6.6 Section I Exclusions

General Exclusions

The policy does not cover loss caused directly or indirectly by any of the following excluded perils. These exclusions apply even when the excluded peril occurs at the same time as another cause of loss or affects a widespread area.

Note

These exclusions closely resemble the exclusions found in Dwelling policies. Learners should recognize that both policy types use similar language to identify losses that are not covered, even when the specific coverage form or policy structure differs.

Ordinance or Law

The policy excludes loss caused by the enforcement of any ordinance or law that regulates the construction, repair, remodeling, renovation, or demolition of a building. However, limited coverage may apply when the loss is specifically covered under the Ordinance or Law Additional Coverage.

Earth Movement

The policy excludes loss caused by earth movement. This includes loss resulting from earthquake, land shock waves or tremors that occur before, during, or after a volcanic eruption, landslide, mudslide, mudflow, subsidence, sinkhole, or any other sinking, rising, or shifting of the earth.

Although earth movement is excluded, the policy may still cover certain ensuing losses. If earth movement causes a direct loss by fire, explosion, or theft, the resulting fire, explosion, or theft loss is covered.

Water

The water exclusion applies to several types of water-related loss. The policy does not cover damage caused by flood, surface water, tidal water, waves, tsunami, or the overflow of a body of water. The exclusion also applies to water or waterborne material that backs up through sewers or drains, or that overflows from a sump pump or related system. In addition, coverage is excluded for underground water or waterborne material that creates pressure against, seeps through, or leaks into a building, foundation, swimming pool, or other structure. This exclusion applies regardless of whether the water damage is caused by human activity, animal activity, or natural forces.

However, the exclusions for surface water and underground water do not eliminate coverage for the accidental discharge or overflow of water or steam from a household system or appliance when that coverage is otherwise provided by the policy. In addition, if water damage results in a direct loss by fire, explosion, or theft, the resulting fire, explosion, or theft loss is covered.

An Insurance Story

The Nelsons have a Special Form Homeowners policy. Under this form, some types of water damage are covered, while others are excluded.

Water damage caused by putting out a fire in the living room, an overflowing dishwasher, or a leaking fire protective sprinkler system would generally be covered. These losses involve water damage that results from a covered or otherwise insured cause of loss.

However, the policy excludes other types of water-related losses. For example, flood damage after a rainstorm, water damage caused by an overflowing sump pump in the basement, and damage caused by underground water pressure that cracks the driveway are not covered. The policy also excludes damage caused by the escape or overflow of water or waterborne material from a dam, levee, seawall, or similar water containment system.

Now assume a pipe beneath a bathroom leaks and causes water to seep through the foundation, damaging the floors. This loss would be covered because the policy insures against the accidental discharge of water from a plumbing system. However, coverage applies only to the resulting water damage, such as the damaged flooring. It does not cover the cost to repair or replace the defective plumbing system itself. If the pipe damage is so extensive that the entire plumbing system must be replaced, the cost of replacing that system is not covered.

Power Failure

The power failure exclusion applies when the failure of power, water, or other utility service occurs away from the residence premises and causes a loss. However, if the off-premises utility failure results in a covered peril occurring on the residence premises, the policy may cover the resulting loss. This type of covered resulting loss is often referred to as an ensuing loss.

Example

A power failure caused by a vehicle striking a utility pole one mile away from the residence premises would not be covered because the failure occurred off the residence premises. However, if a tree falls on a power line that runs from the utility pole to the residence premises, the resulting power failure may be covered because the damage affects the service line serving the insured location.

Neglect

The policy does not provide coverage for a loss when the insured fails to take reasonable steps to protect covered property at the time of loss and after the loss occurs. The insured is expected to use all reasonable means available to save and preserve covered property from further damage.

Intentional Loss

The policy does not cover loss that results from an intentional act committed by an insured, or from an act an insured conspires to commit, when the purpose of the act is to cause a loss. When an intentional loss occurs, coverage is excluded for all insureds. This means that no insured may recover under the policy, even if that insured did not personally cause or participate in the loss.

War

The policy excludes loss caused by war or warlike activity. This exclusion applies to declared war, undeclared war, civil war, insurrection, rebellion, or revolution. It also applies to warlike acts carried out by military forces or military personnel, including the destruction, seizure, or use of property for a military purpose. In addition, loss caused by the discharge of a nuclear weapon is excluded, even if the discharge is accidental.

Nuclear Hazard

The policy excludes loss caused by nuclear hazard. This includes damage resulting from any nuclear reaction, nuclear radiation, radioactive contamination, or any consequence of these events.

Governmental Action

The policy excludes loss caused by the destruction, confiscation, or seizure of covered property when ordered by a governmental or public authority. However, this exclusion does not apply when a public authority takes action at the time of a fire to prevent the fire from spreading, provided the fire loss would otherwise be covered under the policy.

Other Exclusions

Homeowners forms exclude loss caused by faulty, inadequate, or defective work. This includes faulty planning, zoning, development, surveying, design, repair, construction, remodeling, or renovation. However, if faulty work results in a separate covered loss to the dwelling or other structures, the resulting loss may be covered. This is known as an ensuing loss. The policy does not cover the defective work itself, but it may cover the covered damage that follows from that work.