CONSTRUING INSURANCE EXCLUSIONS

Damage to Building Caused by Excavation Next Door Is not Covered because Man-Made Causes Are among Listed Exclusions

In its 2009 Pioneer decision (Digest 595), the Court of Appeals held that damage to a building caused by an excavation next door was included in the coverage of an insurance policy.  The insured prevailed when the Court found that the exclusions in the policy covered only natural, not man-made, causes.  The cause in Pioneer was man-made: a deliberate excavation undertaken by an adjoining owner.

In a situation almost identical on its facts – damage to a building caused by an excavation next door – the result is just the opposite in Bentoria Holdings, Inc. v. Travelers Indemnity Co., 20 N.Y.3d 65, …. N.Y.S.2d …. (Oct. 25, 2012), and the insurer wins because of one additional clause in the insurance contract.  In listing “earth movement” as an exclusion, the clause adds:

whether naturally occurring or due to man-made or other artificial causes.

That alone turns the case away from Pioneer, holds the Court in an opinion by Judge Smith.  The insurer ends up with summary judgment dismissing the insured’s complaint.

 

NYS Law Digest No. 637 January 2013