Governmental Action
This exclusion precludes coverage for the destruction, confiscation, or seizure of a dwelling, other structures, or personal property by order of any governmental or public authority. There is a significant exception to this exclusion. When a governmental body acts at the time of a fire to prevent its spread, loss will be covered. In practical terms, this exclusion prevents coverage when a government seizes property based on the arrest or conviction for certain crimes or offenses, such as drug related offenses.
Section 1: Concurrent Causation
The second group of exclusions applicable to the property coverages of homeowners policies consists of three categories that are of great importance. However, unlike the preceding nine exclusions, this group of three categories of exclusions is not made subject to the anticoncurrent causation language. Effectively, these exclusions are narrower than those we have just discussed. There are a couple additional qualifications to note. First, these exclusions only apply to the dwelling and other structures coverages, not to the contents coverage. This further narrows the scope of these exclusions.
Second, if there is an ensuing loss to the dwelling or other structures by a covered peril for which homeowners insurance coverage is not precluded by any other policy provision, that ensuing loss is covered.
Weather Conditions
This exclusion has a substantial qualification and is actually relatively narrow.This exclusion only applies if weather conditions contribute in any way with a cause of loss or an event excluded in any of the exclusions previously discussed to produce the loss. Let’s try some illustrative examples. Weather conditions cause a power failure, resulting in loss to contents of refrigerators and freezers. The exclusion applies. Heavy rain causes a hillside to give way, resulting in a mudslide that damages your house or garage. The exclusion applies. Lighting causes a power failure that causes a sump pump to cease operating, resulting in backup or overflow of the sump. The exclusion applies.
Acts or Decisions
The language of this exclusion tends to strike the average reader as, alternatively,nebulous or opaque. It states:
We do not insure for loss to property described in Coverages A or B caused by any of the following…
Acts or decisions, including the failure to act or decide, of any person, group, organization or governmental body.
The nebulous nature of this exclusion is underscored that there is little, if any, case law interpreting it. Thus, whether it would apply to a particular claim would depend on the facts of the claim and the plain language of the exclusion. As a practical matter, when a policy provision has not been construed by courts, insurers are often reluctant to rely on such a provision as the basis for a denial of coverage, unless the insurer has other and stronger defenses to a claim.
Faulty, Inadequate, or Defective Maintenance or Construction
This is the most important of the three categories of exclusions. The essential theme of this category is that coverage does not apply to losses that are the result of poor design, planning, siting, construction, materials, or maintenance. The message communicated by this exclusion is two-fold. First, if another person or third party causes the loss, the insured’s remedy is to sue them, not to look to his or her own property insurance.
Second, if the cause of loss is the insured’s own failure to maintain his or her property—too bad. This body of homeowners insurance exclusions puts the burden on the insured not only to maintain his or her property to assure the existence of coverage, but also to take due care in assessing the quality of property before purchase and the competence of persons with whom the insured contracts to perform remodeling or reconstruction. This would also exclude problems developing from do-it-yourself remodeling or construction projects where loss results from defective design, materials, or construction.
Under this exclusion lie four subcategories. The first precludes coverage for faulty, inadequate, or defective planning, zoning, development, surveying, or siting. In other words, the subcategory precludes coverage for errors by governmental bodies, real estate developers, and design professionals such as geologists, soils engineers, and architects. The purpose of this exclusion is to cause losses of this nature to be borne by the party whose errors or misjudgments are the cause of loss.
Problems that would fall under this exclusion could take years to develop, leaving the insured seemingly without remedy against the party at fault due to statutes of limitations. However, under the ensuing loss clause, if the nature of the damage caused by this category of exclusions is covered, coverage will exists. For example, a soils engineer’s failure to identify an ancient landslide results in subsidence damage, no coverage exists. If there is subsidence damage that ruptures a gas line and the dwelling is destroyed by a fire, coverage would then exist.
The second of the four subcategories of this exclusions precludes coverage for faulty, inadequate, or defective…design, specifications, workmanship, repair, construction, renovation, remodeling, grading, or compaction. There is some obvious overlap with this group of exclusions with the previous group, particularly with respect to design and specifications. This group of exclusions goes more to loss caused by age than the actual construction of the dwelling. Notably, this exclusion applies not only to loss arising from defective original construction, but also defective repair, remodeling, and renovation.
The presence of this exclusion is the reason to choose remodeling or repair contractors carefully, and to take care that if you do your own remodeling or repair work, it is done correctly and in compliance with building codes. The ensuing loss clause again provides an exception to this group of exclusions for ensuing loss by a covered peril. However, merely defective work will not result in coverage.
The third subcategory of these exclusions precludes coverage for faulty, inadequate, or defective, materials used in repair, construction, renovation or remodeling. There is some overlap between this subcategory and the previous subcategory. This exclusion focuses on loss caused by improperly chosen or defective materials, as opposed to defective performance of the work. The ensuing loss clause restores coverage for loss within this exclusion for ensuing losses that are caused by covered perils.
The fourth and final subcategory of this group of exclusions is for loss resulting from faulty, inadequate, or defective maintenance of part or all of any property whether on or off the residence premises. The ensuing loss coverage will restore coverage for ensuing losses caused by covered perils.
