Earth Movement Exclusion Held Ambiguous By Nevada Supreme Court

November 3, 2011

American Bar Association Insurance Coverage Case Notes

Excerpt from "Earth Movement Exclusion Held Ambiguous By Nevada Supreme Court."

The Supreme Court of Nevada held that the earth movement exclusion in a homeowner’s insurance policy was ambiguous and was to be construed against the insurer. Powell v. Liberty Mut. Fire Ins. Co., 252 P.3d 668 (Nev. 2011).

In July 2005, a water pipe in the insured’s house exploded, flooding the dirt sub-basement. An expert concluded that “after many years of relative foundation stability, [the house] is currently being affected by the expansion of supporting clay soils. [T]he expansion . . . has been severely aggravated by the intrusion of a significant amount of water a short time ago. . . .” 252 P.3d at 671.

The insured submitted a claim under her all risk homeowner’s policy that was issued by Liberty Mutual. The claim was denied on the grounds that the earth movement exclusion applied. The exclusion states in pertinent part:

We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. . . . Earth movement, meaning earthquake including land shock waves or tremors before, during or after a volcanic eruption; landslide, mine subsidence; mudflow; earth sinking, rising or shifting.

252 P.3d at 670 (bold in original). The policy also contains a settling clause, which further excludes losses caused by “settling, shrinking, bulging or expansion, including resultant cracking, of payments, patios, foundations, walls, floors, roofs or ceilings.” 252 P.3d at 671.

For the full article, please use the following link:  Earth Movement Exclusion Held Ambiguous By Nevada Supreme Court.