Just Droppin’ By: Godzilla Coverage Analysis Raises the Issue of Nuclear “Waste”

Such a seemingly theoretical exercise is a potent way to see whether your insurance coverage knowledge is truly applicable to a myriad of possible loss scenarios. For too many, the only risks they can effectively address are those acquired via an insurance class, text or license exam. It may have been more than 40 years ago, but I'm pretty sure my original Florida general lines agent exam did not have a "What if a Giant Reptile Stomps Miami" case study. Something like that would stay with you.

Yet change "reptile" to "hurricane," and is it possible such a query would have better prepared agents and adjusters for Andrew than my actual retail store case? All the supposed coverage knowledge challenge of that latter scenario would, in only a few short years, be rendered moot by three words: "Buy a BOP."

And using a seemingly ludicrous case study has even more merit when it forces you to consider possible losses outside the typical. Although I enjoyed pondering the business income loss possibilities of Godzilla taking out the Golden Gate, what kicked my insurance brain into overdrive was Bill's seemingly throw-away mention of the damage potentially caused by what I shall charitably refer to as "Godzilla droppings." At first glance you might dismiss this as mere off-hand attempt at giant-sized "potty" humor, but hey—it's summer! Take another sip of tea, ease back in your swaying hammock, and take another glance. Bill has raised a truly worthy homeowners' coverage query.

Let's look at the current ISO Homeowners (HO 00 03 05 11) for possible coverage issues should your living room turn to lizard litter box. 

• Damage: Severe – you think hail will shred a roof, imagine a possibly several hundred pound "dropping."
• Coverage A: While I don't personally think Godzilla can be classified under the "birds, rodents or insects" exclusion, I'm not so sanguine that the "discharge or release of waste products or secretions, by any animals" is not going to kill the claim. There is an exception to that exclusion for damages arising from overflow of water or steam from certain specified sources, but the bottom line is the insured is going to be in real trouble trying to collect for buildings and structures.
• Coverage C: Here we find one of those infamous occasions when named peril actually proves superior to special causes of loss. "Infamous" because numerous insurance folks insist such occasions do not really exist outside the fevered thoughts of insurance geeks who need to get a life instead of trying to twist insurance coverage wording into clearly unintended contortions. Wrong, grasshopper! While there may be some topics where emotion clearly has overruled common sense (certificates and hold-harmless agreements, anyone?), you cannot simply "wish away" clear and unambiguous form wording. The "waste/secretion" exclusion applicable to Coverage A does not exist in Coverage C. So the only question is whether there is a named peril that applies. I say yes – #10: Falling Objects. (This is also why I didn't include the pollution exclusion under Coverage A: the exclusion is rendered moot if it results from a Coverage C peril.)
• Coverage D: Since this responds if the claimed damages arise from "a loss covered under Section I," it doesn't matter if Coverage A excludes it; since Coverage C is covered, we are good to go. One could argue whether a loss under Coverage C alone "makes that part of the residence premises where you reside not fit to live in." I simply ask you once again imagine the damage created by that massive "falling object." Do you want to live in a house with that sitting in your living room? Does your adjuster? Didn't think so.

"Okay," you may be thinking. "We can debate the specific language under the various Coverage Parts, but clearly ISO is going to whip an overall Section I exclusion on this clearly unintended-to-be-covered situation."

I agree ISO may not have intended coverage for this. No doubt an extensive search of ISO committee and forms drafting team notes will come up empty for "nuclear lizard excrement." But although ISO intent may be valid in trying to decipher allegedly ambiguous or obtuse language, what has that to do with specific form wording? So let's see what Section I — Exclusion, if any, may apply. 

• Earth movement? While the earth no doubt was moved by a romping, stomping Godzilla, the specific movement we are discussing is less "earth" and more "bowel."
• War? Even with the disclaimer that "discharge of a nuclear weapon will be deemed a warlike act even if accidental" (well, duh!), this exclusion only refers to damages caused directly or indirectly by the specified scenarios. Since our "dropping" damage is not directly an act of war, the only possibility I see here is an argument that the "falling object" was "caused by" an act of war; in effect, the military bombardment created such fear in Godzilla that he literally…well, you see where this is going. Suffice to say that argument is quite a stretch, and would require some evidence that such fear was, indeed, the cause, and our falling object was not simply a nuclear-fueled "call of nature."
• Governmental Action? Same analysis as for war: the damages were not caused by the order of governmental or public authority.
• Nuclear Hazard? Herein lies a most interesting argument. One can strongly argue that every single event of the movie, including any and all damages, arose from events as specified in the Nuclear Hazard Clause: "Nuclear Hazard" means any nuclear reaction, radiation, or radioactive contamination, all whether controlled or uncontrolled or however caused, or any consequence of any of these."(Emphasis mine.) A broad brush, I grant you, but for a carrier seeking any port in the policy storm on which to hang a total coverage denial, this at least offers intriguing potential.

Ah, grasshopper! Far from the heat overcooking my brain, it turns out summer's slower "gone fishing" pace actually furnishes excellent opportunities for that rarest of "life-in-the-insurance-fast-lane" pursuits: a true deep dive into those cool and refreshing coverage waters, where thoughts are stimulated, assumptions are tested and truths revealed.