One of the recurring battles in property insurance litigation involves the meaning of an “ensuing loss” provision. Adjusters, policyholders, and attorneys frequently encounter exclusions for faulty workmanship, defective construction, or inadequate repairs that are immediately followed by language restoring coverage for “any ensuing loss” not otherwise excluded. But what exactly qualifies as an ensuing loss? Must it be something entirely unexpected, or is it simply damage that follows from an excluded cause?
A recent Pennsylvania decision, Campanile v. The Hanover Insurance Company, 1 offers an important discussion of this issue. While the insurer ultimately prevailed because of a separate pollution exclusion, the court’s analysis of the ensuing loss provision is noteworthy and, in my view, one of the better discussions of the subject in recent years.
The case arose after homeowners hired a contractor to repair a void beneath the foundation of their home. The contractor admittedly performed faulty work. When the homeowners returned, they discovered that fine concrete dust had spread throughout virtually every room of the house after being drawn into the HVAC system. Importantly, the homeowners were not seeking coverage for repairing the contractor’s defective foundation work itself. Instead, they sought coverage for the widespread dust damage that followed.
Hanover denied coverage under two separate policy provisions. First, it relied upon the faulty workmanship exclusion, arguing that the dust damage was not an ensuing loss because it was simply the natural and foreseeable consequence of defective construction. Hanover relied heavily upon the Pennsylvania Superior Court’s unpublished decision in Ridgewood Group, LLC v. Millers Capital Insurance Company, 2 which adopted reasoning that an ensuing loss must be independent and not naturally foreseeable from the excluded peril.
The policyholders responded with what I believe was the stronger contract interpretation argument. The policy restored coverage for “any ensuing loss” not otherwise excluded. Nowhere did the policy state that the ensuing loss had to be “unforeseeable.” The homeowners argued that Hanover was asking the court to insert limiting language into a policy it drafted but never actually wrote. They also argued that Pennsylvania’s well-established rules of insurance policy construction require ambiguities to be construed in favor of coverage and against the insurer.
Federal Judge Harvey Bartle agreed. Rejecting the reasoning of Ridgewood, the court concluded that Pennsylvania’s Supreme Court would likely not adopt a foreseeability limitation because doing so would conflict with Pennsylvania’s longstanding rules governing insurance contract interpretation. The court held that the phrase “any ensuing loss” was unambiguous and meant that a loss follows from faulty workmanship and causes consequential damage to property beyond the property that was the subject of the defective work. The court specifically refused to rewrite the policy by adding words the insurer never included, stating that there was “nothing in the language ‘any ensuing loss’ so as to construe it to mean ‘any ensuing and non-foreseeable loss.’”
I find that reasoning persuasive. Foreseeability is a familiar concept in tort law. It is far less common in insurance contract interpretation. Insurance policies are contracts, and courts are generally not supposed to rewrite them by adding limitations that insurers could have included but chose not to. If an insurer wants to limit ensuing losses to those that are “unexpected,” “independent,” or “unforeseeable,” it certainly knows how to draft those words into the policy. The absence of those limitations should matter.
The policyholders also made another argument that exposes the weakness of the foreseeability test. Courts frequently use the hypothetical of faulty roof maintenance leading to water intrusion, which eventually shorts an electrical outlet and starts a fire. Those courts often say the fire would qualify as an ensuing loss because it is a new peril. But isn’t a fire caused by water contacting electrical wiring itself foreseeable? If foreseeability is truly the governing standard, then even that classic example would fail. The better approach is to ask whether a separate loss followed from the excluded cause, not whether someone could have anticipated it.
Unfortunately for the homeowners, their victory on the ensuing loss issue did not end the case. The policy provided that an ensuing loss remained covered only if it was “not precluded by any other provision” of the policy. Hanover also relied upon the pollution exclusion, which defined pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant.” Although “dust” did not appear in the definition, the court concluded that concrete dust fit comfortably within the definition of an irritant or contaminant. Relying upon prior precedent involving construction dust, the court held that the pollution exclusion independently barred coverage. As a result, Hanover obtained summary judgment despite losing the ensuing loss argument.
That portion of the opinion is likely to generate further debate. The homeowners argued that the policy referred to dust as a covered peril elsewhere, suggesting that ordinary construction dust could not automatically become a pollutant whenever it suited the insurer’s coverage position. They also noted that Hanover never tested the dust before concluding it was a pollutant. The court rejected those arguments, reasoning that the definition was broad enough to encompass construction dust because it functioned as an irritant and contaminant.
For public adjusters and attorneys handling faulty workmanship claims, this decision illustrates two important lessons. First, do not assume an insurer’s argument that an ensuing loss must be unforeseeable is supported by the actual policy language. Read the contract carefully. Second, even when you successfully establish an ensuing loss, coverage may still depend upon whether another exclusion independently applies. Every exclusion must be analyzed in context rather than in isolation.
I suspect this case will become part of the ongoing national conversation over what an ensuing loss clause actually means. Judge Bartle’s refusal to rewrite the policy by inserting an “unforeseeability” requirement is faithful to traditional principles of contract interpretation. Whether appellate courts continue moving in that direction remains to be seen.
For those interested in this topic, I suggest reading Ensuing Loss Clauses Are Often Confusing.
Thought For The Day
“Pennsylvania is a state that has always had a great history of things with people who are ready to take chances.”
— Milton S. Hershey
1 Campanile v. The Hanover Ins. Co., No. 25-3028 (E.D. Penn. June 24, 2026). See Hanover Motion for Summary Judgment and Campanile Response in Opposition.
2 Ridgewood Grp., LLC v. Millers Cap. Ins. Co., No. 1138 EDA 2016, 2017 WL 781620 (Pa. Super. Ct. Feb 28, 2027).