In-Ground Swimming Pools – Claims Magazine

QUESTION:

The insured's backyard in-ground swimming pool is connected to the dwelling's fresh water supply by underground pipes. The pool is also connected to the city sewer system by a drain pipe connected to the bottom of the pool. Due to deterioration of the drain valve at the bottom of the pool, all the water in the pool drained into the sewer. The insured did not notice this problem since the pool had been covered for the cooler months with a vinyl pool cover. Heavy snow accumulates on the pool cover, tearing the cover and bending in the walls of the pool, damaging them. The insured is covered under an ISO HO 00 03 04 91 policy.

Which, if any, parts of the insured's loss are covered?

ANALYSIS:

This seems to be a simple loss, but the scenario raises a number of coverage issues. One aspect seems clear: the cost of repair or replacement of the drain valve is excluded. The swimming pool is another structure covered under Coverage B on an open perils basis, subject to stated exclusions. Since the rain valve deteriorated, the Coverage A and B exclusion for loss caused by wear and tear and deterioration applies to the cost to repair or replace the valve.

The loss of the water in the pool is probably covered, however. Assuming the water which filled the pool was metered water for which the insured was billed, the water is personal property with a definite value. Personal property is insured under Coverage C on a specified peril basis and loss to such property is not subject to the deterioration exclusion. One of the specified perils against which the water is insured is accidental discharge of water from within a plumbing system. Since the swimming pool was connected both to the insured dwelling's plumbing system and to the municipal sewer, the pool should be regarded as part of a plumbing system. Note that in Holcomb v. United States Fire Ins. Co., 279 S.E.2d 50 (N.C. App.), one of the very few cases interpreting the meaning of "plumbing system" as used in homeowners coverage, the court quoted with approval from Collier's Encyclopedia's definition of plumbing. That definition specifically includes swimming pools. And in Gatti v. Hanover Ins. Co., 601 F. Supp. 210 (E.D. Pa. 1985), aff'd w/out opinion (3rd Cir. 1985), Â the court held that loss of water from leaky pipes, after the water had passed through the insured's meter, was a covered direct physical loss to personal property since no exclusions applied. While Gatti involved open perils coverage, it seems reasonable to interpret the accidental discharge peril broadly enough to cover loss to covered water which itself accidentally discharges from a plumbing system.

If the vinyl pool cover is considered personal property, there is no coverage for the loss to it since none of the covered perils specified in Coverage C apply. The peril of loss caused by weight of ice, snow, or sleet does not apply since that peril is limited to damage to property contained within a building.

Probably the better view, however, is that the cover should be regarded as part of the pool insured on an open perils basis under Coverage B. If so classified, the loss to the pool cover is covered since no exclusions apply. The exclusion for loss to a swimming pool caused by "pressure or weight of water or ice" should not apply since the loss was caused by the weight of snow, not the weight of water or ice. ISO has been careful to use precise language to refer to various forms of water in the various Homeowners perils and exclusions. Rain, hail, snow, sleet, ice, water, steam, flood, surface water, waves, tidal water, overflow of a body of water, spray, water which backs up through sewers or drains or which overflows from a sump, and water below the surface of the ground are all specifically mentioned in various Homeowners provisions. Given such precision, an exclusion for loss caused by "pressure or weight of water or ice" should not be interpreted to include loss caused by the weight of snow, especially since one of the Coverage C specified perils specifically refers to loss caused by the "[w]eight of ice, snow, or sleet."

Coverage for the loss to the pool walls is uncertain. The proximate cause of that loss is probably the weight of snow on the pool cover combined with the accidental discharge of water from the pool. The analysis above suggests that both of these factors are unexcluded perils. However, if the loss to the pool walls is considered to be one "[i]nvolving collapse," the analysis gets murky. First, the Additional Coverage for collapse does not apply here since, even if the loss is one "[i]nvolving collapse," there was no collapse of a building or any part of a building as required for the Additional Coverage to apply.

Second, it is not clear whether the damage to the pool walls here involves collapse of the pool or part of it. No part of the pool has actually fallen down; the walls are merely bent inward. Courts disagree as to the meaning of collapse as used in property coverages. Some say that collapse involves falling into a heap or reduction to a flattened form or rubble. Others say that a collapse has occurred if there has been a substantial impairment of the structural integrity of the property, such that the property is in immediate danger of actually falling. Some jurisdictions have yet to address this issue in any reported case. Thus the case law of the particular state must be checked.

Third, even if the state in question has adopted the substantial impairment of structural integrity test, it is not certain from the facts stated whether the pool walls have collapsed since it is not clear whether the walls are in immediate danger of actually falling in.

Finally, the policy exclusion for loss "[i]nvolving collapse" may not apply if the proximate cause of the loss is deemed to be weight of snow, accidental discharge of the water from the pool, or both. Note that the policy does not exclude loss "caused by" collapse, but instead separates the collapse exclusion from the following list of "[c]aused by" exclusions, and uses the arguably broader "involving" language. According to ISO, the use of "involving" was meant to clarify that collapse is usually a result of other causes of loss rather than a proximate, efficient, or moving cause of loss. Presumably the intent is that the exclusion apply to loss "involving" collapse even where other covered events are found to be the proximate cause of the loss, but courts have yet to determine whether the collapse exclusion will apply in such situations. Note that the collapse exclusion, unlike some other exclusions in the form, is not prefaced by the statement that the exclusion applies "regardless of any other cause or event which contributes concurrently or in any sequence to the loss."