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Homeowners property policies often contain
exclusions for loss caused by surface water runoff. While it may seem that the
terms "surface water" are self-explanatory, not all damage from running water
by R. Brent
Cooper & Dana Harbin
Cooper & Scully
The courts in several jurisdictions have carved out scenarios where such
damage may not fall within the surface water exclusion, such as incidents where
the origin of the water was not natural or the flow of the water was channeled
by another structure on the ground.
There are a number of courts that have held that the "surface water" exclusion
does not apply to damages caused by water that is interrupted or channeled by
man-made structures or water that is not of a natural origin. For example, the
Colorado Supreme Court held in Heller v. Fire Ins. Exch.,
800 P.2d 1006 (Colo. 1990), that spring runoff of melting snow diverted from
regular path onto the Hellers' property by three parallel trenches constructed
behind property was not "surface water" because trenches were "defined channels."
The court held that surface water follows no defined course or channel.
In Cochran v. Travelers Ins. Co., 606 So.
2d 22 (La. App. 1992), the Louisiana appellate court held that rainwater that
overflowed and seeped from the roof into the interior of the building was not
"surface water" because it was not water that collected and lay on the ground.
In Ebbing v. State Farm Fire & Cas. Co., 1 S.W.3d
459 (Ark. App. 1999), the Arkansas appellate court held that water from burst
water main was not "surface water" because it did not accumulate from natural
causes. Finally, in Aetna Fire Underwriters Ins. Co.
v. Crawley, 207 S.E.2d 666, 668 (Ga. App. 1974), the Georgia appellate
court interpreted "surface water" strictly to water on surface of ground and
not to rainwater falling on and flowing from the roof of an insured dwelling.
The majority of courts interpret the surface water exclusion broadly to apply
to damages caused by water that ran onto some man-made object, instead of directly
onto the earth. For example, Texas courts recognize that the surface water exclusion
applies to damages caused by water that runs over various items or the flow
is altered by items built on top of the ground. In Crocker
v. American Nat'l Gen. Ins. Co., 211 S.W.3d 928 (Tex. App. 2007), the
court of appeals affirmed a summary judgment in favor of American National General
Insurance Company (ANGIC), holding that the surface water exclusion in the homeowners
policy issued to the Crockers barred their claim for damage to their home. The
Crockers' homeowners policy provided that:
We insure against all risks of physical loss to the property … unless the
loss is excluded in Section I Exclusions.
Section I provided:
We do not cover loss caused by or resulting from flood, surface water, waves,
tidal water or tidal waves, overflow of streams or other bodies of water
or spray from any of these whether or not driven by wind.
The court noted that the term "surface water" was not defined by the policy
and referred to other Texas cases that have defined "surface water" in the insurance
context as follows:
In the Crocker case, the water entered the
house "from a raised patio." The parties agreed the resurfacing of the patio
caused rainwater to drain into the house instead of into the flower beds as
planned. The Crockers argued that because the rain hit the patio instead of
the dirt, and the top of the patio was 8 to 10 inches or a foot from the soil,
it was not water on the surface of the ground. ANGIC argued it would:
Id. The court agreed and held that the
ordinary meaning of the words "surface water" reasonably can include rainwater
that has collected on the surface of their patio relying on several other Texas
cases on point.2
The Illinois court in Smith v. Union Auto. Indem.
Co., 752 N.E.2d 1261, 1266 (Ill. App. 2001), appeal denied, 763 N.E.2d 778 (Ill. 2001),
discussed whether water could be "surface water" when its flow had been altered
by man-made structures. In Smith, during
a torrential rainstorm, the window wells in the basement of the Smiths' home
filled with water, causing the windows to break and the basement to fill with
5 feet of water. Water also came into the basement through the sewer drain.
The court held that the average reasonable person would not limit surface water
to water whose flow has not been altered in any way by paved surfaces, buildings,
or other structures. Id. at 1267. Therefore,
the court held the water entering the Smiths' home as a result of a torrential
rainstorm was surface water excluded by their homeowner's insurance policy.3
Dana Harbin is an attorney in the Dallas office of Cooper & Scully, P.C. where she specializes
in insurance coverage and bad faith involving all types of insurance policies,
both first and third party. Ms. Harbin earned her BA degree from the University
of Texas in Arlington and her JD degree from the University of Texas at Austin.
She can be reached at .
1Id. citing State Farm Lloyds v. Marchetti, 962 S.W.2d
58, 61 (Tex. App. 1997, pet. denied) (emphasis
added); see alsoTransamerica
Ins. Co. v. Raffkind, 521 S.W.2d 935, 939 (Tex. Civ. App. 1975, no writ [emp. italics]) ("[W]e hold that
the term surface water is used in the policy to mean natural precipitation coming
on and passing over the surface of the ground until it either evaporates, or
is absorbed by the land, or reaches channels where water naturally flows"); Sun Underwriters Ins. Co. of N.Y. v. Bunkley,
233 S.W.2d 153, 155 (Tex. Civ. App. 1950, writ
ref'd) (surface water generally defined as derived from falling rain
or melting snow and diffused over surface of ground, following no defined course
or channel, not gathered into natural body of water, and lost by evaporation,
percolation, or natural drainage).
2The court cited:
Cameron v. USAA P&C Ins. Co.,
733 A.2d 965 (D.C. 1999) (personal property in basement that was damaged by
overflow of melted snow that flowed over patio into basement was excluded by
surface water exclusion).
Kannatt v. Valley Forge Ins. Co.,
Inc., 644 N.Y.S.2d 530 (N.Y.A.D. 1996) (Evidence established that basement
flooding after heavy rainstorm resulted from surface water flowing down incline
of backyard into basement through bottom of basement door, rather than rain
falling through hole in basement door, and, thus, flood exclusion barred coverage
under homeowners insurance policy; claim by insureds' attorney that wind or
falling object pierced hole in basement door and that rain fell through hole
was based on speculation and conjecture).
Thorell v. Union Ins. Co.,
492 N.W.2d 879 (Neb. 1992) (Homeowners policy exclusion for "surface water"
applied to 4-foot accumulation in walkout basement of insureds' home following
severe rainstorm, even though insureds claimed that loss was covered under section
of policy including damage from rain following creation of opening in roof or
wall through force of wind or hail; 4-foot accumulation of water in basement
could not have been caused by approximately 4 and three-quarter inch rainfall).
Casey v. General Acc. Ins. Co.,
178 A.D.2d 1001, 578 N.Y.S.2d 337 (N.Y.A.D. 1991) (Exclusion in homeowners policy
for damages caused by surface water applied to damage to insured's basement
occurring when rain water accumulated outside of basement door, entered basement
sitting area, and damaged insured's personal property; although clogged drain
contributed to loss, actual cause of loss was presence of surface water).
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