Surface Water Revisited

One of the most common coverage disputes the Big “I” Virtual University receives involves what constitutes “surface water” and, thus, is excluded by most property policies. The VU has looked at everything from Wikipedia to case law, and insurers still cannot agree.

The most common issue is water damage that occurs from accumulations above ground level. In commercial lines, there’s often claim denials based on this exclusion for water accumulating on flat roofs. More commonly, in personal lines, water from a heavy rain cannot run or drain fast enough from an above ground terrace or balcony.

According to Wikipedia, “surface water” is a geologic term for water collecting on the ground. The “Policyholder’s Guide to the Law of Insurance Coverage,” by Peter Kalis, has a brief, but good discussion of the surface water exclusion found in many insurance policies. “Surface waters are those falling upon, arising from and naturally spreading over lands produced by rainfall, melting snow or spring.”

Kalis also cites a number of court cases holding that water accumulating on a roof is not “surface water.”

For more information, including a listing of pro and con court cases, click here.

Trees: Homeowners Policy Headaches

An agency is trying to come up with a streamlined, simplified summary of how the ISO homeowners’ policies respond to various types of losses involving trees. What coverage is there for the trees and for what perils and limits? What coverage and limits are provided for debris removal? Is there a deductible and how does it apply?

Trees are covered as property only if damaged by fire, lightning, explosion, riot or civil commotion, aircraft, vehicles not owned or operated by a resident of the “residence premises” and vandalism, malicious mischief or theft. The limit is $500 per tree, with an aggregate limit of 5% of coverage A.

For trees damaged by one of the seven perils, the limit of $500 per tree/aggregate of 5% coverage A includes debris removal expenses. An additional 5% of that limit is available for additional debris removal (5% of $500 is $25 or 5% of the aggregate limit for all trees).

For trees damaged by other perils such as windstorm, the policy pays $500/$1,000, as long as the tree damages a covered structure or blocks a driveway or handicap assist ramp. If a tree simply is blown down in the yard, nothing is payable for debris removal.

For answers and more questions, click here.

Trees: Commercial Coverage Caveats

Most While we’re talking about trees, like the ISO Homeowners’ Form 3 coverage, commercial property forms also address the issues of trees. Are they covered? What if they’re business property (stock)? Would the additional $10,000 debris removal apply for trees? How about the debris removal endorsement? What about the business income form? If trees on a golf course were uprooted, preventing access or play, would there be coverage?

The business income issue is particularly interesting because trees are not “covered property” for windstorm damage. But that doesn’t mean there isn’t business income coverage if trees are blown down on the property.

For a detailed analysis, click here.

Bill Wilson (bill.wilson@iiaba.net) is director of the Big “I” Virtual University, an online learning center for agents and brokers.