Section I Exclusions

Section I Conditions

Section II Liability Coverages

Section II Exclusions

Section II Additional Coverages

Section II Conditions, Sections I and II Conditions

SECTION I – EXCLUSIONS 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 1.a. does not apply to the amount of coverage that may be provided for in D.9. 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 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 2. applies regardless of whether any of the above, in 2.a. through 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 2.a. through 2.d., is covered.

3. Water This means:

a. Flood, surface water, waves, including tidal wave and tsunami, tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind, including storm surge; b. Water which:

(1) Backs up through sewers or drains; or (2) Overflows or is otherwise discharged from a sump, sump pump or related equipment;

c. Water below the surface of the ground, including water which exerts pressure on, or seeps, leaks or flows through a building, sidewalk, driveway, patio, foundation, swimming pool or other structure; or d. Waterborne material carried or otherwise moved by any of the water referred to in 3.a. through 3.c. of this exclusion. This Exclusion 3. applies regardless of whether any of the above, in 3.a. through 3.d., is caused by an act of nature or is otherwise caused. This Exclusion 3. applies to, but is not limited to, escape, overflow or discharge, for any reason, of water or waterborne material from a dam, levee, seawall or any other boundary or containment system. However, direct loss by fire, explosion or theft resulting from any of the above, in 3.a. through 3.d., is covered.

Analysis

The exclusions section begins with the standard anticoncurrent causation language. This language states that even if the excluded peril occurs in conjunction or in sequence with a covered peril, the damage from the excluded peril is still excluded. For example, if a tornado occurs at the same time as an earthquake and both perils damage the property, only the damage from the tornado will be covered.

The first exclusion is for Ordinance or Law, and it is defined as any ordinance or law that regulates the construction, repair, demolition, remodeling, or renovation of the property, including debris removal. However, this exclusion does not apply to the limited coverage found under the Additional Coverage of Ordinance or Law. This is restricting anything beyond that limited coverage. Also excluded is the testing, monitoring, cleaning up, removing, containing or otherwise treating or responding to any pollutants. Pollutants are then defined as any solid, liquid, gaseous or thermal irritant or contaminant, and this includes smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste is further defined as including materials that can be recycled, reconditioned or reclaimed. The ordinance or law exclusion applies whether or not the property has been physically damaged. Pollutants could be released without actually damaging the property but still need to be treated and cleaned up according to local ordinances. Such cleanup and treatment would not be covered.

Earth movement is defined as earthquake, including land shock waves and tremors before, during or after a volcanic eruption as well as landslide, mudslides, mudflows, subsidence, sinkholes, or any other earth movement including rising, sinking or shifting. Any type of earth movement is excluded, whether it is caused naturally or by other forces. If there is construction next to the insured property and due to the heavy equipment being used the earth shifts at the insured property causing damage, there is still no coverage. There is an exception for ensuing fire, explosion, or theft. It is not unusual for earth movement to rupture gas lines which then start fires; any damage from such a fire or explosion that occurs as a result of an earthquake would be covered.

Water is excluded in several ways. First, flood, surface water, waves, tidal waves, tsunamis, tides, tidal water, overflow of any body of water or spray from any of these, whether or not driven from wind, is excluded. Any sort of flood, whether from a hurricane or a nearby stream overflowing is excluded, as is any spray from nearby streams or lakes or any other body of water and waves. The spray could be from winds or very large waves – regardless such damage is excluded.

Next is the backup exclusion. Water that backs up through sewers or drains, or that overflows or is otherwise discharged from a sump, sump pump or related equipment is also excluded. This brings the exclusion into the dwelling instead of water from outside entering in. Again we have important terms that the policy doesn't define – back up, overflow, discharge, sewer, and drain are important for the understanding of this exclusion. For an in-depth discussion see Holding Water – Definitions Needed to Understand Water Losses.

