Water as Property Not Covered

 January 2, 2014

 We are a firm working for an insurer and handling a commercial property water loss occurring from overflow of a toilet. The insured made a claim for the increase in the water bill for the period of time that the water ran prior to discovery. We have always considered this part of the personal property loss, as once the water passes through the meter, it becomes the insured's property. The insurer advised us to inform the insured that the increase in utility expense is not covered, in accordance with the policy CP 00 10 04 02, A. 2. Property Not Covered, h. Land, water, growing crops or lawns.

We believe the water he is referring to refers to bodies of water, not utility water.

I could not find any reference in my search to justify my prior interpretation or to refute the company's interpretation of water in the cited policy language. Can you assist?

Iowa Subscriber

Since the policy does not specify a type of water that is to be considered property not covered, the insurer is justified in denying coverage under A.2.h. Even if it does become the insured's personal property after passing through the meter, it is still water and categorized as property not covered.

 Editor's Note 2023: 

The editors' have since reconsidered this position, and have applied the principle of ejusdem generis to the exclusion. In light of that, the exclusion should only apply to water that is similar to other items in the list – lawns, grass, land. Water from an overflowing toilet is considerably different than water related to land, growing crops and lawns. Baring another exclusion that would remove coverage for the overflowing toilet, the loss should be covered.