Larry Bache – April 18, 2013
Insurance policies often include an exclusionary provision dealing with damages caused by Earth Movement. But does the exclusionary provision include natural and man-made earth movement, or just natural earth movement? According to FC&S, it depends on jurisdiction.1
The majority view is damage caused by natural earth movement is excluded, but damage caused by earth movement resulting from man-made disturbances do not fall within the standard exclusionary provision. An example of the majority approach is found in Steele v. Statesman Insurance Company.2
In Steele, the court held that the exclusion was limited to natural events only and found coverage for damage to a home when the hillside above it collapsed due to nearby construction. The exclusion was held to be ambiguous:
On the one hand, the provision bars coverage for natural events, i.e., earthquake and volcanic eruptions. On the other hand, the provision bars coverage for events which can be natural, man-made or both, i.e., landslide, mudflow, earth sinking, rising or shifting. Although it is arguable that the exclusion is applicable to earth movement due to natural and man-made events, a reasonable insured could conclude that the exclusion is applicable to earth movement due to natural events only. Since the earth movement exclusion is susceptible to different constructions, it is impossible to determine the intent of the parties as manifested by the written language of the contract of insurance.
Under this approach, damaged caused by vibration from blasting, large trucks, or any other man-made events are covered under an open or all-peril policy.
Another view on the Earth Movement exclusion is more broad and excludes all damages caused by movement of the earth, including both natural movement, such as settlement, and man-made earth movement, such as blasting or mining.
In Lee v. Nationwide Mutual Insurance,3 a Tennessee court of appeals ruled that the words “earth movement” mean “any change of place, position or posture of the soil.” The court applied the plain and ordinary meaning of the term because it found the words had not acquired a technical sense by commercial usage.
In 2002, Florida appeared to be fall inline with Lee and applied the Earth Movement exclusion broadly. In State Farm Fire and Casualty Company v. Castillo,4 the Castillos’ home suffered damage from nearby blasting. The Castillos argued the policy should be interpreted as applying only to natural events. The Court of Appeal refused to follow the majority position and held the provision was not ambiguous and the exclusionary provision included man-made earth movement.
Fortunately for Florida’s policyholders, the Florida Supreme Court dealt with the issue in Fayad v. Clarendon National Insurance Company,5 and Justice Pariente wrote the majority opinion stating:
We interpret  [the] earth movement exclusion to exclude damage caused by earth movement arising from natural events from coverage rather than damage caused by earth movement arising from any cause, including man-made events such as blasting.
The Supreme Court noted the specific language of the Earth Movement Exclusion is important, and if the exclusionary provision is not ambiguous, it can include man-made events.
This is significant because man-made earth movement causes damage to many properties and it is important for insureds to understand that if nearby blasting causes damage, they may not have coverage.
Most insurers make available an Earth Movement Coverage Endorsement for an additional premium. It is important for policyholders to consider whether they want to purchase this coverage to protect their property.
1 “Earth Movement Exclusion – Opposing Views: Any Movement versus Natural and Catastrophic” FC&S Bulletin, June 7, 2012.
2 Steele v. Statesman Ins. Co., 607 A.2d 742 (Pa. 1992).
3 Lee v. Nationwide Mut. Ins., 87-357-II, 1988 WL 39567 (Tenn. Ct. App. Apr. 29, 1988).
4 State Farm Fire and Cas. Co. v. Castillo, 829 So.2d 242 (Fla. App. 2002).
5 Fayad v. Clarendon Nat. Ins. Co., 899 So. 2d 1082, 1090 (Fla. 2005).