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Rhode Island Supreme Court Affirms: No Coverage for Gradual Corrosion of Oil Feed Line

Blogs, Insurance Coverage

In a recent decision, the Supreme Court of Rhode Island held that a homeowner insurer properly denied coverage under the subject policy’s corrosion exclusion for an oil feed line leak caused by gradual corrosion of the feed line. Nunez, et al, v. Merrimack Mutual Fire Ins. Co., 88 A.3d 1146 (R.I. 2014).

Plaintiffs Wilfredo Nunez and Janette Campos purchased a home in 2004. A pre-closing inspection of the home revealed corrosion on the oil heating system in the basement and the seller agreed to replace the system. A third party hired to perform the work replaced the boiler and the oil tank but did not replace the oil feed line buried beneath the basement’s concrete floor. Two years later, during a service call, Plaintiffs’ oil dealer smelled the oil and noticed staining at the feed line near the homeowners’ boiler. Plaintiffs initiated a claim under their homeowner’s insurance policy issued by Merrimack Mutual Fire Insurance Company (“Merrimack”). 

Following an inspection, Merrimack’s investigator concluded that the leaks may have occurred over time and possibly occurred prior to the Plaintiffs’ purchase of the home. Merrimack then hired a testing firm to pressure test and remove the feed line. The testing firm concluded that the feed line was severely corroded in several areas and that the corroded area was moist with fuel; it further concluded that the feed line had a very slow, weeping corrosion leak and that it appeared that the line was leaking slowly for some time and was likely leaking before the Plaintiffs purchased the home.

Thereafter, Merrimack disclaimed coverage on grounds that the policy excludes loss caused by corrosion. Plaintiffs initiated suit, alleging breach of contract, and Merrimack moved for summary judgment. The trial court granted summary judgment based on its finding that it was undisputed that Plaintiffs’ claim was caused by gradual corrosion of an oil feed line, not a sudden or accidental loss, and therefore, Plaintiffs’ claim was barred by the clear and unambiguous terms of the policy. 

On appeal, Plaintiffs argued that the loss was indisputably caused by the unexpected cracking, bulging or failure of the hot water system, and that this is covered under the policy’s express coverage for the “[s]udden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system.” The Supreme Court disagreed, holding that the relevant exclusion’s literal language, specifically, “[w]e do not insure . . . for loss . . . [c]aused by . . . [s]mog, rust or other corrosion,” unambiguously states that the policy does not cover against losses caused by corrosion. Further, the Court found that Plaintiffs offered no evidence to contradict the conclusions drawn by Merrimack’s investigator and testing firm, namely, that the leak in the oil feed line was caused by slow, gradual corrosion.

The Court went on to note Plaintiffs presented no evidence that the loss was due to “a tearing apart, cracking, burning or bulging.”

To read a copy of the court’s decision click here