Section I Perils Insured Against

Section I Coverage C Personal Property

Section I Exclusions

Section I Conditions

Liability Coverages and Exclusions A-D

Exclusion E Coverages E. F and G

Section II Additional Coverages and Conditions

SECTION I – EXCLUSIONS A. 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. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

1. Ordinance Or Law Ordinance Or Law means any ordinance or law:

a. Requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris. This Exclusion A.1.a. does not apply to the amount of coverage that may be provided for in E.10. Ordinance Or Law under Section I – Property Coverages; b. The requirements of which result in a loss in value to property; or c. Requiring any "insured" or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. This Exclusion A.1. applies whether or not the property has been physically damaged.

2. Earth Movement Earth Movement means:

a. Earthquake, including land shock waves or tremors before, during or after a volcanic eruption; b. Landslide, mudslide or mudflow; c. Subsidence or sinkhole; or d. Any other earth movement including earth sinking, rising or shifting. This Exclusion A.2. applies regardless of whether any of the above, in A.2.a. through A.2.d., is caused by an act of nature or is otherwise caused. However, direct loss by fire, explosion or theft resulting from any of the above, in A.2.a. through A.2.d., is covered.

Analysis

There are no real changes to the exclusions in Section I of the policy, just a few minor editorial changes. The exclusions section begins with the standard anti-concurrent causation language, in which the carrier states that there is no coverage for the listed perils even if they occur at the same time as a covered peril. For example, a severe storm with strong winds and rain comes through the area, with the wind damaging many properties and the rain causing widespread flooding. The insured's premises is damaged by both the wind and the flooding. The damage from the wind is covered, but the damage from the flood is not covered, even though it occurred at the same time and from the same storm that caused the covered wind damage. Therefore, the perils listed here are not covered even if they occur concurrently with other, covered perils.

Ordinance or law

The first exclusion is for ordinances or laws that regulate the construction, demolition, remodeling or repair of an insureds property, including debris removal. Ordinance or law coverage is an additional coverage in the policy, so this exclusion is for what is not provided in that additional coverage. Remember that additional ordinance or law coverage is limited to 10% of the coverage A amount under certain conditions. If the enforcement of ordinances or laws results in a loss of value to the property, that loss in value is not covered. Any requirement to test for, clean up, monitor, remove, contain, or otherwise handle pollutants is excluded.

Pollutants are not a defined term but are defined in this section of the policy. A pollutant is any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, alkalis, chemicals and waste, including waste to be recycled, reconditioned or reclaimed.

The ordinance or law exclusion applies whether or not there has been any physical damage to the property. An ordinance could come into play when the property had not been damaged; coverage for such an ordinance is excluded by this clause. For example, an ordinance requiring all homes within a subdivision to have trees trimmed if they are touching electrical lines within 30 days.

Earth movement

Earth movement is the next exclusion, and earth movement is defined as earthquake, including land shock waves or tremors before, during or after a volcanic eruption, or landslide, mudslide, mudflow, subsidence, sinkhole or any other earth movement including sinking, rising or shifting. The exclusion is all encompassing, and states that these types of earth movement are excluded whether the cause is an act or nature or caused by another factor. If an insured's home is damaged by a landslide caused by his neighbor digging a swimming pool, that is excluded.

An exception exists for direct loss by fire, explosion or theft that results from any of the earth movement as described. When the earth shifts, it is not uncommon for underground gas pipes to rupture causing an explosion or fire, and if the premises has been damaged by earth movement part of the wall may have been opened making it easier for thieves to access the property before the insured can take protective measures. Therefore if an earthquake or other earth movement event occurs that damages the property, any subsequent fire, explosion, or theft of property would be covered.

Water

Water is the next exclusion, and a number of water events are excluded. First, flood, surface water, waves, tidal waves and tsunamis, tides, tidal water, overflow of any body of water or any spray, whether or not driven by wind, including storm surge, is excluded. So any type of water from hurricanes, heavy storms, high tides, or tidal waves is excluded. While many in the industry are very familiar with the NFIP definition of flood, that definition does not occur in this policy. Therefore, there doesn't have to be an inundation of more than 2 acres or two dwellings in order for conditions to be considered a flood and to be excluded under this policy. If a question exists as to whether something constitutes a flood, a standard dictionary should be used as that is what courts refer to. Merriam Webster online defines flood as: "a rising and overflowing of a body of water especially onto normally dry land, or an overwhelming quantity or volume".

Surface water also needs a definition. Surface water is water that meanders across the ground not following any given pattern. Runoff from heavy rains, for example, or snowmelt becomes surface water. Ballentine's Law Dictionary defines it as: "Water derived from falling rain or melting snow, or rising to the surface in springs, and diffused over the surface of the ground. Inclusive of floodwater severed from the main current and spreading out over lower ground." Falling rain often puddles in low-lying areas; that would be surface water.

The next part of the water exclusion is for water that backs up through sewers or drains, or overflows or is otherwise discharged from a sump, sump pump or related equipment. Again, terms are important, and what exactly is a back-up or discharge is not defined. A back-up is when water reverses direction and goes back the way it came; often this is because of something blocking the path of the water, for example a toy a toddler flushed down the toilet. The water cannot travel through its normal path, so it reverses direction and flows backwards.

An overflow is when water exceeds the boundaries of the container it is in; a bathtub with the water left running when the insured goes to answer the phone and gets distracted, for example. The container, be it the bathtub, sump pit or whatever, can no longer hold the volume of water flowing into the receptacle.

Damage from any of these causes, back-up through sewers or drains or overflow from a sump pump or related equipment is excluded. Coverage can be purchased by using the HO 04 95 Limited Water Back-up and Sump Discharge or Overflow Coverage endorsement. Close attention must be paid to the terms used in the policy and the endorsement.

