The damage was devastatingly clear. The landslide at the La Costs De Marbella Condominium Complex damaged 15 condominium units as well as parts of the common area. The Association blamed the City of Carlsbad because it was a poorly maintained fire hydrant and water line that caused the ground to become unstable.

The city paid $12,627,000 to settle the lawsuits and turned to its insurer for relief. The carrier paid all the bodily injury claims but refused to pay any property damage losses because a policy exclusion stated that it would not defend or pay for claims or suits for property damage arising out of land subsidence for any reason, however caused.

The city demanded payment citing proximate cause doctrines including concurrent causation actions. All were deemed irrelevant because they were all based on first-party losses, while this particular case was clearly a third-party action that involved an entirely different type of policy.

Click here for the details on this court case.

What is proximate cause and concurrent causation?

What is the difference between first-party and third-party insurance?

Can you provide simple definitions if your client asks for them?

Click here to see how “Insurance Words and Their Meaning” defines these terms.

This court case is about an exclusion that denied coverage for only the property damage due to land subsidence. The Insurance Service Office (ISO) Commercial General Liability (CGL) Coverage Form does not have a similar exclusion, but it does have a number of exclusions that apply to only property damage claims.

Click here for a description of the ISO CGL property damage only exclusions. You might be surprised!

The Association's coverage would depend on the perils or causes of loss covered. However, even if coverage applied and paid, its insurance company assumes the association’s rights of recovery against the party that caused the loss.

Click here for an explanation of the Transfer of Rights of Recovery (Subrogation) condition.

ACORD recently updated and replaced the following:

1–Property Loss Notice
2–Automobile Loss Notice
3–General Liability Notice of Occurrence/Claim
4–Workers Compensation – First Report of Injury or Illness
5–Aircraft Loss Notice
20–Certificate of Aviation Liability Insurance
21–Certificate of Aircraft Insurance
22–Intermodal Interchange Certificate of Insurance
23–Automobile Certificate of Insurance
27–Evidence of Property Insurance
28–Evidence of Commercial Property Insurances
60–Flood Insurance Selection/Rejection
74–Residence Based Business Supplement to Residential Section
82–Watercraft Section
91–Good Student/Driver Training
92–Medical Statement
93–Young Driver Questionnaire
127–Business Auto Section
129–Vehicle Section
130–Workers Compensation Application
141–Crime Section 2000
190–Supplemental Property Application
407–Livestock Mortality Section
807–Directors & Officers Liability Section

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