Q

An insured lost a hammer bar, which is a permanent part of a well digging truck and rig, insured under a commercial inland marine policy. The hammer bar was damaged (lost) when a well in which it was being operated collapsed. We are concerned about the applicability of the form's exclusion 4., “property that is underground, in caissons or underwater.” Is this exclusion applicable?

Alabama Subscriber

A

Although in a technical sense the hammer bar became property underground when it was lost in the well collapse, the exclusion seems not applicable to the loss.

First, the ejusdem generis doctrine can be applied. From Black's Law Dictionary, “Under ejusdem generis canon of statutory construction, where general words follow the enumeration of particular classes of things, the general words will be construed as applying only to things of the same general class as those enumerated,” and “such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned.” This rule basically means that specific words in an enumerated list in an insurance policy need to be read in the context of their overall meaning.

Therefore, underground property has to be read in context with property in caissons or underwater. The construction definition of “caisson” is “a water tight chamber used in construction work under water or as a foundation.” It appears that the intent of the clause is to exclude property whose more or less permanent placement is underground, in caissons, or underwater. Because property falls into a hole, it does not give that property the characteristics of “underground property.” The insurance company wrote an inland marine floater on a piece of property whose function is to operate below the surface of the ground with full disclosure of the nature of the rig. The hammer bar exposure goes with this line of business.