“Hi. Sam Houghton, Aqualine Insurance. Thanks for visiting the site. I wanted to discuss the subject of subsidence coverage with you this morning. The definition of “subsidence” is the gradual caving in or sinking of an area of land, which is important to us in the pool industry. In the past, subsidence coverage was almost impossible to get, and if we did find it, it was very, very expensive. But now, more and more carriers are adding the coverage, or what we call “going silent” on an exclusion in their general liability policy with subsidence.
The question is, “Hey, Sam. If I can get it for not too much, isn’t it a no-brainer that I add it to my policy?” And that’s the subject that I want to talk to you guys today. That’s not always the case. And let me kind of give you an example of why with a case and point.
A couple years ago, there was a track development in Mission Viejo. Probably 200 homes. A slope gave way. Nine pools moved from 1 to 3 feet and–which is usually typical in the swimming pool construction–the pool moved as a whole shell. There was nothing faulty with the construction of the swimming pool. It moved as a whole. There was no water leaking. But the Homeowner Association sued the developer, the general contractor, and every subcontractor on the job. Basically, everybody was named in this suit. Well, to make a long story short, the reason for the slope giving way was improper irrigation. It was also a bit of a compaction problem. Needless to say, the soil’s geotechnics firm that was in charge of the compaction got hit for policy limits on the claim, and of the nine pools that moved, one of the pool builders had full subsidence coverage. His policy got hit for million dollar limits.
The moral of this story is you don’t want to be the only contractor on a job site that’s exposing your full limits to a subsidence claim.
What do we do to combat that? Well, there’s different resources we use, but one of the most popular we’re using, now, a sub-limit for subsidence coverage, anywhere from $50,000 to $100,000. And what that is mainly used for is defense coverage when one of our pool builders gets brought into a suit. Again, like I said, the pool usually is intact–nothing faulty with that. But getting named in the suit, there needs to be some outlet for defense cost expenditure. Hence, the sub-limit.
So, be careful when it comes to subsidence. I think it’s a must. We’re in the ground in some way, shape, or form. We need to have this coverage, but be careful on limits. And I’d be happy to discuss this further with anyone one of you.
Thank you for your time.”