United Policyholders filed an amicus temporary within the case famous within the publish, “Can a Flood Occur on the High of a 10-Story Roof? What Is Floor Water?” United Policyholders argued the next level:
The Massachusetts Supreme Judicial Court docket has outlined ‘floor waters’ as waters ‘that lie or stream on the floor of the earth and naturally unfold over the bottom however don’t type a part of a pure watercourse or lake.’ Boazova v. Security Ins. Co., 462 Mass. 346, 354, 968 N.E.2nd 385 (2012), quoting DeSanctis v. Lynn Water & Sewer Comm’n, 423 Mass. 112, 115 n.6, 666 N.E.2nd 1292 (1996). Zurich American Insurance coverage Firm (‘Zurich’) would have this Court docket imagine that that definition encompasses rainwater that collects on an enclosed roof a number of tales above the bottom. As Defendant-Appellant Medical Properties Belief’s (‘MPT’) temporary explains intimately, Zurich’s place is opposite to Massachusetts regulation, which applies right here.
Zurich’s place can be incorrect for different causes. It’s belied by the way in which the insurance coverage trade charges flood danger, it’s belied by the phrases of Zurich’s coverage, and it undermines policyholders’ affordable expectation that rainwater seeping by a roof shouldn’t be ‘floor waters.’
The temporary then offered a fast historical past of flood insurance coverage, the Nationwide Flood Program, and that roofs usually are not thought-about when making flood score assessments:
The federal authorities has been the first supplier of flood insurance coverage for 60 years, and has been so due to non-public insurers’ exodus from the market. Whereas non-public flood insurance coverage was frequent between 1895 and 1927, the non-public market all however dried up in response to intensive flooding across the Mississippi River in 1927. Personal insurers decided that flood peril was uninsurable due to the catastrophic nature of flooding, the issue of figuring out correct charges, the danger of antagonistic choice, and the priority that they may not profitably present risk-based flood protection at an inexpensive value.
Within the years following the 1927 floods, political leaders like President Eisenhower referred to as for a nationwide system of flood insurance coverage. In 1956, the Federal Flood Insurance coverage Act was handed, however this system was defunded in 1957. Then, in 1965, Hurricane Betsy inundated New Orleans, changing into the nation’s first billion-dollar hurricane.
Enter the Nationwide Flood Insurance coverage Act of 1968. In recognition of the shortage of protection provided by the non-public market and within the face of Hurricane Betsy and different pure disasters, the U.S. Congress established the NFIP. The NFIP goals to supply entry to major flood insurance coverage whereas additionally mitigating the nation’s complete flood danger by the event and implementation of floodplain-management requirements. And a vital part of the NFIP’s mission is creating flood maps.
The Federal Emergency Administration Company (‘FEMA’), NFIP’s administrator, is chargeable for creating nationwide flood maps that establish areas with particular flood, mudslide, and flood-related erosion hazards. In coordination with taking part communities, FEMA develops Flood Insurance coverage Price Maps (‘FIRMs’) that depict an space’s flood danger and flood plain. Because the identify suggests, the FIRM, partially, establishes the premium to be charged for flood insurance coverage in a specific space.
The FIRM delineates the Particular Flood Hazard Space (‘SFHA’)–that’s, an ‘space that shall be inundated by the flood occasion having a 1-percent likelihood of being equaled or exceeded in any given 12 months.’ Throughout the SFHA, areas are divided into zones primarily based on the kind of flood danger, e.g., tidal flooding, mudslides, and undetermined dangers. Critically, FIRM information is utilized by the non-public insurance coverage trade to evaluate danger and set up premiums.
Flood danger is decided primarily by a property’s location and the way it’s constructed, although variable inputs have modified over time. The property’s bodily location is used to find out (1) its proximity relative to flood sources together with the coast, ocean, rivers, and Nice Lakes, (2) floor elevation, i.e., the place the constructing is situated relative to the elevation of the encircling space and close by flood sources, and (3) different elements resembling whether or not the property is situated on a barrier island or located close to a dam or levee. Moreover, constructing traits are additionally necessary to figuring out flood danger. Among the many constructing properties that FEMA considers are: (1) the sort and use of the constructing, (2) the muse sort, (3) first-floor top, (4) variety of flooring, (5) unit location, (6) development sort, (7) flood openings, and (8) whether or not equipment and gear are situated on the bottom ground.
Noticeably absent from this record is the property’s roof sort. And that makes good sense. The three commonest varieties of floods, in line with Zurich’s personal web site, are fluvial (river floods), coastal floods, and pluvial floods (flash floods and surface-water floods). ‘Floor water floods happen when an city drainage system is overwhelmed and water flows out into streets and close by buildings.’ Areas most in danger for floor water flooding are the place there may be ‘run-off from surrounding areas right into a central low-lying land.’
United Policyholders claimed that the case is an instance of “artistic denials” on water claims primarily based on strained constructions of coverage language and that that is occurring throughout the nation. I agree that insurers are extra continuously battling their policyholders attempting to cut back funds on water losses. I famous this 4 years in the past in Water Loss Declare Denied? Don’t Take “No” For An Reply:
Water loss declare denials occur much more continuously than after I began within the enterprise over 30 years in the past. There are a lot of causes for this, together with corporations altering their insurance policies in order that whereas they promote the phantasm of policyholders having the peace of thoughts, that’s removed from the truth of what’s offered. I famous this frustration felt by many policyholders—and never simply State Farm’s—in, Is the State Farm Coverage Actually Value Something.
One more reason for denials is insurance coverage firm claims ignorance or wrongful claims practices. Many corporations merely prepare their subject adjusters within the improper method about what’s and what’s not coated. Some corporations hope the denied policyholder will go away and never problem the choice to not pay.
Insurance coverage protection evaluation of water injury claims is usually difficult. Getting knowledgeable on the policyholder’s aspect is necessary.
Water loss claims are a major and frequent reason for loss. Understanding the time period “floor water” is usually a key element to protection concerning water loss claims. I’ll proceed this research of “floor water” with extra posts to come back.
Thought For The Day
Twenty years from now you can be extra upset by the issues that you simply didn’t do than by those you probably did do. So throw off the bowlines. Sail away from the protected harbor. Catch the commerce winds in your sails. Discover. Dream. Uncover.
—Mark Twain
