As we're sure you know, horrible flooding hit the New York City metro area yesterday as the remnants of Hurricane Ida arrived, dumping a shocking amount of rain, stranding commuters, and costing lives. The loss of life is tragic and immeasurable, and the disruption to the lives of survivors is immense.
And property was damaged. The Big I NY and Big I CT research departments have received questions from members about how personal and commercial property insurance may apply. Unfortunately, the news isn't good.
Many commercial property insurance policies contain exclusions similar to this one from the ISO Causes of Loss - Special Form, CP 10 30 09 17:
1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. ...
(1) Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);
(2) Mudslide or mudflow;
(3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment;
(4) Water under the ground surface pressing on, or flowing or seeping through:
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings; or
(5) Waterborne material carried or otherwise moved by any of the water referred to in Paragraph (1), (3) or (4), or material carried or otherwise moved by mudslide or mudflow.
This exclusion applies regardless of whether any of the above, in Paragraphs (1) through (5), is caused by an act of nature or is otherwise caused. An example of a situation to which this exclusion applies is the situation where a dam, levee, seawall or other boundary or containment system fails in whole or in part, for any reason, to contain the water.
But if any of the above, in Paragraphs (1) through (5), results in fire, explosion or sprinkler leakage, we will pay for the loss or damage caused by that fire, explosion or sprinkler leakage (if sprinkler leakage is a Covered Cause of Loss).
A very similar exclusion is found in the ISO Homeowners 3 - Special Form, HO 00 03 05 11, though that one does not mention mudslide or mudflow and some of the other wording is slightly different. The upshot, however, is that neither policy will cover damage caused by water during a storm unless the water entered through a hole the storm punched in a roof or a window the storm broke. If it flowed off the street and into a building, it is by definition "surface water." The forms clearly state that the insurer will not pay for damage caused by that.
You may be getting calls from distraught clients about flood damage. They should submit claims to their insurers and let the insurers make the coverage decision. However, if their policies contain this type of language, the odds for coverage will not be good.
There is another post in this Newsfeed describing how your agencies can apply for assistance from Trusted Choice if you've suffered damage from this terrible storm. We encourage you to take advantage of that resource. As always, we at Big I New York and Big I Connecticut are ready to help you in any way we can. Don't be afraid to call or email for help.