In Maine an Insurance Contract Means What it Says
The Maine Supreme Judicial Court was asked, in Arthur Bibeau v. Concord General Mutual Insurance Company, Docket: Cum-20-149, 2021 ME 4, Maine Supreme Judicial Court (January 26, 2021), to determine whether the provisions of a homeowner’s insurance policy unambiguously exclude coverage for substantial losses sustained by the policy holder. Arthur Bibeau appealed from a summary judgment entered by the Superior Court in favor of Concord General Mutual Insurance Company (Concord) on Bibeau’s complaint for alleged breaches and violations of the homeowner’s insurance policy issued to him by Concord. Bibeau argues, among other things, that the court erred when it found that the policy unambiguously excluded from coverage losses caused by earth movement.
In 2006, Bibeau purchased a home in Portland and insured it through the policy issued to him by Concord. On or about September 15, 2017, Bibeau submitted a notice of claim to Concord for damage to his home that included extensive foundation cracks and settlement and that led to “racking doors and windows, out of level floors and stairs, cracking drywall, separating interior baseboard, and a leaning garage.” Bibeau alleged that this damage was caused by a 2006 water line leak, which, according to his expert, pushed sand and other material under the foundation of the home, compromising the foundation’s integrity, causing it to drop down or “settle.” In contrast, Concord’s expert concluded that the settling was caused by the house being built on “unprepared or uncontrolled fill,” a nonuniform soil composition that allowed the house to settle at different rates.
Although the parties disagree about what caused the settling, the parties do not dispute that the damage to Bibeau’s house is the result of earth moving under the house’s foundation.
Concord denied Bibeau’s claim based on the policy’s earth movement exclusion and its anti-concurrent-causation clause. Bibeau sued Concord alleging a breach of the policy and unfair claims settlement practices, and seeking overdue interest on the amount owed under the policy. Eventual;ly Concord moved for a summary judgment.
The trial court entered a summary judgment for Concord, reasoning that because there was no genuine dispute that Bibeau’s losses were caused by “subsurface soils being undermined and earth movement,” the policy’s unambiguous language, specifically its earth movement exclusion, excluded Bibeau’s claim from coverage.
Bibeau argued that the court erred in concluding that the relevant policy language was not ambiguous and that the damage to his house was excluded based on the policy’s earth movement exclusion.
The policy covers the dwelling on the “residence premises,” i.e., Bibeau’s home. The scope of the coverage was limited because the policy does not insure against losses specifically excluded including losses caused by earthquakes, landslides, mudslides, mudflow, subsidence, sinkholes or “[a]ny other earth movement including earth sinking, rising or shifting; caused by or resulting from human or animal forces or any act of nature.” (Emphasis added.)
Additionally, the exclusion includes an anti-concurrent-causation clause, which provides that losses caused by any of the enumerated exclusions are not covered “regardless of any other cause or event contributing concurrently or in any sequence to the loss.” The anti-concurrent-causation clause “entirely bars insurance coverage where a claimed loss is caused by a combination of covered and excluded perils.” Boazova v. Safety Ins. Co., 968 N.E.2d 385, 393 (Mass. 2012).
The trial court concluded that there was no genuine dispute that the damage to Bibeau’s home was caused by the movement of earth under the foundation. The parties agree that earth movement under the foundation caused the house to “settle,” or drop down, which resulted in the damage.
However, the parties do not agree about what caused the earth movement—a water leak as asserted by Bibeau, or the construction of Bibeau’s home on top of uncontrolled fill as asserted by Concord. The trial court concluded that this disagreement is not material to Bibeau’s claim under the policy because regardless of the cause of the earth movement, Bibeau’s losses are clearly excluded by the policy’s earth movement exclusion.
Ambiguity of Earth Movement Exclusion
The determination of whether an insurance contract is ambiguous is a question of law for the court. If the language of an insurance policy is unambiguous, the court will interpret it in accordance with its plain meaning, but it will construe ambiguous policy language strictly against the insurance company and liberally in favor of the policyholder.
The court decided to follow the Mississippi Supreme Court’s analysis in Mississippi Farm Bureau Casualty Insurance Co. v. Smith, 264 So. 3d 737 (Miss. 2019), because there the court considered an earth movement exclusion that was identical to the exclusion in the policy issued to Bibeau. In that case, the court concluded that the exclusion was unambiguous because “[t]he language contained in the earth-movement exclusion makes clear that it excludes coverage for damage resulting from earth movement, regardless of the cause of the earth movement, including human forces.”
The earth movement exclusion included in the policy is not limited to natural forces, but applies to any earth movement including earth sinking, rising or shifting; caused by or resulting from human or animal forces or any act of nature.
Because the policy’s earth movement exclusion clearly applies to ANY earth movement, not just natural disasters, and includes earth movement resulting from human or natural forces, the appellate court concluded that the policy’s earth movement exclusion is not reasonably susceptible to different interpretations and concluded that the court did not err in concluding that the exclusion was unambiguous.
Distilled to its simplest meaning and construing the policy as a whole, the policy generally covers direct physical losses to Bibeau’s home, but it explicitly does not cover any losses caused by earth movement, which includes natural disasters as well as any other earth movement such as sinking, rising or shifting caused by or resulting from human or animal forces or any act of nature. Such losses are excluded even if they were caused concurrently by a covered peril.
Evaluating the plain language of the policy as a whole the court did not err in determining that the policy was unambiguous and that Bibeau’s losses were excluded from coverage pursuant to the earth movement exclusion.
The courts of the state of Maine have accepted the fact that an insurance contract means what it says. When the policy clearly and unambiguously excludes coverage for “earth movement” however caused and any “earth movement” even if other causes concurred with the earth movement to cause damage. Since there was no question that the damage was caused by earth movement the court had no choice but to refuse payment.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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