Surface Water Exclusions in the Homeowners Policy

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:

Surface water is defined as water or natural precipitation diffused over surface of the ground until it either evaporates, is absorbed by the land, or reaches channels where water naturally flows. [Citations omitted.] "Flood water" and "surface water," therefore, have a terranean nature, i.e., water overflowing its natural banks or which does not form a well-defined body of water—as opposed to water below the surface, whether from a nature or unnatural source.¹

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:

be a strained interpretation of 'surface water' to hold that it does not include rainwater that falls upon concrete and asphalt structures such as patios, roads, driveways, playground blacktops and parking lots—structures which are by their nature placed upon the surface of the ground.

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

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:

• Valley Forge Ins. Co. v. Hicks Thomas & Lilienstern, 174 S.W.3d 254 (Tex. App. 2004, pet. denied) (lost income when law firm forced to conduct business from an alternate location after the basement of its building flooded and the electrical equipment supplying power to the building was damaged were excluded by surface water)
• Sun Underwriters Ins. Co. of N.Y. v. Bunkley, 233 S.W.2d 153, 155 (Tex. Civ. App. 1950, writ ref'd) (surface water exclusion applied to loss of chickens when heavy rainfall caused chickens to drown when water ran into their chicken house even though some of the water "poured over a low concrete foundation at the east end of the houses, thus causing the loss of the chickens.")

³See also:

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).

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