The court determined the ensuing loss provision was ambiguous and found coverage for the home owners in Platek v. Town of Hamburg, 2012 N.Y. App. Div. LEXIS 5371 (N.Y. App. Div. July 6, 2012).

    The burst of a water main caused water damage to the insureds' basement. Allstate disclaimed coverage under exclusion 4 for losses caused by "[w]ater . . . on or below the surface of the ground, regardless of its source . . . [,] includ[ing] water . . . which exerts pressure on or flows, seeps or leaks through any part of the residence premises."

   Another policy provision covered "sudden and accidental direct physical loss caused by fire, explosion or theft resulting from item []. . . 4 . . . ."  Plaintiffs argued that this exception applied because their claimed loss was caused by an "explosion" of the water main. The lower court granted summary judgment to Plaintiffs.

   On appeal, Allstate argued that the exception was an "ensuing loss"provision. Therefore, any initial loss to the insured's property caused by "water on or below the surface of the ground" was not covered. Only if there was an "explosion . . .  resulting from"that initial loss would an ensuing loss caused by the explosion be covered. Plaintiffs disagreed that there must be a secondary or ensuing loss. Instead, the exception applied because there was "explosion [of the water main] resulting from" the condition set forth in exclusion 4, "[w]ater . . . below the surface of the ground," causing "sudden and accidental direct physical loss" to their property.

   The court determined that both interpretations were reasonable. Therefdore the exception was ambiguous and would be construed in the Plaintiffs' favor.