Anti-Concurrent Cause Language Required Claim Denial

Earth Movement Exclusion Effective as  Major Cause of Loss
One of Many Causes of Destruction of House was Earth Movement
Post 5111

Terri Lawrence sued alleging that State Farm breached an insurance contract and acted in bad faith by failing to pay benefits under the contract. The case was removed to the United States District Court based on diversity jurisdiction, and the trial was set to begin on September 8, 2025.

In Terri Lawrence v. State Farm Fire..., No. C24-4008-LTS-MAR, United States District Court, N.D. Iowa, Western Division (June 25, 2025) the USDC applied anti-concurrent cause language to dismiss suit.

SUMMARY JUDGMENT
Relevant Facts

Lawrence purchased a property in Sioux City, Iowa, and insured it with State Farm. In January 2023, a burst water pipe caused significant damage to the property, leading to its condemnation. Lawrence filed a claim with State Farm, but the claim was denied based on several policy exclusions, including earth movement and water damage.

According to the City of Sioux City Utilities, 168 CCF (centum cubic feet; equivalent to 125,673 gallons) of water was released into the home in the January billing cycle ending on January 6 (when Lawrence was not home), and an additional 90 CCF (equivalent to 67,325 gallons) of water was released in the February billing cycle starting January 7 (up until the time the water was shut off on January 11). On or about January 11, 2023, the Property was placarded as being unfit for human habitation by the Inspection Services Division of the City of Sioux City Iowa because of “major foundation and structural damage due to a burst water pipe.” Prior to the pipe burst, Lawrence never observed water in the basement.

After a claim was made State Farm estimated the structural damage to be over $150,000.

ANALYSIS

The court analyzed whether the earth movement exclusion in the policy applied to bar coverage if water released from a burst pipe caused the earth movement and subsequent settlement of the property. The court found that the policy's earth movement exclusion unambiguously precluded coverage, even if the burst pipe was the sole cause of the property's earth movement.

The party claiming entitlement to coverage under the policy must prove compliance with its terms. The party claiming coverage may meet this burden of proof by showing: (1) substantial compliance with the condition precedent; (2) the failure to comply was excused or waived; or (3) the failure to comply was not prejudicial to the insurer.

The court concluded that the primary issue WAs whether the earth movement exclusion in the Policy applies to bar coverage if water released from a burst pipe caused the earth movement and subsequent settlement of the Property.

The only reasonable reading of the Policy led the court to conclude that the “earth movement” clause is preceded by what is commonly referred to as an “anti-concurrent” clause, which excludes coverage for damage caused by an excluded peril even when covered perils also contribute to the damage. Accordingly, because “earth movement” was at least a contributing cause of the damage (and clearly a major one), plaintiffs wee not entitled to coverage under the Policy.

Because the Policy's earth movement exclusion unambiguously applies to preclude coverage, Lawrence cannot show that State Farm breached the Policy “in some particular way” and her breach of contract claim fails as a matter of law.

Since State Farm had a reasonable basis for denying Lawrence's claim, namely the Policy's earth movement exclusion Lawrence could not prove that State Farm had no reasonable basis for denying benefits under the policy and her bad faith claim fails as a matter of law.

CONCLUSION

State Farm's motion for summary judgment was granted in its entirety, the action was dismissed and judgment was entered in favor of State Farm and against plaintiffs.

ZALMA OPINION

Insurance litigants must be aware of the anti-concurrent cause language now existing in almost all modern insurance policies before bringing a breach of contract and bad faith suit. “earth movement” was at least a contributing cause of the damage (and clearly a major one), plaintiffs are not entitled to coverage under the Policy. Even though some of the cause of her damage was a covered peril, earth movement was a major cause and was clearly and unambiguously excluded and State Farm's claim denial was affirmed.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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