We have an insured whose commercial building suffered a loss when water started filling up the elevator shaft. It was determined that the source of the water was a broken city water pipe on the street near our insured's building that caused the water to seep through the ground and fill up the shaft.

The carrier denied the loss based on the underground water exclusion. We asked them to reconsider based on the distinction of natural vs. artificial underground water, see Water Exclusion Clause.

The carrier is standing firm on their denial, now stating that the current policy language precludes coverage. The language they are relying on is this: “Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss.”

We are not convinced that this “concurrent causation” language applies to this situation and would like your opinion.

California Subscriber

If an insured experiences a loss caused by flood, surface waters, or underground seepage or leakage, the loss is not covered under the Insurance Services Office commercial property forms. Even if the flood, etc., is triggered by another unexcluded event (so that there is “concurrent causation”), there is no insurance protection.

However, it is questionable that the loss you described is excluded underground seepage. As you pointed out, a number of courts have declared that water that is released underground “artificially” by way of an accidental event does not come within the meaning of excluded underground seepage. If the exclusion does not apply, the concurrent causation language has no bearing at all.

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