Basement Collapse Caused By Defective Workmanship Not Covered By Property Policy


VIRGINIA, July 26 – Peerless Insurance has won a summary judgment motion in federal court in Virginia, after the Court held that a property policy insuring a building under renovation did not provide coverage for a collapsed basement wall which was the result of a subcontractor failing to properly shore a basement wall.

Construction Company Taja Investments was doing excavation work in a building crawl space. One of the basement walls collapsed because a subcontractor did not properly shore the walls as construction proceeded.  Taja filed a claim with Peerless.

Peerless denied the claim made by the insured, Taja, arising out of the collapse and Taja filed suit.  In granting summary judgment, the Court reasoned that the collapse was a result of the insured’s failing to safeguard the basement walls during excavation.  The Court found under Virginia law that there was no independent cause of the loss apart from the insured’s failure, and the failure of the subcontractor. The Court also rejected the lines of cases outside Virginia which do not require independent cause to establish coverage.

The Court also found that an earth movement exclusion applied to bar coverage whether or not the movement was underground and whether the movement was natural or man made:

“while the movement that caused the east wall’s collapse occurred below grade (in the basement, below the ground level of the structure), it still involved movement of the earth surface (the uppermost layer of the soil and clay).”

Taja Investments v. Peerless Ins. Co. a/k/a Liberty Mutual Insurance Co., Civ. No. 1:15-cv-01647, 2016 U.S. Dist. LEXIS 95760 (E. D. VA, July 21, 2016).


Author: CJ Haddick

C.J. Haddick is a Director with the law firm of Dickie, McCamey, & Chilcote, PC, based in Pittsburgh, Pa. He has advised and represented insurers in insurance coverage and bad faith litigation for more than three decades, and written and spoken throughout the United States on insurance coverage and bad faith prevention and litigation. He is Managing Director of the firm's Harrisburg, Pa. office. Reach him at or 717-731-4800.

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