Imagine you are walking around your house one night, and the lights suddenly flicker. You immediately investigate the issue, open a living room wall, and determine that the electrical wiring behind the wall is burned due to water leaking down from the bathroom above. You shut the main valve to the bathroom right away and call an electrician. Prior to this, there were no signs of any plumbing or wiring issues that would have tipped you off that you had a problem in your home. It is subsequently determined that the wax ring on your toilet, which is hidden and not visible, failed and has been leaking. You submit an insurance claim only to be told that the loss is excluded.
Continue Reading Merlin Law Group Overturns Coverage Denial Over Interpretation of the Term “Sudden”

An ensuing loss clause within an insurance policy operates to preserve coverage when a loss excluded under a policy results in a subsequent or “ensuing” loss that otherwise would be covered.
Continue Reading Court Predicts Ensuing Loss Clause Provides Coverage For Hotel’s Damage Due To Windstorm, Despite Defective Roof

Chip Merlin posted about the Wear and Tear Exclusion just last month in Wear and Tear Exclusions Versus Depreciation For Resulting Damage To Worn and Torn Older Parts of a Structure. Explaining about wear and tear, Chip gave this example:

The judge made up his own example of ten old bolts giving way and then the rest of what the bolts failed to hold up, crashed and broke the rest of the old structure. The worn-out bolts may not be covered, but if you have the right ensuing loss provisions after the “wear and tear” clause, the rest of the loss is covered—even if the rest is old.

The older parts of the structure are the ensuing loss. They did not suffer a loss because they were worn out and broke. They suffered a loss because other parts of the structure broke from “wear and tear.” Those ensuing parts of the loss are depreciated on an actual cash value basis. If replaced, they are then valued at Replacement Cost.

Continue Reading Why is the Carrier so Quick to Argue the Wear and Tear Exclusion?

Buy Bill Wilson’s book! This is the least I can say after quoting him about “resulting” or “ensuing” loss provisions following “wear and tear” exclusionary language. I am certain his book helped a judge understand how the coverage works.
Continue Reading Wear and Tear Exclusions Versus Depreciation For Resulting Damage To Worn and Torn Older Parts of a Structure

A public adjuster called with a common situation—a property loss occurred during repair and the insurance company had initially denied the claim, saying that the loss was from defective construction. The smart public adjuster thought the property damage caused in part by defective construction could lead to coverage under an ensuing loss provision. The policyholder did not want to get bogged down in years of possible litigation with its repair contractor.
Continue Reading Defective Construction and Ensuing Loss Provisions

A recent case out of Massachusetts examined an ‘ensuing loss’ clause and found that there was not coverage provided for the loss at issue.1 Abbott, a manufacturer of a milk-based product, entered into a contract packing agreement with Hood to produce 40 million bottles of Myoplex. Hood was required to conduct specific quality control testing. Some testing was so Myoplex remained contaminant free, others so it remained hermetically sealed. A secure seal test involved puncturing bottles under pressure, so it was a destructive test.

Continue Reading Ensuing Loss Clause – What is it and Does it Provide Coverage?

If there is a design defect to a part of your property, then most insurance policies will contain exclusions for those design defects. Depending on the type of policy that you have and it’s wording, if a separate loss occurs as a result of a design defect, it may be covered under your policy. Well what type of loss could follow from a design defect? There are too many possibilities to try to explain in a list, but consider a wall not designed correctly that falls down and causes direct damage to other areas of the insured property. Replacement of the improperly designed wall may not be covered, but if the claim involves the cost of repairing other areas of the insured property damaged when the wall fell, that should be covered.

Continue Reading If A Separate Loss Occurs as a Result of A Design Defect, It May Be Covered Under Your Insurance Policy