Property damage caused by earth movement come in various forms. Soil subsidence, mudslides, slope creep, and earthquake are examples of earth movement that can cause property damage. Because soil is part of the foundation which holds the home or property up, earth movement claims often involve large and substantial losses. They can also raise difficult coverage issues implicating earth movement exclusions.
Many property damage policies contain an earth movement exclusion, which will commonly exclude losses for things like “landslide; mudflow; earth sinking, rising or shifting . . .” (Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 751.) With respect to earthquake, damages caused by earthquake will likely be excluded under the earth movement exclusion unless you have purchased earthquake coverage. With respect to damages caused by other earth movement, like subsidence, slope creep, or landslide, whether or not the loss is covered or excluded depends on the facts of the claim.
There are many events which are covered by property insurance and which cause earth movement that damages property. For instance, improper compaction of soil by a contractor may be covered, while the soil subsidence resulting from the improper compaction may be excluded. Similarly, a fire that destroys hillside vegetation may be covered, while the resulting landslide after heavy rains may not be.
Where a covered event, like negligence or fire, combines with an excluded event, like earth movement, to cause damage, whether there is coverage depends on the “efficient proximate cause” (also described as the “prime” or “moving” cause) of the loss. Where the efficient proximate cause of property damage is a covered event, coverage exists even is excluded earth movement contributed to the damage.
A property damage claim arising out of soil or earth movement will almost always face challenges under the earth movement exclusion, and will often result in a denial of coverage. In order to contest coverage, insureds will often have to retain geotechnical engineers who are soils experts, and potentially structural engineers, to analyze the cause of loss. Because of the expert analysis needed for these kind of claims, it can be expensive to contest an insurance company's denial. Insureds must be able to point to a covered event as the “efficient proximate cause” of the loss in order to contest coverage. Often there is a covered event that is arguably the cause of the soil movement and property damage. Ultimately, if the insured and insurance company cannot resolve it, what constitutes the “efficient proximate cause” of a loss involving soil or earth movement is decided by a jury.
Establishing the cost of repair is also an expert driven analysis when the property damage is caused by soil movement. Often underpinning, retaining walls, or other support for the soil or structure is required. These are expensive repairs, and are frequently contested by insurance companies.
Insureds who have experienced property damage relating to soil subsidence or movement, and have had an insurance claim denied, may want to seek legal or expert advice, to determine whether there is an argument for coverage. Soil subsidence claims present complicated coverage issues, but coverage can often be found when the cause of loss is investigated by qualified experts.