In Novotny v. Farmers Ins. Co., Inc., No. 05-0110, 2006 WL 468704 (Iowa App. Mar. 1, 2006), an Iowa appeals court held that homeowners failed to show water damage was covered under their insurance policy.

 

Clarence and Clyda Novotny owned a duplex house. They lived downstairs and rented out the upstairs unit. The duplex suffered water damage, the cause of which was disputed by the Novotnys and their insurer, Farmers.

 

Soil was removed in the basement to make room for a heating system many years before the water damage occurred. The soil removal caused the basement's bearing wall to sag and settle, which in turn caused the house to sag. The sagging house put stress on the soil pipe, which cracked and leaked. The district court ruled that the resulting water damage was not covered.

 

The Novotnys argued that “the water damage was actually caused by accidental disconnection of the domestic water supply line in the course of repairs made to the upstairs bathroom sink.” However, the district court found that when the adjuster visited the insureds' house, they told him that a broken soil pipe had caused the leak and even showed the adjuster a piece of broken pipe.

 

The insureds did not allege the water damage was caused by an accidental disconnection until after their claim was denied on the basis of the broken soil pipe.

 

After viewing the evidence, the appeals court said that “there is substantial evidence to support the verdict of the district court.” The court listed such evidence as an engineering report showing that the soil pipe cracked and leaked due to earth movement. Thus, the court upheld the district courts finding in favor of Farmers.