In a recent case, Sullivan v. Nationwide Affinity Insurance Company,1 the 10th Circuit Court of Appeals upheld a trial court’s decision finding a policy’s earth movement exclusion barred coverage for damage caused by rockfalls. On Monday, the three-judge panel found the policy’s earth movement exclusion is not limited to damage caused by soil movement, but also included rocks, concluding a “rockfall” is a type of “landslide.”

In August 2018, Plaintiffs’ Colorado cabin sustained significant damage when a couple of uphill boulders became dislodged, striking Plaintiffs’ home.

Plaintiffs filed a claim with their insurance carrier Nationwide, who in turn denied the claim. In their denial, Nationwide referred to their engineer report asserting the damage was caused by a landslide and the policy bars coverage for “earth movement.” Plaintiffs brought suit for breach of contract, insurance bad faith, and a declaratory judgment. To support their position, Plaintiffs submitted a geological engineering report concluding a rockfall is not a landslide and the term “earth” means soil, not rock.

However, the Court of Appeals upheld the District Court’s grant of summary judgment in favor of Nationwide, stating the policy’s exclusion was “intended to be broadly inclusive of all-natural materials that comprise the surface of the earth, including rocks and soil.” The three-judge panel explained it would be unreasonable to cover damage from a rock-only slide and bar damage caused by soil-slide events.
1 Sullivan v. Nationwide Affinity Ins. Co., No. 20-1063 (10th Cir. Jan. 11, 2021).