By Andrew B. Downs, Kristol Bradley Ginapp
The Nevada Supreme Court recently held that a property insurance
policy's earth movement exclusion was ambiguous because, unlike some
other earth movement exclusions, it did not state clearly whether it
applied to both natural and man-made earth movement.
Powell v. Liberty Mut. Fire Ins. Co.
127 Nev. Adv. Op. 14 (May 5, 2011), arose out of a claim under a
homeowners policy. A water pipe in Ms. Powell's home exploded, flooding
the sub-basement of the home. Afterwards, the home suffered a shift in
the foundation and extensive cracking and separation in the wall and
ceiling. The trial court granted Liberty's motion for summary judgment,
finding the earth movement exclusion controlling.
The Liberty earth movement exclusion provided there was no coverage
for "Earth movement, meaning earthquake including land shock waves or
tremors before, during or after a volcanic eruption; landslide, mine
subsidence; mudflow; earth sinking, rising or shifting." The Nevada
Supreme Court held that exclusion was ambiguous because it did not make
clear whether it applied to both natural and man-made earth movement and
because it did not state what was excluded earth movement when there
was not a widespread calamitous event.
In reaching this conclusion, the Nevada Supreme Court distinguished
other forms of earth movement exclusions that specified their
application to both natural and unnatural causes, as well those which
used "includes but is not limited to" language before a listing of
examples of excluded earth movement. The court noted that the policy it
was considering simply stated "including" before the examples, rather
than the "including but not limited to" used in other policies. The
court did note in dicta that the anti-concurrent causation language in
the policy was enforceable, but found it inapplicable due to the
ambiguity of the earth movement exclusion.
This decision does not render unenforceable all earth movement
exclusions in Nevada. Many exclusions in common use, including the
exclusion in the ISO CP 10 30 (06 07) form, and the exclusion in the HO3
policy form, contain materially different language that addresses the
ambiguities perceived by the Nevada Supreme Court.
Andrew Downs and Kristol Ginapp practice insurance coverage law from
the Las Vegas office of Bullivant Houser Bailey PC. For more information
about this eAlert, please contact the authors or the Insurance Group of Bullivant Houser Bailey PC.
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