Policy doesn't cover boulder damage done to home
The case examined whether a policy's earth movement exclusion bars coverage for damage caused by large boulders rolling down a hillside.
The U.S. Court of Appeals for the Tenth Circuit has decided that an insurance policy’s earth movement exclusion barred coverage for damage caused to a home by large boulders rolling down from a hillside above the home.
The Colorado house of the plaintiffs, Dustin Sullivan and Nana Naisbitt, sustained severe damage when several large boulders dislodged from a rocky outcropping and rolled down a steep hillside into their home and yard. One boulder stopped rolling in the yard, and a few others struck the house. Sullivan and Naisbitt filed a claim with their insurer, Nationwide, which hired an engineering firm and a geological firm to investigate the rock slide. The engineering firm’s report noted that some rocks dislodged from the upper part of the slope accidentally and were not influenced by meteorological conditions such as torrential rain or high winds. The geological firm’s report found that rockfall hazards existed at the property in question and found that there was evidence of large boulders falling down the slope previously.
After considering the reports, Nationwide denied coverage under the “earth movement” exclusion in the home insurance policy. The exclusion states that the insurer does “ not insure for loss caused directly or indirectly by . . . earth movement.”
According to the policy, ’earth movement’ means:
a. Earthquake, including land shock waves or tremors before, during or after volcanic eruption;
b. Landslide, mudslide, or mudflow;
c. Subsidence or sinkhole; or
d. Any other earth movement including earth sinking, rising or shifting; caused by or resulting from human or animal forces or any act of nature. . .
The important phrases in this excerpt are “landslide” and “any other earth movement” and neither is further defined in the policy.
After Nationwide denied the claim, the plaintiffs filed suit asserting breach of contract, insurance bad faith, and a declaratory judgment regarding coverage. Nationwide moved for summary judgment, and the plaintiffs responded by submitting a report by a geological engineer supporting the position that a rockfall is not a landslide, and the term “earth” means soil, not rock. Unfortunately, the report also quoted sources suggesting that a rockfall was a type of landslide. The district court granted summary judgment for the insurer.
No definitive Colorado law depicts whether the damage caused by a rockfall is excluded under an earth movement provision. The court considered case law from other jurisdictions and found that the Colorado Supreme Court would likely follow the cases which held that a rockfall was excluded from coverage.
Also, the dictionary definition of “landslide” includes the movement of rock alone, so a reasonably objective insured would read the earth movement exclusion as excluding coverage for the event in the case above, as either a “landslide” or as “another earth movement.”
The case is Sullivan v. Nationwide Affinity Ins. Co. of Am., 2021 U.S. App. LEXIS 628 (10th Cir. Jan. 11, 2021).
Related: