19 N.Y.3d 60 (2012)

When an insurance policy explicitly excludes earth movement caused by both natural and man-made events, damage caused by excavation on an adjacent property is not covered.

Summary

Bentoria Holdings sued Travelers Indemnity after its building suffered damage from excavation on a neighboring property, claiming the damage was covered under its insurance policy. Travelers denied the claim, citing an “earth movement” exclusion. The New York Court of Appeals reversed the Appellate Division’s decision, holding that the policy’s explicit exclusion of earth movement caused by “man made” events unambiguously applied to excavation, thus precluding coverage. The court distinguished this case from a prior ruling, emphasizing the significance of the ‘man-made’ clause in clarifying the exclusion’s scope.

Facts

Bentoria Holdings owned a building in Brooklyn insured by Travelers Indemnity Company. A neighboring property underwent excavation. The excavation caused cracks and damage to Bentoria’s building. Bentoria filed an insurance claim with Travelers. Travelers denied the claim based on the “Earth Movement” exclusion in the policy.

Procedural History

Bentoria Holdings sued Travelers in the Supreme Court for breach of the insurance policy. The Supreme Court denied Travelers’ motion for summary judgment. The Appellate Division affirmed the Supreme Court’s decision. The Appellate Division granted Travelers leave to appeal to the New York Court of Appeals.

Issue(s)

Whether an “earth movement” exclusion in an insurance policy, which expressly applies to man-made causes, unambiguously excludes coverage for damage caused by excavation on an adjacent property.

Holding

No, because the policy explicitly excludes earth movement caused by “man made or other artificial causes,” the damage resulting from excavation is not covered.

Court’s Reasoning

The court distinguished this case from Pioneer Tower Owners Assn. v State Farm Fire & Cas. Co., where a similar earth movement exclusion was deemed ambiguous because it lacked the “man made” clause. In Pioneer, the court found that it was reasonable to argue that “the intentional removal of earth by humans” was not clearly excluded. However, in this case, the policy’s explicit exclusion of earth movement “due to man made or other artificial causes” directly contradicts the argument that excavation is not an excluded event. The court emphasized that insurance policies should be interpreted based on the plain meaning of their language. Since the policy clearly excluded man-made earth movement, it unambiguously excluded damage caused by excavation. The court stated that, “By expressly excluding earth movement ‘due to man made or other artificial causes,’ the policy contradicts the idea that ‘the intentional removal of earth by humans’ is not an excluded event.” Therefore, the court concluded that no reasonable interpretation of the policy would provide coverage for the damage in question. The court’s decision underscores the importance of clear and unambiguous language in insurance policies to accurately reflect the intended scope of coverage and exclusions.