Maine Supreme Judicial Court Asked in Arthur Bibeau v. Concord General Mutual Insurance Company Docket: Cum-20-149, 2021 ME 4, Maine Supreme Judicial Court (January 26, 2021) , to determine whether the provisions of a homeowner's insurance unequivocally exclude coverage for significant losses suffered by the policyholder. Arthur Bibeau appealed a summary judgment of the Superior Court in favor of the Concord General Mutual Insurance Company (Concord) on Bibeau's complaint for alleged and breaches of the homeowner's insurance policy issued to him by Concord. Bibeau argues, among other things, that the court erred when it found that the policy unequivocally excluded coverage losses caused by earthquakes.
In 2006, Bibeau bought a home in Portland and insured it through the insurance issued. to him by Concord. On September 15, 2017, Bibeau filed a claim with Concord for damage to his home that included extensive foundation cracks and decommissioning that led to “racking doors and windows, from flat floors and stairs, cracked drywall, separating the interior baseboard and a sloping garage. Bibeau claimed that this damage was caused by a waterline leak from 2006, which according to his expert pressed sand and other material under the foundation of the home, which compromised the foundation's integrity and caused it to fall down or "settle". However, Concord's expert concluded that the settlement was caused by the house being built on "unprepared or uncontrolled filling", a non-uniform soil composition that allowed the house to settle at different rates.
Although the parties disagree as to what caused the settlement, the parties do not dispute that the damage to Bibeau's house is the result of the earth moving under the foundation of the house.
Concord denied Bibeau's assertion based on the exclusion of the political movements of the earth and its clause on anti-competitor causation. Bibeau sued Concord with allegations of policy violations and unfair settlement practices, and plaintiffs' delayed interest on the amount owed under the policy. Eventually; Concord proceeded to a summary judgment.
The Court of Appeal delivered a summary judgment for Concord, arguing that since there was no real dispute that Bibeau's losses were caused by the undermining of "underground soils and soil movement", the clear language of the policy, in particular its exclusion of soil movements, precludes Bibeau's claim.
Bibeau argued that the Court erred in concluding that the relevant policy language was not ambiguous and that the damage to his house was excluded based on the exclusion of land movements from the policy.
The policy covers the home in the "residential area", ie Bibeau's home. The scope of coverage was limited as the policy does not insure against losses specifically excluded including losses caused by earthquakes, landslides, mud, mudflow, immersion, sinkholes or " a ] new earth movement including soil falls, rises or shifts; caused by or derived from human or animal forces or any natural act. ”(My emphasis added.)
In addition, the exclusion includes an anti-competitor clause, which provides for losses caused by any of the exclusions listed. not covered "regardless of any other cause or event contributing simultaneously or in any consequence to the loss." The anti-concurrent-causation clause "completely blocks insurance coverage where an injured loss is caused by a combination of covered and excluded hazards." Boazova v . Safety regulations . Co ., 968 NE2d 385, 393 (Mass. 2012).
The trial court concluded that there was no real dispute that the damage to Bibeau's home was caused by the movement of the earth beneath the foundation. . The parties agree that earth movements during the foundation caused the house to "settle" or fall down, which resulted in the damage.
However, the parties do not agree on what caused the earth movement – a water leak claimed by Bibeau, or the construction of Bibeau's home on top of uncontrolled filling according to Concord. The trial court concluded that this disagreement is not material to Bibeau's claims under the policy, because regardless of the cause of the land movement, Bibeau's losses are clearly excluded by the exclusion of the land movement of the policy.
Ambiguity in the exclusion of land movements
The determination of whether an insurance contract is ambiguous is a matter of law before the court. If the language of an insurance policy is unambiguous, the court will interpret it in accordance with its clear meaning, but it will interpret the ambiguous language of insurance strictly against the insurance company and liberally in favor of the policyholder.
The court decided to follow the Mississippi Supreme Court's analysis in Mississippi Farm Bureau Casualty Insurance Co. . v . Smith 264 So. 3d 737 (Miss. 2019), because there the court considered an exclusion from earth movements that was identical to the exclusion in the policy issued to Bibeau. In that case, the court concluded that the exclusion was unequivocal because '
The exclusion of earth movements included in the policy is not limited to natural forces, but applies to all earth movements including earth that sinks, rises or shifts; caused by or derived from human or animal forces or any other natural act.
Since the exclusion of earth's motion on earth clearly applies to all earth's movements, not just natural disasters, and includes earthquakes originating from human or natural forces, appeals concluded that the policy's exclusion of earth's movements is not reasonably susceptible to different interpretations and the Court did not err in concluding that the exclusion was unequivocal.
Distilled to its simplest meaning and interpreted policy as a whole, the policy generally covers direct physical losses to Bibeau's homes, but it does not explicitly cover losses caused by earthquakes, which include natural disasters as well as all other earth movements such as sinking, rising or moving caused by or as a result of human or animal forces or any act of nature. Such losses are excluded even if they are caused at the same time by a covered hazard.
The evaluation of the clear language of the policy as a whole did not err in the Court's finding that the policy was unambiguous and that Bibeau's losses were excluded from coverage under the exclusion of land movements.
The courts of the state of Maine have accepted the fact that an insurance contract means what it says. However, when the policy clearly and unequivocally excludes coverage for "earth movement" caused and each "earth movement" even if other causes agree with the earth movement to cause damage. Since the damage was not caused by earthquakes, the court had no choice but to refuse payment.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance coverage, insurance claims handling, fraud and insurance fraud almost equally for insurers and insurers. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
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