The insured owns an office building with a basement. There was a water main that 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 water 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 also 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
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 instead of flood that puts thousands of gallons into the ground over a period of time, even if at times is it rapid. This is a sudden event.
In statutory construction, the "esjudem generis rule" is that where 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.6
5 See Adrian Assocs., General Contractors v. Nat'l Sur. Corp., 638 S.W.2d 138 (Tex. App.1982). 6 But see Carver v. Allstate Ins. Co., 76 S.W.3d 901 (Ark. App. 2001) (policy excluded loss caused by "[w]ater or any other substance on or below the surface of the ground, regardless of its source," reflecting an intent to exclude damage from both natural and artificial water sources).
Therefore, in the loss that you describe the exclusion does not apply and there should be coverage for this loss.