Need An Insurance Attorney To Interpret An Insurance Policy

Weatherford insurance attorneys and those in Mineral Wells, Graford, Cool, Springtown and other places in Parker and Palo Pinto County need to know how courts interpret insurance policy disputes.
The United States District Court, Southern District, Houston Division, issued an opinion in June 2012, dealing with this issue. The style of the case is, Texas Renegade Construction Company, Inc. v. Hartford Lloyd’s Insurance Company.
This is a case where the court granted the insurance companies motion for summary judgment. The case is a coverage dispute based on the policy language and the facts of the claim. Here are some of the basic facts:
In April 2009, Texas Renegade discovered a large pooling of water on the property grounds of a building they owned. They contacted the City of Houston and reported the possibility of a leak coming from the City’s main underground water supply. It was later determined that the source of the leak was a main underground water pipe. Repairs were made and the water leak ceased.
Almost two years later, Texas Renegade began noticing foundation and structural damage to the building. The damages included cracks in the building’s floors, walls, and ceilings and inoperable doors and windows. Texas Renegade made a claim with Hartford who investigated and denied the claim. The denial was based on a finding that the damaged resulted from the leak that had occurred almost two years earlier. As a result of the denial, this lawsuit was filed.
Hartford relied on three exclusions in the policy: (1) “Earth Movement” — Earth sinking, rising, or shifting; (2) “Water” — Water under the ground surface; and (3) “Miscellaneous Types of Loss” — Settling, cracking, shrinking or expansion. The pertinent language of these provisions is as follows:
B. EXCLUSIONS 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributed concurrently or in any sequence to the loss.
a. Earth Movement ….
(4) Earth sinking (other than sinkhole collapse), rising or shifting including soil conditions which cause settling, cracking or other disarrangement of foundations or other parts of reality. Soil conditions include contraction, expansion, freezing, thawing, erosion, improperly compacted soil, and the action of water under the ground surface;
….
f. Water ….
(4) Water under the ground surface pressing on, or flowing or seeping through:
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or (c) Doors, windows or other openings.
….
2. We will not pay for physical loss or physical damage caused by or resulting from:
….
c. Miscellaneous Types or Loss:
….
(4) Settling, cracking, shrinking or expansion;
….
Hartford argued that the plain language of each of the above provisions unambiguously operated to exclude coverage for damages to the building. The Judges here agreed. Looking at the evidence, the court pointed out both sides agreed that the underground water leak over saturated the soil surrounding the building causing it to heave, which then resulted in the claimed foundation and structural damage. Based on the plain language of the Earth Movement exclusion, this series of events constitutes earth sinking, rising, or shifting, and includes soil conditions, such as water under the ground surface, which causes settling, cracking or other disarrangement of foundations or other parts of realty. Additionally, based upon the plain language of the Water exclusion, “this series of events constitutes water under the ground surface pressing on foundations and floors.”
Texas Renegade argued that the exclusions only excluded coverage for damage caused by earth sinking, rising, or shifting, and water under the ground surface, which are the product of natural events (like earthquakes, landslides, or volcanos), not the product of man-made or artificial events such as the water leak here.
The Court pointed out the Earth Movement and the Water exclusions expressly refer to “water under the ground surface,” but neither section specifically identifies the events, either natural or artificial, from which such water originates. Nevertheless, the lead-in sentence introducing these exclusions states that Hartford “will not pay for loss or damage caused directly or indirectly by [earth movement or water under the ground surface; and] such loss is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.” Thus said the court, whether the underground water leak occurred in this case as the result of a natural or artificial event, the plain language of the Earth Movement and Water exclusions, combined with the exclusions’ introductory statement, unambiguously and independently operated to exclude coverage for the claimed damages caused by the leak.
These policy interpretation cases can be difficult. Even experienced Insurance Law Attorneys will have a difficult time advising a client on the best course of action. It is important to make clear to an insurance agent, when purchasing coverage, the extent of the coverage being sought.