You may have seen this story floating around the internet not long ago.

Since 2016, a popular attraction in Williamstown, Kentucky has been a replica of Noah’s Ark.  It is full-size -- 510 feet long, 85 feet wide and 51 feet high, per the dimensions given in the Bible.  

On May 22, its owner, Ark Encounter, LLC, filed suit against several of its insurers, for damage caused by heavy rains.  Some media stories suggested that the suit was for damage to the ark caused by flooding.  But it is not.  I guess that was just too attractive of a headline to pass up.  In fact, the suit seeks to recover for damages to an ark access road that was caused when heavy rains led to a landslide.

Since Coverage Opinions readers wants their insurance news from the source, and not the internet, I splurged and spent $1.30 to get the complaint from PACER.

Plaintiffs, Ark Encounter, LLC and Crosswater Canyon, Inc. (sole member and manager of Ark Encounter) -- represented by Keating, Muething & Klekamp of Cincinnati -- filed suit in the Eastern District of Kentucky against two Allied World Assurance Company entities, Certain Underwriters at Lloyd’s, HDI Global Specialty, Blackboard Specialty Insurance Company and General Security Indemnity Company of Arizona.  No counsel had yet been listed for any of the insurer-defendants.
    
Plaintiffs were insured under a commercial property policy, issued by the defendant-insurers, that covered plaintiffs’ property at 1 Ark Encounter Drive in Williamstown, Kentucky.  At this location, Ark Encounters operates a “creationist theme park” known as Ark Encounter and the “centerpiece” is a representation of Noah’s Ark. 

The complaint alleges that “[b]eginning in or about May 2017, and continuing into 2018, the slope abutting and supporting the access road [to Ark Encounters] began to fail.  Subsequent to heavy rains, a significant landslide occurred along portions of the slope, which eliminated the structural support for the roadway, caused significant damage to the road surface itself and the incorporated improvements, and rendered portions of the road unsafe and unfit for use.  The complaint alleges that the work to remediate the damaged and destroyed roadway, and the substructure surrounding and underlying the roadway, was completed by plaintiffs at a cost of approximately $1,000,000.”

As far as I can tell from the complaint, the claim involved a covered peril – on the basis of it being an exception to an excluded peril. Specifically, the policy states that it “does not insure against the cost of correcting defective design or specifications, faulty material, or faulty workmanship; however, this exclusion shall not apply to direct physical loss, damage or destruction resulting from such defective design or specifications, faulty material, or faulty workmanship.”

The dispute may be over an exception to excluded property.  While the policy does not insure “land and land values,” there is an exception for the cost of “reclaiming, restoring or repairing Land Improvements.”  The Policy defines “Land Improvements” as “any alteration to the natural condition of the land whether natural or manmade by grading, landscaping, earthen dikes or dams, and additions to land such as drainage systems, pavements, roadways or similar works.”

But the plaintiffs also stated another issue that they allege to be causing problems.  Plaintiffs allege that the insurers “agreed to issue payments for part of Plaintiffs’ claim of loss. With respect to the remainder of Plaintiffs’ claim, the Defendants requested that Plaintiffs submit additional information.  Despite Defendants’ appropriate concessions and the additional information Plaintiffs provided, the Defendants continue to contend that Plaintiffs’ loss is not covered because the physical damage was caused by faulty design or workmanship, even though the Defendants have already conceded that the Policy language provides coverage for damage resulting from faulty design or workmanship.”

The Plaintiffs assert causes of action for breach of contract, declaratory judgment, common law bad faith and violation of the Kentucky Unfair Claims Settlement Practices Act.    

What’s the remedy for committing bad faith in a claim involving Noah’s Ark?  Obviously, the insurer must pay every dollar twice.