In a case before the Supreme Court, an insured sued her insurer under her homeowners policy to recover for subsidence damage caused by a plumbing leak. The court granted summary judgment for the insurer, holding that the insurers reasons for denying the claim fell within the exclusions listed in the policy. The insured appealed.

In this action, the plaintiff sought coverage under a homeowners policy issued by the defendant carrier for a plumbing leak and resulting subsidence of the foundation walls and concrete floor of her home. The damage was caused when a water supply pipe burst and caused the surrounding gravel fill to wash away.

The defendant denied coverage on the ground that the subsidence was caused by water erosion below the surface of the ground, and was therefore precluded by several policy exclusions. Those exclusions provide, in relevant part, that [w]e do not cover loss to the propertycaused by(4)[w]ateron or below the surface of the ground, regardless of its source(5)[e]arth movement of any type, includingsubsidence [or] erosion[or] (12) [c]ollapse.

The plaintiff contends that because the pipe ran through gravel fill, it was not below the surface of the ground, and that, in any event, another provision, exclusion number 15, conflicts with those invoked by the defendant, thereby creating an ambiguity that should be resolved in the plaintiffs favor.

The court states, As the plaintiff correctly contends, the pipe was not below the surface of the ground. The pipe entered the plaintiffs house through the foundation wall and ran through artificially created gravel material that filled the area above the ground and between the foundation walls and supported the concrete slab. Therefore, the exclusion for damage caused by water below the surface of the ground does not apply. Furthermore, because the damage was caused by the displacement of gravel fill, and not by the movement of the earth or by a structural collapse, those exclusions do not apply, either.

Furthermore, a conflict between several of the policy provisions creates a latent ambiguity that must be resolved in favor of the plaintiff. Exclusion number 15 provides that we do not cover loss consisting of or caused by any of the following; (15)(a) wear and tear, aging, marring, scratching, deterioration, inherent vice, or latent defect, (b) mechanical breakdown(d) rust or other corrosion, but also provides that, [i]f any of (a) through (h) cause the sudden and accidental escape of waterfrom a plumbingsystemwe will cover the direct physical damage caused by the water. Because the pipe that burst supplied water to the plaintiffs home, it was part of her plumbing system. Therefore, an ambiguity was created by the conflict between the provision of coverage for accidental escape of water from a plumbing system and the exclusions invoked by the defendant.

In order to give effect to the well-settled principle that provisions of an insurance policy are to be harmonized and that ambiguities must be resolved in favor of the insured (Cantanucci v. Reliance Ins. Co., Miller v. Continental Ins. Co.), we find that the exclusions do not negate the coverage for damage caused by the accidental escape of water from a plumbing system.

Accordingly, the defendant failed to establish, prima facie, that the policy did not cover the loss claimed, and therefore was not entitled to summary judgment dismissing the complaint. However, the plaintiff established a prima facie case that the policy did cover the loss claimed, and in response the defendant failed to raise a triable issue of fact.

The insured was represented by Wilkofsky, Friedman, Karel & Cummins, New York, N.Y.

Hudson v. Allstate Ins. Co.