A carrier denied a client’s property damage claim because the water was "surface water." The property had the standard ISO special perils form, as well as coverage on a sublimit for sewer and drain backup.
A town had 9 inches of rain in less than an hour. Water flooded under doors and drains into a client's property. Some of the water damage was caused by drain backups. However, the carrier is denying a client's property damage claim because the water was "surface water."
Q: How would this be covered? The property had the standard ISO special perils form, as well as coverage on a sublimit for sewer and drain backup.
Response 1: Your description matches the NFIP definition of a flood:
Flood, as used in this flood insurance policy, means:
1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (one of which is your property) from:
a. Overflow of inland or tidal waters;
b. Unusual and rapid accumulation or runoff of surface waters from any source;
If the local town had 9 inches of rain in less than an hour, presumably “two or more acres of normally dry land or two or more properties" were affected by the surface water.
You would cover this event with a flood policy. There are other policies and endorsement options today as well, but you would need to look at the form's definition of flood. Many errors & omissions claims come from flood losses where the agency does not have a discussion with the client or have them sign a rejection form if they don't purchase the coverage.
Response 2: The ISO Causes of Loss–Special Form specifically excludes “surface water." Based only on your description of the situation, this loss is excluded whether you call it a flood or not.
Claiming the loss as a backup generally requires that the water starts in the building, enters the sewer system, and then backs up into the building. It sounds like that wasn't the case.
Response 3: Coverage could have been obtained by adding CP 10 65: Flood Coverage Endorsement.
C. Additional Covered Cause Of Loss
The following is added to the Covered Causes of Loss:
Flood, meaning a general and temporary condition of partial or complete inundation of normally dry land areas due to:
1. The overflow of inland or tidal waters;
2. The unusual or rapid accumulation or runoff of surface waters from any source; or
3. Mudslides or mudflows which are caused by flooding as defined in C.2. above. For the purpose of this Covered Cause of Loss, a mudslide or mudflow involves a river of liquid and flowing mud on the surface of normally dry land areas as when earth is carried by a current of water and deposited along the path of the current.
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