A recent federal decision out of Connecticut, Dalmac Realty LLC v. Scottsdale Insurance Company, 1 perfectly captures how modern open perils, aka “all risk” property insurance, has drifted from its original purpose to broadly cover against sudden and accidental loss. I suggest that for any policyholder trying to read the insurance contract, it has become a labyrinth of exclusions that deny coverage for precisely those events.
Dalmac Realty owned a modest apartment building in Vernon, Connecticut. A water line burst under the structure, flooding the soil around its support columns and causing the foundation to settle and the main floor joist to collapse. It was, by all accounts, a sudden and catastrophic event. The building was condemned that same day. Yet when the owner turned to Scottsdale Insurance for help, the insurer’s engineers redefined a plumbing failure into “soil consolidation.” From there, it was a short and predictable leap to invoke the earth movement and settling exclusions and to deny coverage entirely.
The court agreed, granting summary judgment to Scottsdale. The court’s reasoning was clinical. Both experts (including the policyholder’s) agreed that soil consolidation occurred as a result of the broken water pipe. The policy excluded damage from earth sinking or shifting, including soil conditions caused by “the action of water under the ground surface.” And because the policy contained an anti-concurrent cause clause, stating the exclusion applied “regardless of any other cause or event that contributes concurrently or in any sequence to the loss,” the court found that even if a broken pipe started the chain reaction, coverage still evaporated.
I am certain that the policyholder and many others would note that “water damage” is a specified cause of loss under the policy. I am certain that most would say that the busted pipe and ensuing water damage caused the earth movement. But that troubling anti-concurrent causation language, which was placed into many insurance policies in the 1990s, seems to be the trump exclusionary language that insurers rely on to avoid payment.
This ruling is troubling for the reasons noted in a prior blog, Is Pipe Failure Resulting in Foundation Damage from Washout Covered? Policy Form and Jurisdiction is Important. The undisputed proximate cause was a burst water pipe. This is a classic “specified cause of loss” under most policies. Yet the insurer successfully pivoted the focus away from what triggered the damage to what the water later did underground. The law, as interpreted here and followed in many jurisdictions, allows insurers to escape coverage simply by tracing the mechanics of loss one step further back into the dirt. It is a triumph of semantics over substance.
We should pause to ask: If a policyholder cannot recover when a common peril like a burst pipe saturates the soil and causes collapse, what practical meaning does “water damage coverage” even hold? This decision, like similar ones nationwide, invites insurers to exploit anti-concurrent clauses as catch-all shields rather than as limited exceptions. It is one more example of how anti-concurrent language, often buried deep in the fine print, can nullify the very coverage the policyholder thought they bought.
Yet there are lessons here for insurance coverage nerds. First, the form matters. The Dalmac policy used the ISO commercial property form, where “earth movement” and “settling” are broadly defined and linked to the anti-concurrent clause. Other forms, including some homeowner or surplus lines forms, treat these differently. Second, claims professionals must document the sequence of events with precision: Was the damage from immediate washout, or from gradual soil consolidation after the water dispersed? The distinction can be the difference between full recovery and none at all. Third, those representing policyholders must push back against the lazy conflation of “earth movement” with “any movement of earth.” In some policies, that phrase was never meant to encompass a localized, man-made plumbing failure. It was meant for natural or geological shifts.
The real teaching moment from Dalmac is not just legal. Insurance promises security in the face of calamity. Insurance educator Bill Wilson reminds us that the purpose of insurance is to provide coverage. When that promise dissolves into a technical debate about how wet dirt behaves after water from a burst pipe touches it, the insurance product has lost its purpose. It is no wonder that people are starting to question whether it is worthwhile to even purchase property insurance.
Thought For The Day
“Legal language should be the servant of justice, not its master.”
— Learned Hand
1 Dalmac Realty v. Scottsdale Ins. Co., No. 3:24-CV-00942 (D. Conn. Oct. 30, 2025).