§ 3.17 Exclusions - Deterioration, Inherent Vice, Latent Defect, Wear, and Tear

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 3.17 Exclusions - Deterioration, Inherent Vice, Latent Defect, Wear, and Tear

The federal district court addressed the operation of several policy exclusions in the homeowner's policy issued to the plaintiff in Graf v. Allstate Insurance Co.¹⁰⁵ The plaintiffs purchased a new home in 1996. While the home was still under construction, the plaintiff purchased a homeowner's policy for the November 14, 1996, to November 14, 1997, policy period. The parties stipulated that the builder did not properly install the stucco siding on the house, which caused moisture intrusion, and in November, 2005, the plaintiffs made a claim for the moisture damage. The insurer denied the claim because there had been no sudden or accidental loss and the policy otherwise excluded coverage.¹⁰⁶

The policy at issue provided:

Losses We Do Not Cover:

We do not cover loss to the property described in the Dwelling Protection coverage resulting in any manner from:
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7. One or more of the items listed below, if that item is one of two or more causes of a loss and if the other cause(s) of the loss is (are) excluded by this policy:

(a) Conduct, act, failure to act, or decision of any person, group, organization or governmental body,
(b) Defect, weakness, inadequacy, fault, or unsoundness in:

(1) planning, zoning, development, surveying, sitting, or
(2) design, specifications, workmanship, construction, grading, compaction; or
(3) materials used in construction or repair; or
(4) maintenance of any property including but not limited to land, structures, or improvements of any kind, whether on or off the residence premises

(c) Weather conditions, including, but not limited to heat, cold, rain, ice, snow, sleet, wind, hail, or drought.¹⁰⁷

The court determined the insurer did not meet its burden demonstrating that no genuine issue of material fact precluded application of this exclusion. Specifically, the court reasoned:

It could be argued that Exclusion 7 excludes coverage

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