The insureds attempt to secure coverage for ensuing losses after foundation damage was properly denied by the insurer. Walker v. Nationwide Prop. & Cas. Ins. Co., 2014 U.S. Dist. LEXIS 6683 (W.D. Tex. Jan. 6, 2014).

   Two provisions excluding coverage under Nationwide's homeowner's policy were key to the court's decision. Exclusion 3 (e) barred coverage for "continuous or repeated seepage or leakage of water or stem over a period of time . . . ." Exclusion 3 (f) (6) precluded coverage for settling, cracking, shrinking, bulging or expansion of pavements, patios, foundations, walls, floors, roof or ceiling.

   The policy also included a Dwelling Foundation Endorsement which covered settling, cracking, bulging of floor slabs or footings that supported the dwelling caused by seepage or leakage of water or steam. This endorsement stated the limit of liability would not exceed an amount equal to 15% of the limit of coverage for the dwelling. 

   The parties agreed that the Dwelling Foundation Endorsement limited the amount payment under the policy to 15% of the $250,800 Dwelling Limit, or $37,620. The insureds argued, however, that they were also entitled to coverage for any loss or damage that occurred as the result of any necessary foundation repairs. They argued the Dwelling Foundation Endorsement created an exception to Exclusion 3 (f)(6) for "settling, cracking, shrinking, bulging or expansion of pavements, patios, walls floors, roofs or ceilings."

    The court disagreed. The Dwelling Foundation Endorsement limited Nationwide's liability for foundation damage to 15% of the limit of coverage for the dwelling. 

   Further, the Dwelling Foundation Endorsement only applied to settling, cracking, shrinking, bulging, or expansion of the foundations, floor slabs or footings. Exclusion 3 (f) (6) applied whenever the Dwelling Foundation Endorsement applied, meaning that Nationwide was not obligated to cover "settling, cracking, shrinking, bulging, or expansion of pavement, patios, walls, floors, roofs or ceilings." 

   The insureds contended they were covered for any cracking of walls, floors, and ceilings where the damage ensues from foundation movement caused by a plumbing leak. But Exclusion  3 (e) stated that Nationwide did not have to coverage damaged resulting directly from "continuous or repeated seepage or leakage of water or steam over a period of time from a plumbing system." The insureds' claim fell squarely within this exclusion. In addition, Exclusion 3 (f) (6) stated that Nationwide did not have to cover settling, cracking, shrinking, bulging or expansion of foundations, walls, floors, roofs or ceiling.

   Therefore, the insureds were contractually barred from recovering the ensuing loss damage they sought. The maximum amount they could recover for alleged foundation damage was $37,620.00.