Seeing a case play out in the court of law is interesting, speculating on one that seems to be heading that way is even more interesting. The recent case of White Lodging Services Corporation v. Liberty Mutual Fire Insurance Company should shape up to be an interesting case indeed.

We tend to focus on insurance claim court cases where the decision has already been rendered. While it’s good information to see what precedents these set, there’s other cases out there in the world that are building, and who knows what legal precedent they could set.

In Texas, a case is brewing between Liberty Mutual and a hotel management company over what Kevin Pollack at Property Insurance Law Blog calls “a a collapse claim that arose during the construction of a hotel.”

According to this blog post, the hotel management company was rolling with a builder’s risk insurance policy given to them by Liberty Mutual.

Among the usual routine of covered items, it also includes an exclusion which reads as follows:

Contains an “Earth Movement” Exclusion and a “Defects, Errors an Earth Movement Exclusion, which refers to “[a]ny ‘earth movement’ whether natural or manmade and regardless of cause and regardless of whether or not the cause of the ‘earth movement’ (1) originated at the covered property; or (2) was being performed at ‘your’ request or for ‘your’ benefit”;

This plays into Liberty Mutual’s initial denial of the claim.

The hotel management company claims that Liberty Mutual denied the coverage because they misapplied this “earth movement” exclusion. Normally this would be a “he said, she said” type of issue, but it turns out that this company has yet to receive any evidence that squarely identifies “earth movement” as the cause of the original collapse. They also used third party engineers to determine that the issue did not stem from any kind of earth movement.

The cause of the collapse according to them is from two ‘soldier beams’ which both fell during construction and weakened the scaffolding system. This construction issue caused the policy holder to lose business income, which the insurance policy also covers.

How this case ends remains to be seen.

What do you think? Will this case end in favor of the hotel management company or Liberty Mutual?