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Webinar Recap: Exclusion (Part 1) (Words Matter Part 4)

By February 22, 2024No Comments

On February 16, 2024, Wheeler, DiUlio & Barnabei hosted a lunch & learn webinar, Exclusions (Part 1): Knowing What Isn’t Covered is the Key to Getting Coverage. This was the fourth part of the Words Matter series.

In this webinar, Partner Anthony DiUlio describes common exclusions including how to identify and argue most exclusions from a policy. Exclusion sections are some of the most commonly reviewed parts of the policy when dealing with loss adjustments.

The Exclusion Framework

Most exclusion sections typically begin with an exclusion preamble. The preamble creates a framework for how the exclusion works with each type of claim. This section can vary from carrier to carrier.

In most cases, the preamble is usually a concurrent causation provision. For example, take Alltate’s policy. Their policy states that the specified instances are excluded regardless of what caused them to happen or how widespread the loss is. The preamble language is critical and should be the first item reviewed when diving into the exclusions section.

The Exclusions

As mentioned, the list of exact exclusions changes depending on the carrier and the policy. However, many policies generally exclude similar items from coverage. As always, it is imperative that you read your entire policy.

For example, Allstate (Section A) lists excluded items, regardless of the sequence and no matter what led to the damage. Items not covered include:

  • Flood
  • Surface water
  • Waves
  • Nuclear hazards
  • Soil conditions
  • Inability to use

Nationwide has similar exclusions, but their list also excludes items not found in Allstate’s policy. These items include loss from neglect, government acts, collapse, and intentional acts.

Building an Exclusion Argument

Exclusions can often be argued by providing specific details that may have contributed to or led to the loss. In addition, listed exclusions can be vague, leaving room for the carrier to try to broaden the definition of their own exclusions.

That being said, how the loss is presented to the carrier will aid in supporting your claim and argument. Again, read your policy in its entirety to find ways to frame your argument.

The following are examples of commonly argued exclusions:

  1. Flooding – Floods under homeowner policies are not covered unless you have specific flood coverage. Floods are off-premise water coming onto your property, causing damage on some widespread scale issue. The source of the flood, whether on or off-premise, draws the line between covered or excluded. If the flood is coming from your sewer line or drain on your property, for example, most policies should be covering that damage.
  2. Earth movements – Unless the earth movement was the cause of the damage, not the result, the exclusion does not apply. For instance, earth movement claims are common for damages caused by construction vibrations. Carriers may often try to say those damages are not covered due to this exclusion. However, the vibration is not an earth movement, just a sound wave. Therefore, this instance is covered since the vibration was the actual cause of the loss and technically not an earth movement.
  3. Code compliance – Building codes are constantly changing over time. However, complete upgrades to comply with the new codes are generally not covered. For example, the replacement of your entire electrical system to comply with a new code is not covered. However, if you cannot repair a covered loss without considering codes, that repair falls outside of code compliance. Therefore, this instance is covered since it is now a repairability issue.
  4. Freezing – Most policies will say that you are not covered for freezing unless you’ve taken reasonable steps to maintain heat on the property. Be sure to examine this section to see if there are outlined parameters of the steps required to take to maintain heat on the property to have coverage.
  5. Pollution – Pollution claims have been on the rise recently. However, there is a lot of ambiguity about what is constituted as a pollutant. The language used in your policy for defining a pollutant could help you argue your case.

Tips for Arguing Your Case

When gearing up to argue exclusions, remember these tips. First, be sure to review the entire policy. This will help you find more details on what is covered and will support your claim.

Next, always present just the covered loss, but acknowledge the uncovered losses. That said, openly express you are not claiming excluded items. This will make it more difficult for the carriers to refute the claim.

Interested in learning more? Contact our team at Wheeler, DiUlio, & Barnabei today for more information.