Analysis brought to you by FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to learn how to find answers to YOUR coverage questions — click here! Question: The insured owns an office building with a basement. A water main ruptured directly under the basement floor. The water caused the basement floor to heave, and the basement filled up with several feet of water overnight. The policy is a BP 00 02 12 99. The carrier has asserted the loss is excluded under the water exclusion, which provides, in part, that they exclude damage from "water under the ground surface pressing on, or flowing, or seeping through . . . basements." It has always been my understanding that this language was designed to exclude natural water that seeps up through a basement floor. In our case, we have a ruptured pipe that broke through the basement floor, the water is from the broken pipe and should therefore be covered. The carrier has asserted that the pipe likely broke from corrosion, latent defect, or wear and tear, which is also excluded. However, the policy specifically states that if a "specified cause of loss" results from one of those excluded causes, then the resulting damage is covered. And, of course, "water damage" is a specified cause of loss. We think this loss should be covered. Please give us your thoughts. 

— Michigan Subscriber

Answer: Based on findings from several related court cases, it has been determined that the rupture of a water main is different from water that is flowing underground due to flooding or other circumstances. The main broke, putting probably thousands of gallons out at once. This is a sudden event. In statutory construction, the "ejusdem generis rule" applies when general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned. Courts have interpreted the term "water below the surface of the ground" to have the general meaning of "subterranean waters" i.e., underground bodies or streams of water flowing in known and defined or ascertainable channels or courses, and waters which ooze, seep, or percolate through the earth, or which flow in unknown or undefined channels, both categories of which are waters of natural origin.5 Since it does not include water from an artificial source like a water main, the "water below the surface of the ground" exclusion is not a bar to recovery. Therefore, in the loss that you describe the exclusion does not apply and there should be coverage for the loss. See also: 8 tips to prevent basement flooding

Dispute over broken pipe, basement damage

Question: The insured has a home insured under an HO 3. The house was damaged by water from a broken pipe under the slab. The carrier seems to acknowledge that generally the cost to tear out the slab to get to the broken pipe is covered if there is resulting damage, just not the cost of replacing the pipe. We agree. The facts in this case, however, are unique. One side of the house is built on a slab that sits at grade level. The other side of the house is over a basement. Apparently the pipe broke under the slab at grade level then the water seeped down through the soil and entered the basement through the basement walls, damaging the basement finishes. All of this took place directly under the home. There was no damage to the house in the area above the slab where the pipe broke. It is the carrier's position that since the water went through the soil and into the basement walls, they will not cover the cost to excavate to get at the pipe. I disagree. This was a failure of a plumbing system and there was resulting damage to the home. I believe the cost to tear out and put back the slab to get at the pipe should be covered along with all of the resulting damage from the water and the tear out just not the cost of the broken pipe itself.

— Michigan Subscriber

Answer: The water came from the broken pipe, not the environment. It does not matter that it went through the ground first. Had the pipe not broken, the water would not have entered the basement. The broken pipe is the proximate cause of the loss. The loss is covered.

Municipal pipe problems

Question: We have an insured who had a leak occur in the line running from her house to the municipal sewer. According to the local Borough, the leak caused the dirt to sink and compact, which in turn caused a large hole under the sidewalk and part of the street. The insured had to have the line dug up and repaired. The sidewalk was saved, and the street repaired after the hole was filled in. Her insurer is refusing to pay for the cost to do any of the repairs. We think, though, that since the insured was responsible for the yard and sidewalk, these costs should be covered. Please give us your opinion.

— Pennsylvania Subscriber

Answer: While the yard, sidewalk, and pipe might be the insured's responsibility to maintain, that does not make any of them covered property. The policy does not cover land, and the plumbing leak, from the line to the street, did no damage to covered property so as to trigger coverage for reasonable repairs. If the ISO HO 00 03 10 00 is involved, the cost to tear out and replace a part of an "other structure" is covered, but only if a building is first damaged by a plumbing leak. As for the sidewalk, that might or might not be covered property. In the area where FC&S is located, the sidewalks belong to the municipality but it is the individual homeowner's responsibility to maintain them. But, from what you state, this appears to be more of a liability claim against the insured rather than a first party property damage claim. The Borough might be alleging that the insured's negligent maintenance led to the damage to its property — the street and the sidewalk — and therefore, it is the insured's responsibility to repair the cause of the damage. So, this might mean getting the claims adjuster re-involved in the loss. See also:

• Water, water everywhere: Flood claim questions answered
• Insurance questions grow alongside mold, fungi and algae
• Did snow, ice or water cause the damage?