There are two more water exclusions, one for water below the surface of the ground that exerts pressure on, seeps, leaks or flows through a building, sidewalk, driveway, patio, pool, foundation or other structure, and the other for waterborne material carried by water back-up, overflow or water below the surface of the ground. At any given time the ground contains varying amounts of water from rain and snowmelt. At times the water could be excessive, and could push on the insured's property under or on top of the ground. Waterborne materials include things such as materials picked up by floodwaters as they move across the ground, or materials found in sewage that might back up through the drains.

There are two caveats that go with the water exclusion – the first is that the exclusion applies regardless as to whether the flood or other excluded water is caused by natural or other causes, and the second is the escape, overflow, or discharge for any reason of water from dams, levees, seawalls or any other boundary or containment system. This language was added to the policy after Hurricane Katrina and the failure of the levees that caused significant flooding in New Orleans.

An exception exists, however, for ensuing losses caused by fire, explosion or theft that results. Water and electricity don't mix, and it's possible for water that inundates a house to start a fire or even an explosion. Likewise, if an insured has moved property outside of the damaged dwelling for it to dry and it gets stolen, that would be covered.

Power failure

Power failure is the next exclusion, and this is the failure of power or other utility services if the failure takes place off the "residence premises". If a vehicle hits the transformer up the street and the insured loses power, any damage from that power failure would be excluded since the failure occurred off-premises. However, if the loss of power off-premises results in a loss caused by a covered peril, that would be covered. For example, the vehicle hits the transformer and the insured loses power. The insured had several electronics running at the time, and when the power comes back on the surge causes a fire in the dwelling. This fire would be covered.

Neglect

Neglect of an "insured" to use all reasonable and necessary means to protect property from further damage after a loss is excluded. Note that this exclusion applies after there has been a loss, not before. If a tree limb falls through the roof and the insured fails to have the hole covered, and rain further damages the property, that further damage is excluded because the insured neglected to tarp the roof. Failure to maintain the property in general is a different exclusion.

War

War is catastrophic in nature and as such war and similar actions are excluded. These similar actions include undeclared war, civil war, insurrection, rebellion, revolution, warlike acts by a military force or military personnel, or destruction, or seizure or use for a military purpose.

Insurrection, rebellion, or revolution aren't defined, so a standard desk reference must be used for definitions. Merriam Webster defines insurrection as: "an act or instance of revolting against civil authority or an established government". It doesn't specify any amount of people required to be part of the action, just an act of revolting against the government. Revolt is defined as: "a renouncing of allegiance (as to a government or party) especially : a determined armed uprising, or a movement or expression of vigorous dissent". There's a significant difference between an armed uprising and an expression of vigorous dissent. Whether something fits these definitions will depend on the situation at the time.

Under certain circumstances property of an insured could be destroyed or seized for military purposes; such damage is not covered. Discharge of a nuclear weapon, even if the discharge is accidental, is considered an act of war. The destruction caused by a nuclear weapon, whether activated intentionally or not, is too devastating to be covered by a standard homeowners policy.

Nuclear hazard

Even though discharge of a nuclear weapon is excluded under the war provision, a separate exclusion for nuclear hazard exists. It refers to the Nuclear Hazard Clause listed in the Conditions section, where "nuclear hazard" is defined as any nuclear reaction, radiation or radioactive contamination, whether controlled or uncontrolled, however caused, or any subsequent consequences of any of these. Nuclear hazard will not be considered loss by fire, explosion or smoke, even though a nuclear reaction may cause any of those. The only exception is direct loss by fire resulting from the nuclear hazard. A resultant fire is covered, but the explosion of a nuclear weapon will not be considered a fire in and of itself.

Intentional loss

Intentional loss is the next exclusion, and any intent of an "insured" to cause a loss is excluded. It is important to note that the intent of the insured must be to cause damage to property; if the intent of the insured is something else, for example melting snow with a flame thrower, then when the insured accidentally sets the house on fire because the flame thrower got out of control, the fire damage would be covered. The insured did not intend to set his house on fire, he was trying to melt the snow in what he thought was an efficient way to do so. However, an insured that pours gasoline through the house and then sets it on fire in order to file a claim and receive a payout will not be covered; that is intentional destruction of property.

Governmental action

Actions taken by governmental or public authorities, such as destruction, confiscation or seizure of covered property is excluded. An exception is made if the actions of the authorities are taken at the time of a fire in order to prevent the fire from spreading further. If fire is covered under the policy, that loss would be covered. With the increasing intensity and frequency of wildfires, this may start occurring more frequently than it has in the past.

The next few exclusions are not preceded by the anti-concurrent causation language. Ensuing losses from these perils are covered as long as there are no other exclusions. Weather conditions are excluded if they contribute in any way with the excluded perils already discussed under section A.

Acts or decisions

Acts or decisions, or failures to act or make a decision, by any person, group, organization or governmental body are excluded. Someone's bad decision or failure to do something is not what insurance is designed to provide coverage for.

Faulty/inadequate

The final exclusion is for faulty, inadequate or defective design, construction, repair or maintenance of part of the property. These are again actions by the insured, builder or manufacturer of materials, and are not naturally occurring hazards. Faulty design, construction or remodeling would fall to the builder's CGL policy, and faulty materials would fall to the manufacturer's product liability coverage.

Excluded is faulty, inadequate or defective planning, zoning, development, surveying, siting, design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction, materials used in repair, construction, renovation or remodeling or maintenance. Again, much of this would be covered under a contractor's commercial policy, or if the insured is just not as good at remodeling as he thinks he is and he damages his own property in trying to remodel the kitchen, there is no coverage.

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