Issues of fact surrounding the applicability of various exclusions prevented the insurer from securing summary judgment on claims for water damage. Babai v. Allstate Ins. Co., 2013 U.S. Dist. LEXIS 175336 (W.D. Wash. Dec. 13, 2013).
The insured noticed water damage to various areas of her home during remodeling. Allstate denied the claim because the loss was "not sudden and accidental," but rather progressive. Allstate cited the policy provision for "wear and tear, aging, . . . deterioration," etc., to exclude coverage
Plaintiff filed suit and Allstate moved for summary judgment. First, Allstate argued that construction defects were exclulded from coverage based upon the exclusion for "latent defects." "Latent defects" were those that would not be discovered by a reasonable person. There was no evidence that the water damage was readily discoverable, so Allstate's argument failed.
Allstate also relied upon the exclusion for "water or any other substance on or below the surface of the ground, regardless of its source." While coverage for some of the water damage may have been excluded by this provision, there was evidence that at least some damage resulted from water that never reached the ground.
Next, Allstate relied upon the flood exclusion. This argument was also rejected by the court because excluding flood damage did not necessarily entail excluding all rain damage.
Finally, Allstate argued that any damage caused by rain was not a fortuitous loss because rain was a given in the Puget Sound region. Therefore, loss caused by rain was a reasonably certain or expected loss. The court noted the efficient proximate cause rule applied when multiple independent forces operated to cause the loss. Here, there were many apparent areas of damage and it was unclear whether there may have been different causes for different areas of damage.
Allstate also moved for summary judgment on the insured's bad faith claim. The court noted there was some evidence that Allstate misrepresented the policy provisions and may have failed to investigate and respond in a full and timely manner. Therefore, there were questions of fact and summary judgment could not be granted.
