Recently, I wrapped up the discourse of mold exclusions commonly found in all-risk policies. This week I am writing about another extremely common exclusion: the “wear and tear” exclusion.
As one court put it,
The purpose of the standard wear and tear exclusions in an All-Risk policy is to remove from coverage the repair and replacement of property that deteriorates or has defects occurring over time.
Commonwealth Ins. Co. v. Stone Container Corp., 2002 WL 31833862 at *6 (N.D. Ill. 2002).
The case of Murray v. State Farm Fire & Casualty Co., 219 Cal. App. 3d 58, 268 Cal. Rptr. 33 (1990), illustrates how the wear and tear exclusion works. The Murray’s discovered a crack in the foundation of their home that resulted from a broken water pipe some 23 inches below the concrete slab floor. The Murrays filed a claim with State Farm, but we unable to recover the amount of damages they felt were necessary to fix the broken pipe and cracked foundation. They filed suit, and State Farm argued the loss was not covered because the pipe broke due to deterioration. Both the Murrays’ and State Farm’s experts agreed that the pipe did deteriorate over the course of approximately a year.
The Murrays’ homeowners policy excluded coverage for the following:
e. leakage or seepage of water or steam unless sudden and accidental from a:…plumbing system, including from or around any shower stall or other shower bath installation, bath tub or other plumbing fixture. If loss is caused by water or steam not otherwise excluded, we will cover the cost of tearing our and replacing any part of the building necessary to repair the system or appliance. We do not cover loss to the system or appliance from which the water or steam escaped.
f. wear, tear, marring, deterioration, inherent vice, latent defect, and mechanical breakdown…
As the experts agreed, the court had a fairly easy decision to make. The court noted that,
[A]ny different decision would convert their homeowners’ insurance policy into a maintenance agreement, contrary to the fundamental rule of construing insurance policies which requires that contracts of insurance…be viewed in the light of their general objects and purposes.
Keep in mind that this court applied California law in reaching its decision, and the law may differ in other jurisdictions.