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January 15, 2015  

 Q&A of the Week

Blasting and Earth Movement

A Connecticut subscriber recently asked the following question:

Does the ISO HO–3 special form homeowners policy with the earthquake coverage endorsement provide coverage for a loss to the residence premises if blasting being conducted in the neighborhood caused cracking in the walls and windows of the homeowner's property?

ANSWER: An earthquake and earth movement are two different things. An earthquake is caused by sudden shaking of the ground caused by a disturbance deeper within the crust of the Earth. Most earthquakes occur when masses of rock straining against one another along fault lines suddenly fracture and slip. Blasting in the neighborhood does not constitute an earthquake, and therefor there is no coverage.

Editor's note: We've had a number of comments questioning the exclusion when an explosion is involved. Earth movement is excluded regardless whether caused by nature or something else; it has the standard anti-concurrent causation language. The exception for coverage by explosion is if the explosion is the result of the earth movement, not the earth movement being the result of the explosion. For example, an earthquake ruptures a gas line and causes an explosion that damages the house; that is covered. But an explosion causing the earth movement is excluded if the earth movement is what caused the damage. Damage caused by sonic waves caused by the explosion would be covered, but since the subscriber specifically mentioned the earthquake endorsement, we assumed the cause of damage was earth movement. Read More

 What's New This Week in FC&S
Duties After a Loss
Every insurance policy has things in common, covered perils, definitions, exclusions, and conditions. While the conditions at first glance are self-explanatory, there is still room for confusion. States have even added statements concerning proof of loss to their fair claim handling procedures in order to help avoid duplicated efforts. Read More
 Litigation Watch
Allegations in the Complaint Are Focus of Judicial Analysis

One insurer brought an action against another insurer, seeking a declaratory judgment that the other insurer had a duty to defend in an underlying action. This case is Seneca Ins. Co. v. James River Ins. Co., No. 03:14-cv-00108-HU, 2014 WL 3547376 (D. Ore. July 17, 2014).

The underlying action alleges construction defects in the Sand & Sea Condominiums. Deacon Corp. entered into a contract with the Sand & Sea unit owners association for the reconstruction and renovation of various portions of Sand & Sea. Deacon subcontracted with Superwall for work on the Curtain Wall Renovation. At some point, the association notified Deacon of property damage and construction defect issues. Deacon investigated and concluded the alleged property damage was the result of construction defects, inadequate or inappropriate usage of materials, and violations of local building codes and relevant industry standards. Deacon held Superwall responsible for the problems.

Deacon sued Superwall and sent notice to James River and Travelers Casualty Insurance Company, claiming status as additional insureds on Superwall's policy of insurance issues by James River and Travelers. The policy with James River was cancelled effective January 11, 2012 and replaced with a policy from Seneca. Therefore, Seneca undertook the defense and filed this motion seeking a declaratory judgment that James River had a duty to defend and seeking a money judgment for 50 percent of its defense costs in defending Superwall. Read More

 FC&S Ask the Experts
Did you realize that the Q&A section of FC&S is made up of questions submitted by subscribers like you?

Paid subscribers to FC&S Online or print FC&S Bulletins are invited to submit insurance coverage questions to the editors. We'll provide a personalized opinion within five business days. (We'll let you know if it will be longer than that. Sometimes we have to gather research or other supporting materials).

Who knows? Your question may be featured (anonymously) in the online Q&A of the Week or as an FC&S update.

Submit your coverage interpretation question right to the editors of FC&S for quick and reliable information. Ask our expert staff a question by clicking here.
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FC&S editors regularly conduct web-based demos of the service. Feel free to contact Christine Barlow, cbarlow@, to set one up! They only take 30 minutes, a small investment of time that will help you learn all that FC&S Online has to offer.
 Contact Us
As always, your comments and questions are welcome.

Contact us at:
FC&S Department
Phone: 800-543-0874
Fax: 859-692-2293
The Zalma Insurance Claims Library
Insurance Claims: A Comprehensive Guide
The only source you'll need to successfully handle insurance claims from start to finish. More Info
Construction Defects Coverage Guide
Your single-source for identifying, insuring, investigating, prosecuting, and defending cases that result from construction defect claims. More Info
Mold Claims Coverage Guide
This guide will allow you to handle mold insurance claims and litigation resulting from mold or fungi related disputes with confidence. More Info
For more information about these titles Click Here
FC&S Team
Kelly Maheu, J.D.
  Diane W. Richardson, CPCU
Consulting Editor
Christine G. Barlow, CPCU
Managing Editor, FC&S
  Diana B. Reitz, CPCU, AAI
Consulting Editor
David D. Thamann, J.D., CPCU, ARM
Managing Editor, FC&S Bulletins
  Katherine S. Caudill, J.D.
Manager of Product Development
Susan L. Massmann, CPCU
Managing Editor, Electronic Publications
  Emily Brunner
Online Print/Production Editor
Donald S. Malecki, CPCU
Contributing Editor
  Tosha Brinkman
Marketing Manager
Barry Zalma, Esq., CFE
Contributing Editor
  Donna Cozatchy
Creative Director
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