Every public adjuster should own and study Bill Wilson’s reference book on advocating for insurance coverage, When Words Collide: Resolving Insurance Coverage and Claims Disputes. Every public adjuster has an obligation to advocate for coverage, and there is no better reference book on this topic with practical applications that public adjusters can find. I have also recently suggested that readers should Subscribe To Bill Wilson’s Commentary.
Bill Wison commented on Defining Surface Waters: United Policyholders Argues That a Flood Does Not Happen on a Roof. Wilson noted that he “wrote about this many years ago but the article is no longer on the Big I web site. However, I did find this follow-up article,” which he posted in the comment. It is worthy of being a complete post on this blog.
Surface Water Revisited
An insured suffered severe water damage to the interior of the second floor of a dwelling. A heavy rain storm caused water to accumulate on a second floor deck which seeped into the interior of the structure. The homeowners insurer has denied coverage based on the exclusion for ‘surface water.’ The insured is arguing that ‘surface water’ refers to the accumulation of water on the ground, not 12 feet above it. Who’s right?
Question:
‘Our insured suffered severe water damage on the second floor of the interior of his dwelling. A heavy rain storm caused water to accumulate on a second floor deck which seeped into the interior of the structure. The homeowners insurer has denied coverage based on the exclusion for ‘surface water.’ The insured is arguing that ‘surface water’ refers to the accumulation of water on the ground, not 12 feet above it. The company disagrees.’
Answer:
One of the most common questions received by our ‘Ask an Expert’ service deals with surface water. In response to several such questions, we published the following article that you might find helpful in addition to the VU faculty comments below:
‘Surface Water…What Is It?’
Faculty Response
Check out an earlier VU article (see above) which is excellent and comprehensive. One thought…in the Crocker case cited in IRMI, the patio was ground level. In the instant case, the patio is on the second level. I think that distinction might distinguish this case from Crocker and similar adverse decisions.
Faculty Response
Surface water appears to be a geologic term for water collecting on the ground:
Faculty Response
I don’t believe this is ‘surface’ water.
Faculty Response
I would say the deck is ‘surface’ and would be excluded under the surface water exclusion.
Was this ISO’s intent? I have no idea.
If the damage was only to personal property, unless there was open peril (all risk), then there is no coverage because of the cause of loss wording.
- Windstorm Or Hail
This peril includes loss to watercraft of all types and their trailers, furnishings, equipment, and outboard engines or motors, only while inside a fully enclosed building.
This peril does not include loss to the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.
The AAIS Homeowners wording is very similar.
Faculty Response
I don’t know how water on a second story deck could be considered ‘surface water.’ That is ludicrous on its face.
Faculty Response
The argument is that the deck is a ‘surface’ and that the exclusion does not say ‘water on the surface of the earth/ground.’ I think it has to be placed in context with the rest of the exclusion which lists sources of water that all originate from the surface of the earth. There are a couple of legal principles described in several VU articles that say that an undefined term takes the general meaning of the other words in the phrase/exclusion. To learn more, go to the VU and search for ‘ejusdem generis’ and you’ll find several articles to support the premise that ‘surface’ water refers to water accumulating on the surface of the earth.
Faculty Response
Water is going to be on the surface of something, whether it is a tree, a roof, a gutter, a frog…take your pick. Gravity sees to that. The court decisions almost uniformly point to ‘surface’ as meaning ‘surface of the ground,’ and they make grudging exceptions for roadways, parking lots, and patios that are arbitrarily close to the surface of the ground. I haven’t seen anyone say that something on the second story of a building is now, suddenly, somehow the same kind of ‘surface’ that goes with the term ‘surface water.’ The reductio argument becomes one in which all rain or rain water is excluded because it doesn’t do anything until it hits a surface.
Faculty Response
You didn’t mention what was damaged. There’s no coverage for personal property because this wasn’t one of the named perils. Damage to the building should be covered, though. It’s well established that ice damage losses to roofs (where water backs up under the shingles and damages the interior of the structure) is covered. That certainly involves water from the surface of the roof entering the building and it’s just as certainly not excluded by the ‘surface water’ exclusion. That’s because of the context in which the term ‘surface water’ is found. It’s found with terms like flood, waves, and tidal water…all terms that involve water on the surface OF THE EARTH (as opposed to the surface of something else).
Faculty Response
What was damaged? If it was structural then the surface water exclusion should apply because the water accumulated above the surface of the earth. If the damage was to personal property, there’s no coverage unless the structure is first breached.
Faculty Response
Numerous courts have found that ‘surface water’ means water on the surface of the ground, not on the roof or an elevated surface like a balcony:
‘[N]atural precipitation coming on and passing over the surface of the ground….’
‘Surface waters are commonly understood to be waters on the surface of the ground, usually created by rain or snow….’
‘ ’Surface’ water may be defined as water on the surface of the ground….’
‘Surface waters are those falling upon, arising from, and naturally spreading over lands produced by rainfall, melting snow, or springs.’
Faculty Response
The ‘Policyholder’s Guide to the Law of Insurance Coverage’ By Peter J. Kalis, Thomas M. Reiter, James R. Segerdahl has a brief, but pretty good, discussion of the surface water exclusion found in many insurance policies. It gives an example of a common court definition of ‘surface water’:
Surface waters are those falling upon, arising from, and naturally spreading over lands produced by rainfall, melting snow, or spring. They continued to be surface waters until, in obedience to the laws of gravity, they percolate through the ground or flow vagrantly over the surface of the land into well defined watercourses or strains. [emphasis added]
According to the discussion by Kalis, most courts have held that water on the roofs of buildings does not constitute surface water:
McCorkle v. Penn Mut. Fire Ins. Co., Florida Court of Appeals, 1968
American Ins. Co. v. Guest Printing Co., Georgia Court of Appeals, 1966
Aetna Ins. Co. V. Walker, Georgia Court of Appeals, 1967
Cochran v. Travelers Ins. Co., Louisiana Court of Appeals, 1992.
Some much older decisions, however, have held that water on the roof of a building is surface water:
McCullough v. Hartpence, New Jersey, 1948
Bringhurst v. O’Connell, Delaware, 1924
Last Updated: December 18, 2009
The case that started this recent study of surface water is now pending in front of the Massachusetts Supreme Judicial Court, as noted in “Can a Flood Happen on the Top of a 10-Story Roof? What Is Surface Water?” Maybe Bill Wilson and some of his friends will join me in an amicus brief about the coverage “term of art” definition of insurance coverage. I agree with the faculty. It seems ludicrous to a coverage professional that “surface water” could be on a roof.
Thought For The Day
Water is the driving force of all nature.
—Leonardo da Vinci
