A Video Explaining Wear and Tear and Inherent Vice
Wear and Tear
It is inevitable that objects deteriorate over time and wear out. Even the pyramids in Egypt show wear and tear after more than 4000 years being abused by sand and wind storms. Recent decisions of the courts of appeal have gone through such changes that even an inherent vice of the insured property—a condition certain to result in loss—rarely falls within the parameters of a non-fortuitous loss. The Restatement of Contracts 291, Comment a, holds that a loss is not fortuitous “if it results from an inherent defect in the object damaged, from ordinary wear and tear, or from the intentional misconduct of the insured.” In a case dealing with a boat that was left completely uncovered in the Bahamas during the rainy season, ‘normal wear and tear’ resulted in the sinking of the boat. Rainwater entered the boat, forcing the bilge pump to operate continuously for several days. This drained the boat’s battery, causing the pump to stop functioning. Batteries do not last forever. While the battery may have had enough power to start the engine, it obviously did not have enough power to operate the bilge pump for two days. The deterioration of a battery constitutes normal wear and tear, is not fortuitous, and is not compensable under a policy of insurance. We think it inappropriate to cause the insured to suffer a forfeiture by concluding, with the aid of hindsight, that no fortuitous loss occurred, when at the time the insurance took effect only a risk was involved as far as the parties were aware. See Millers Mutual Fire Insurance Co. v. Murrell, 362 S.W. 2d 868, 870 (Tex. Civ. App. 1962). De Guinee v. Insurance Co., 724 F. 2d 369 (3rd Cir. 12/22/1983). In Compagnie des Bauxites de Guinee v. Insurance Company of North America, 724 F. 2d. 369 (3d Cir. 1983), an insured brought suit against its all-risk insurer to recover business interruption losses arising from the structural failure, collapse, and deformation of a tippler building and crusherhouse used in the mining of bauxite ore. The trial court found no coverage because the damage resulted from the defective design of the building and was not fortuitous. Latent Defect Cases that provide coverage despite an exclusion for latent defects fall generally within two categories. The court determines either that: "the defect could have been discovered through appropriate testing and it is therefore, not latent; or the loss resulted from a contributory covered risk." In Tzung v. State Farm Fire and Cas. Co., 873 F.2d 1338 (9th Cir.1989), the court first held that damage due in part to inadequate protection against soil expansion was excluded under a policy exclusion for “faulty materials or workmanship.” Because the design and construction defects at issue in Tzung—described as “imbedded in the ground”—were discoverable only through expert examination of the apartment building “and the soils beneath it,” they were not “readily discoverable.”