The insureds alleged there was no basis for State Farm to make any conclusion as to the age, condition, or appearance of the burst pipe because it was not physically visible.
The court granted the insurer's motion to dismiss the insured's claim for water damage under a homeowners' policy, but granted leave to amend. Thompson v. State Farm Gen. Ins. Co., 2024 U.S. Dist. LEXIS 98486 (C.D. Cal. June 3, 2024).
The insureds' first amended complaint alleged they "suffered a sudden and accidental water loss below their slab in their home." A plumber hired by the insureds discovered "a copper pipe burst inside a structural concrete footing between a manifold in the living room and the water heater." The insureds notified their insurer, State Farm.
Claim adjuster Andrea Acevedo conducted a visual inspection. The complaint alleged she did not "inspect or view the pipe, or have a testing conducted on the pipe." Acevedo sent a letter denying the insureds' claim based upon her finding that "because the loss was caused by a slab leak, there is no coverage available for the loss." The letter explained that the hot water supply line under the home failed due to wear, tear, deterioration and/or electrolysis. The predominant cause of loss to the failed pipe was due to one or a combination of rust, electrolysis, corrosion, wear, tear and/or deterioration. The policy did not cover water damage caused by water from below the surface of the ground. Further coverage for wear, tear, deterioration, rot, mold, maintenance, water from below the surface of the ground and a continuous or repeated seepage or leakage of water was excluded.
Mr. Eyerly may be contacted at te@hawaiilawyer.com