Can a Flood Happen on the Top of a 10-Story Roof? What Is Surface Water?

Imagine this hypothetical conversation:

Client: “Mr. Merlin, it was like Noah’s Ark in our living room! We were flooded out. Our appliances, clothes, beds, sofas – everything turned into a soggy mess. And guess what? The insurance company is playing hide and seek with our money.”

Chip: “That sounds like a modern-day aquatic adventure! But tell me, did you have flood insurance?”

Client: “Flood insurance? We live in the penthouse, 23 floors up. The only waves we see are the ones on TV! Why would we buy flood insurance?”

People often call various forms of water damage a “flood” when most insurance professionals dealing with insurance think of a flood as rising waters on ground level caused by various factors. Water at ground level then brings to mind the term “surface water.” “Surface water” may not rise to the level of a “flood,” but is often of concern because damage from surface water is often excluded in property insurance policies.

Understanding the distinction between these two terms is essential in the context of property insurance. It helps in accurately assessing appropriate coverage for water-related damages. So, what is “surface water,” and how is it different than a “flood?”

These issues and terms are at issue in a case that is being sent to the Massachusetts Supreme Judicial Court with the following question posed by the federal appellate court:1

Whether rainwater that lands and accumulates on either (i) a building’s second-floor outdoor rooftop courtyard or (ii) a building’s parapet roof and that subsequently inundates the interior of the building unambiguously constitutes ‘surface waters’ under Massachusetts law for the purposes of the insurance policies at issue in this case?

The strange part of this case is that “surface waters” are part of the definition of a “flood” in the policies at issue.  Both policies consider “Flood” a “Covered Cause of Loss.” The policies define flood as:

A general and temporary condition of partial or complete inundation of normally dry land areas or structure(s) caused by: The unusual and rapid accumulation or runoff of surface waters, waves, tides, tidal waves, tsunami, the release of water, the rising, overflowing or breaking of boundaries of nature or man-made bodies of water; or the spray there from all whether driven by wind or not[.]

In this unusual case, the insurance companies are arguing that a “flood” occurred on the roof because a flood sublimit reduces the amount payable.

A search of this blog pointed to a relevant article, How Do You Define “Surface Water” And Is It Covered Under My Policy?:

In Union Street Furniture and Carpet, Inc. v. Peerless Indemnity Insurance Company, Union’s property was severely damaged by water when a substantial rainfall occurred in the area which caused water to enter the property through the walls, chimney and skylight. Most of the damage was caused by water that flowed into the facility from the parking lot through the loading dock.

Peerless argued the water damage to Union’s business personal property was not an insured loss because the damage was caused by a ‘flood’ or by ‘surface water.’ Peerless also argued that the water that came through the roof that also damaged the business personal property was ‘surface water’ and because of the anti-concurrent clause, the contents were not insured.

In rejecting Peerless’ interpretation of the term ‘surface water,’ the court, citing cases and authority from other jurisdictions, indicated that water from precipitation (rain or snow) flowing on the ground outside of any defined channel, but that water which accumulates on a roof from rain, does not qualify.

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The issue regarding the legal definitions of ‘surface water’ and ‘flood’ vary from jurisdiction to jurisdiction and come in many shapes and sizes. If your insurance carrier denies your claim for ‘surface water’ or ‘flood,’ make sure you call one of our attorneys to assist you with your claim.

My interest in “surface water” has officially reached new heights – or should I say depths? It’s like the mysterious character in a detective novel that keeps popping up where you least expect it. I’ll be diving into this common water damage coverage battle with the enthusiasm of a kid in a puddle. Expect splashes of insight and maybe even a few ripples of laughter as we explore this topic over the next week. Get your rain boots ready because we’re about to wade through some seriously murky insurance waters!

Thought For The Day

Dogs are the leaders of the planet. If you see two life forms, one of them’s making a poop, the other one’s carrying it for him, who would you assume is in charge?

—Jerry Seinfeld

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1 Zurich American Ins. Co. v. Medical Properties Trust, No. 23-1167 (1st Cir. Dec. 19, 2023).