A pipe that was part of the plumbing system in a concrete slab building broke under the concrete slab causing a loss of water into the ground under the building. The insured wants coverage for the cost of tearing out and replacing the concrete slab so the broken pipe can be fixed. Some of the people in our office say there is no coverage because the escaping water ran into the ground and did not damage covered property. Others believe that there is coverage due to the wording of the water damage peril. The peril states that there is coverage for: "Water Damage, meaning accidental discharge or leakage of water or steam as the direct result of the breaking or cracking of any part of a system or appliance containing water or steam…If the building or structure containing the system or appliance is Covered Property, we will also pay the cost to tear out and replace any part of the building or structure to repair damage to the system or appliance from which the water or steam escapes."  What do you think?

Ohio Subscriber

Coverage applies to the costs of tearing out and replacing the slab. The wording of the peril does not require damage to covered property by water before such costs are covered. However, the peril requires that the damaged system be contained in covered property. In this case, the pipe is part of the system contained within the covered building.