"
And I saw my reflection in the snow-covered hills
'Til the landslide brought me down ..."
-- Stephanie Lynn (AKA Stevie) Nicks, American singer/songwriter
Here in the Empire State, we generally don't have to worry much about earthquakes. New York gets some seismic activity, but it's usually minor and certainly not on par with what our fellow citizens in the midwest and west must contend with. But does that mean we shouldn't be concerned about the ubiquitous earth movement exclusions found in personal and commercial property insurance policies?
A couple in Colorado has learned the hard way that there are different kinds of earth movement losses, and their experience could happen to people living in rural New York.
Specifically, some boulders on a hillside became dislodged and followed the law of gravity to the letter. One came to rest in the family's backyard, but two others struck the house. The dollar amount of the damage was not reported. However, their homeowners insurance carrier denied coverage after consulting with engineering and geological firms. The inspectors concluded that no external causes, such as rain or wind, set the boulders in motion. The dislodgment was accidental.
The policy excluded all coverage for damage caused by --
a. Earthquake, including land shock waves or tremors before,
during or after volcanic eruption;
b. Landslide, mudslide, or mudflow;
c. Subsidence or sinkhole; or
d. Any other earth movement including earth sinking, rising or
shifting;
caused by or resulting from human or animal forces or any act of nature . . . .
The trial court ruled that the words "landslide" and "any other earth movement" precluded coverage. The insureds appealed, but in January the U.S. Tenth Circuit Court of Appeals
upheld the verdict. Based on several dictionary definitions, they concluded that the term "landslide" includes the movement of rocks as well as dirt. Boulders rolling downhill are a landslide, and the policy did not cover damages caused by a landslide.
We have two mountain ranges in New York and numerous very steep hills (Central New York alone has multiple ski resorts.) There are many homes on them there hills, and they're all vulnerable to dirt, mud and rocks flowing downhill (note that "mudslide" is also an excluded cause of loss.) I grew up in a very rural part of the state, and it's certainly not hard for me to imagine such an event, especially in a state that practically invented rain.
Do your clients have to worry much about earthquakes? Not really. Do some of them have to worry about earth movement? Definitely. This might be something to put on the agenda for the next renewal discussion. The Insurance Services Office (ISO) does not offer an endorsement for the homeowners policy that would insure against these types of losses, but insurers who use other forms might have them. At the very least, you can warn your clients of the uninsured risks.