A PVC pipe beneath the concrete slab of a 27-year-old building burst, causing damage to the concrete slab. The slab, which the insurance carrier is considering a foundation, was poured on compacted backfill and was not below the surface of the ground.

The insurance carrier is excluding coverage for the pipe based on the “wear and tear” exclusion. It is also excluding coverage for the damaged slab because “foundations below the surface of the ground” are not covered. 

Q: Should the carrier deny coverage for the pipe and slab under those exclusions?

Response 1: A slab is not a foundation. Wear and tear is covered if it causes a “specified cause of loss.” One of those specified causes of loss is “accidental discharge or leakage of water or steam as the direct result of the breaking apart or cracking of a plumbing, heating, air conditioning or other system or appliance (other than a sump system, including its related equipment and parts), that is located on the described premises and contains water or steam.” 

See if the adjuster will reconsider.

Response 2: It all depends upon what actually happened to the pipe. That's an engineering question and it needs to be answered before you can take a position on the coverage question. 

If it simply burst, you've got coverage. If it rusted out and leaked, you're out of luck. Once you have a firm handle on what happened, and if this was a sudden bursting rather than a corrosion or rust event, you can go back to the insurance company for reconsideration. If the pipe actually burst, the entire cost of repair should be covered.

Response 3: This doesn't seem to be wear and tear as you describe it, and foundations do not deteriorate naturally from wear and tear anyway. As you point out, the slab is not below the surface of the ground so this is a situation that is better handled by you communicating with "higher-ups" with the carrier. They are your best recourse for reconsideration based on the actual facts of the loss.

Response 4: I’m not a concrete expert but I’m unfamiliar with many slabs that aren’t below ground to some extent. Generally, a hole is dug—even a shallow one—and the slab is poured. Non-compacted ground is not a good base for a slab. The wording doesn’t require the entire slab to be below the ground.

Response 5: The best way to prohibit a situation like this in the future is to use the CP 14 10 form. With an understanding of Property Not Covered in the CP 00 10, you can use the 14 10 to add what you need as Covered Property. This eliminates the argument of whether the foundation is below the surface.

This question was originally submitted by an agent through the Big “I” Virtual University’s (VU) Ask an Expert Service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.