Then, water below the surface of the ground is excluded. The exclusion includes water that exerts pressure on, or seeps, leaks, or flows through a building, sidewalk, driveway, patio, foundation, swimming pool or other structure. Water naturally occurs underground. If after a series of heavy rains the ground is saturated and water under the ground seeps into the building, that would be excluded.

Flood waters often carry loose objects along with the flow of water. Any material carried or otherwise moved by water as listed in the exclusion is also excluded. If an area floods and tree branches are carried into an insured's dwelling causing damage, that is excluded.

Similar to earth movement the water exclusion applies whether any of the loss is caused by natural or manmade occurrences. The escape, overflow, or discharge of water for any reason of any levee, dam, seawall, or any other containment or boundary system is excluded. There is an exception for direct loss by fire, explosion, or theft that results from excluded water damage. If water backs up through a drain and shorts out a space heater causing a fire to the dwelling, that fire is covered.

4. Power Failure Power Failure means the failure of power or other utility service if the failure takes place off the "residence premises". But if the failure results in a loss, from a Peril Insured Against on the "residence premises", we will pay for the loss caused by that peril. 5. Neglect Neglect means neglect of an "insured" to use all reasonable means to save and preserve property at and after the time of a loss. 6. War War includes the following and any consequence of any of the following:

a. Undeclared war, civil war, insurrection, rebellion or revolution; b. Warlike act by a military force or military personnel; or c. Destruction, seizure or use for a military purpose. Discharge of a nuclear weapon will be deemed a warlike act even if accidental.

7. Nuclear Hazard This Exclusion 7. pertains to Nuclear Hazard to the extent set forth in N. Nuclear Hazard Clause under Section I – Conditions. 8. Intentional Loss Intentional Loss means any loss arising out of any act an "insured" commits or conspires to commit with the intent to cause a loss. In the event of such loss, no "insured" is entitled to coverage, even "insureds" who did not commit or conspire to commit the act causing the loss. 9. Governmental Action Governmental Action means the destruction, confiscation or seizure of property described in Coverage A or C by order of any governmental or public authority. This exclusion does not apply to such acts ordered by any governmental or public authority that are taken at the time of a fire to prevent its spread, if the loss caused by fire would be covered under this Policy.

Analysis

Power failure is the failure of power that occurs off the "residence premises" for example if a transformer malfunctions or is struck by a vehicle, that loss of power that causes damage is excluded. However, if that loss of power causes a covered peril to occur that damages property, then there is coverage for the damage from that peril. A power failure occurs off premises, but it leads to a fire on premises. That fire would be covered.

Neglect is an issue if the insured neglects to use reasonable means to save and preserve property after the time of a loss. If a pipe breaks and floods the dwelling, the insured should remove personal property and get it out of the water in order to prevent further damage. Failure to do so could result in damage being excluded.

War is defined as including undeclared war, civil war, insurrection, rebellion, revolution, warlike acts by a military force or military personnel or destruction, seizure or use for a military purpose. Any such activity is excluded. Likewise the discharge of a nuclear weapon is considered to be a warlike act even if the weapon is discharged accidentally. War is not insurable, there is no way to predict wars or to develop a reasonable premium in order to provide for coverage.

Nuclear hazard is a separate exclusion from war. Nuclear hazards are not just nuclear weapons but hazards related to nuclear power. It refers to the Nuclear Hazard Clause, which states that "nuclear hazard" means any nuclear reaction, radiation, radioactive contamination, controlled or uncontrolled, however caused, and any consequences of any such activity.

Intentional loss is excluded and means any loss that arises out of an act committed by an "insured" or that an "insured" has conspired to commit to cause damage to the covered property. If such a loss occurs no "insured" receives coverage, even "insureds" that were not involved in the collusion or act that occurred.

Governmental action is the destruction, confiscation or seizure of property in Coverage A or C by order of any governmental authority. If the county confiscates some of the insured's property or orders it destroyed, there is no coverage. An exception to this exists in cases of fire and to prevent the spread of the fire to nearby areas. At times a property will be destroyed in order to save other properties, and if this occurs the loss would be covered.

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