Wednesday, December 10, 2014

"Specified Cause of Loss" in Colorado Can Determine Whether There is Coverage

Originally published by .


I recently came across a case in Colorado involving a suit filed by a business owner against the insurance company for damage to his building when an underground water main leak caused settling.1 The facts are:

The plaintiff owned a building where he operated a martial arts training program. He noticed a crack in the wall and reported the damage to his insurance agent. The claim was denied by the insurer based upon an exclusion for settling. Almost two years later, plaintiff again contacted his agent because the damages had increased significantly. He found out that a city water line was being repaired nearby. Water was ‘bubbling up like an artesian well’ in the basement of an adjacent building. The city found a leak and repaired it. Plaintiff told his insurance company that this leak caused his damage too, but the claim was denied. The insurance company relied on an exclusion which stated that they would not pay for damage due to settling, cracking, shrinking or expansion…


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