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Is the exclusion of earth movements limited to damage from natural causes? | Legal insurance blog for property insurance



In a recent case 1 a federal court in Pennsylvania ruled that the exclusion of land movement within an insurance policy was not limited to natural causes but also to human damage. In that case, an insurance commercial building suffered damage due to the neighbor storing wooden railway tracks on his property and laying them against the insured's building. This caused the ground under the insured's property to be moved, which resulted in significant structural damage to the insured's building in the form of a curved outer block wall. The insurer denied coverage and relied mainly on the exclusion of soil movements in the insurance. In the relevant field, the exclusion of earth movements provided:

We do not insure under any cover for any loss that would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) if other causes acted simultaneously or in any consequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or extensive damage, results from natural or external forces, or occurs as a result of any combination of these:…

b. Soil movement …

(4) Soil sinks (other than "collapse of holes"), rises or shifts, whether combined with water or not, including soil conditions that cause sedimentation, cracking or other disturbance of foundations or other parts of the property. Soil conditions include contraction, expansion, freezing, thawing, erosion, action of water or other natural forces; or incorrect compaction, site selection, excavation, retention, stabilization or other external forces.

The insured did not question that the storage of the neighbor's wooden railway tracks against its building created wall movement and damage to the building. However, the insured claimed that the exclusion of earth movements did not prevent coverage for "artificial" causes of damage (such as wooden railway tracks). The insured also claimed that the exclusion of earth movements was ambiguous and should therefore be read in favor of coverage. On the other hand, the insurer claimed that the exclusion of earth movements was applied because the damage was due to changing ground conditions caused by an external force, namely the placement of railway tracks on the ground and towards the insured's building.

The court was instructed to interpret the insurance policy and found that the exclusion of land movements unequivocally excluded coverage. The court found that the management clause for the exclusion of earth movements was so broad and applied regardless of whether the causes were natural, artificial or some combination of causes. In addition, the court found that even the removal of the management clause made the text to the exclusion of the earth movement to include damage from "external forces" clear that it was unequivocal to clearly include any external act, including human behavior. ] ___________________________________
1

Source Architechnology Sys., Inc. v. State Farm Fire & Cas. Co. No. 2: 19-CV-376, 2020 WL 4274291 (W.D. Pa. July 24, 2020).


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