Insureds under an all-risk policy who are unable to establish a separate loss apart from excluded perils, notwithstanding that the exclusion contains an ensuing/resulting loss clause, may not be able to establish coverage under such ensuing loss clause.

Sprague v. Safeco Ins. Co., 2012 WL 1744149 (5/17/12) had been consolidated for argument with Vision One, LLC v. Philadelphia Indem. Ins. Co., 2012 WL 1740155 (5/17/12). Sprague involved a residential deck system that rotted out due to improper construction techniques (including resulting in rotting supporting “fin walls”). Over the years, Safeco had issued all risk policies to the homeowners. The parties agreed that the loss occurred prior to a revised homeowners’ policy issued in 2003 that excluded “collapse” from the insured risks. The homeowners argued that their deck was in a state of collapse and because “collapse” was not excluded under the pre–2003 policies, coverage was available under the ensuing loss provision. Safeco disputed whether the deck had collapsed and contended that coverage was excluded under the rot and defective construction exclusions.

In agreeing with Safeco that there was no coverage, the Washington Supreme Court stated: “We need not decide whether the deck had collapsed due to the loss of structural integrity even though it had not fallen to the ground. Whether or not the deck had reached a state of collapse, its condition was the result of the excluded perils of defective workmanship and rot and did not constitute a separate loss apart from those perils.” The Supreme Court went on to distinguish this case from Vision One: “If there had been losses other than to the fin walls—an injury to a person hurt by the collapse or property damaged by the deck failure—coverage would have existed under the ensuing loss provisions of the policy. Unlike Vision One, that was not the case here. The only loss was to the deck system itself. That loss resulted from rot caused by construction defects.”