The court rejected the insured's argument that there was coverage for the collapse of a building caused by water leakage (a covered peril) and landslide (an uncovered peril). Stor/Gard, Inc. v. Strathmore Ins. Co., 2013 U.S. LEXIS App. 11015 (1st Cir. May 31, 2013).
A severe rain storm caused soil to slide down a hill and over a retaining wall, thereby damaging a building owned by the insured. Investigators hired by Strathmore Insurance Company determined that rain had soaked into the soil, causing the landslide. Although the investigators found some water leakage, they determined the leakage was not a cause or contributing factor, and was negligible compared to the rain amount.
The insured's policy with Strathmore was an all-risk policy. Loss caused by a landslide was excluded. Further, loss caused by collapse was excluded from coverage except as set forth in the policy's "additional coverage for collapse" section. This section provided coverage for a collapse caused by water damage or a leakage of water. Another exclusion barred coverage for loss caused by weather conditions.
Strathmore denied coverage based upon the landslide, collapse and weather exclusions. The insured sued, and the magistrate granted summary judgment to Strathmore.
On appeal, the insured relied upon the concurrent causation theory to argue there was coverage. A covered peril (water damage) had combined with one or more excluded perils (weather conditions or landslide) to cause the collapse. Therefore, all loss should be covered.
The First Circuit pointed out that this argument neglected to factor in the efficient proximate cause doctrine. Only if the leak was the predominant cause of the collapse or set in motion the cause of the collapse would there be coverage. But the investigators found that only two percent of all the water in the failed area had come from the leaky pipe. The investigators concluded that the heavy rain and inadequate subsurface drainage combined to cause the slope failure.
Therefore, the magistrate's grant of summary judgment to Strathmore was proper because there was no coverage under the policy.