“Water Exclusion Endorsement” precluded coverage irrespective of cause.

The rupture of an underground water supply line and resultant water pressure caused the collapse of the building’s foundation wall, thereby allowing water, mud and debris to enter the basement. The plaintiff denied coverage based upon a “Water Exclusion Endorsement” to the policy, which excluded coverage for foundation or basement damage caused by mud or water under the ground surface and applied regardless of the cause of the loss. The court found that coverage was properly denied, as the damage was of the type specifically outlined in the endorsement, and due to the fact that a ruptured pipe caused the damage as opposed to a natural phenomenon was irrelevant. The endorsement did provide for coverage for loss or damage caused by sprinkler leakage; while the water supply line did provide water to the commercial property’s sprinkler system, the court noted that the ruptured pipe did not cause the leak; thus, coverage under the endorsement was properly precluded.

Case Law Alerts, 4th Quarter 2013