Mudslide is not an explosion (US)

Patrick Bracher from Norton Rose Fulbright.

An insured unsuccessfully contended that the destruction of a building during a mudslide was an explosion under the policy terms.

Torrential rain in Boulder, Colorado in September 2013 triggered a mudslide that cascaded down a hill and destroyed the property, leading to a loss of $1.3 million. The policy excluded losses due to water-based causes, including mudslides, but included cover for an explosion.

The court said that the building did not explode in any traditional sense of the word: ‘What makes most sense in the present context is the classical notion of an explosion, as from a bomb or leaking gas.’

The fact that the water, mud and debris caused the building to suddenly break apart did not mean it was damaged by an explosion even without a definition of explosion in the policy.

The outcome of this case is hardly surprising.

(Paros Properties LLC v Colorado Casualty Insurance Co.)

First published by Financial Institutions Legal Snapshot.