Homeowner is relaxing one night, and all of the sudden there was a huge clap of thunder. It was so loud she thought it might have hit the house or somewhere in the yard … but everything looked ok. Six weeks later she got her normal water bill in the mail (billed quarterly), and to her surprise, it was outrageously high – $4,500. She knew she wasn't taking that many showers and thought there must be a leak, so she called a plumber who came over, scoped a camera, and found a big leak underground next to the house. It looked like the underground pipe had burst open, not just deteriorated. The homeowner immediately knew what happened: lightning damaged the pipe 6 weeks ago.
Notable Timestamps
[ 00:15 ] - The insured wants coverage for 3 things: (1) the water bill, (2) the plumber's invoice for the camera inspection, and (3) repairing the underground pipe, including the cost to dig out the land and replace it with sod to access the pipe. Policy = ISO HO 00 03 05 11
[ 01:45 ] - Trivia Time! Where is the lightning capital of the United States? What is the study of lightning called?
[ 03:35 ] - Now for a multiple choice: Is it Coverage A, Coverage B, or Coverage C? The answer is likely C! The water lost is personal property.
[ 04:18 ] - Newer policies state that water is Property Not Covered, but older ones don't. This only applies to homeowners losses; commercial properties have an exclusion that likely applies.
[ 06:00 ] - Whether Lightning or Accidental Discharge from a Plumbing System (or Zeus?), this is likely a covered cause of loss.
[ 07:00 ] - Once the insured demonstrates a direct physical loss, the burden shifts to the insurance company. So, if the insurer wants to investigate further, the insurer would pay for that.
[ 08:45 ] - As long as the insured's investigation (the plumber's investigative camera-scoping) was reasonable, it is likely covered even if it occurred prior to the claim being filed.
[ 10:00 ] - The pipe replacement is covered, and replacement costs generally include anything required to get to the repair. Land is typically Property Not Covered, but it's not the land that suffered the loss. The cost of digging to the pipe to repair it is likely covered.
[ 11:05 ] - But what if camera-scoping didn't work, and digging to the pipe was part of the investigative process? And, what if the damage to the pipe turned out to be wear and tear? In that scenario, tear-out costs would likely not be covered.
[ 12:15 ] - No case law advises on what is needed regarding replacing the land.
[ 13:00 ] - In the wear-and-tear scenario, a specific provision may apply to lead to coverage for tear-out costs, e.g. if water damage was caused by the leak.
[ 14:30 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Constant Or Repeated Seepage Or Leakage Of Water — Burden Of Proof – PCQ.2022.06.27.jem.a - https://www.plrb.org/documents/constant-or-repeated-seepage-or-leakage-of-water-burden-of-proof-pcq-2022-06-27-jem-a/
Structure Settled After Water Escaped From Pipe – Earth Movement, Water Exclusion – PCQ.2022.04.13.twh.b - https://www.plrb.org/documents/structure-settled-after-water-escaped-from-pipe-earth-movement-water-exclusion-pcq-2022-04-13-twh-b/
Water Exclusion Might Not Include Metered Water – PCQ.2018.02.26.dwf.a - https://www.plrb.org/documents/water-exclusion-might-not-include-metered-water-pcq-2018-02-26-dwf-a/
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