A water loss occurred on June 22, 2026. A water main broke off the insured's premise which is above the insured's location at that top of the hill. When the water main broke water ran down the hill along the ground and entered the insured's property causing damage.
The adjusters of the opinion there is no coverage because the water is considered ground. Under the exclusion in the BOP 03 (07/13) water is excluded for any body of water.
Florida Subscriber
While a review of several court cases reveal that overall courts have fallen on both sides of the issue, depending on the facts of the case and the jurisdiction, we find the following Alabama case to be most similar to what you describe. This similar court case found that the flood exclusion, including surface water, does not apply to a water main break. For example, in Auto-Owners Ins. Co. v. United Way of E. Cent. Ala., 497 F. Supp. 3d 1115, 2020 U.S. Dist. LEXIS 197012, 2020 WL 6262428, the court held that [1]-Damage to the insured's property was not excluded by the water damage exclusion because water that escaped from the ruptured water main and flowed across a parking lot was not a "flood" as that term was used in the policy, and as the water that damaged the insured's property was never a "flood," the introductory clause "regardless of the cause" was irrelevant; [2]-Damage to the insured's property was not excluded by the water damage exclusion because water that escaped from the ruptured water main and flowed across a parking lot into an adjacent building was not "surface water" as that term was used in the exclusion provision, and as the water that damaged the insured's property was never "surface water," the introductory clause "regardless of the cause" was irrelevant.
Of importance in making their determination, the court, in defining surface water, started with a presumption that "surface water" comes from a natural source, not a man-made system, because the other terms in the exclusion—i.e., "waves, tides, tidal waves, storm surge, overflow of any body of water"—have a natural connotation. And the same sources that supported a natural, rather than man-made, origin for "flood" support the same result for "surface water."
As for general understanding, Merriam-Webster defines "surface water" as "natural water that has not penetrated much below the surface [**13] of the ground; drainage water." Surface water, Merriam-Webster Online Dictionary (2020), supra. Black's Law Dictionary defines "surface water" as "[w]ater lying on the surface of the earth but not forming part of a watercourse or lake. Surface water most commonly derives from rain, springs, or melting snow." Flood. Black's Law Dictionary (10th ed. 2014). Both definitions talk about water from natural sources, not water that escapes from man-made systems.
The insurance industry imposes the same limitation. Couch on Insurance describes "surface water" as a "natural water-related force," 11 Couch § 153:48, and says that "[t]ypically, surface water is created by rain or other precipitation." Id. §153:48. Insurance Law and Practice similarly describes "surface water" as:
water which is derived from falling rain or melting snow, or which rises to the surface in springs, and is diffused over the surface of the ground while it remains in such diffused state, and which follows no defined course or channel, which does not gather into or form a natural body of water, and which is lost by evaporation, percolation, or natural drainage.
In short, the court found that a reasonable, ordinary person shopping for insurance would not assume or believe that water that escapes from a ruptured wain main and flows across a parking lot is "flood" or "surface water." The court also found the terms to not be ambiguous once you consider the other terms in the B.1(g)(1) "water" exclusion, as well as dictionaries [**15] and insurance treatises.
Even had Auto-Owners argued that the terms were ambiguous, Alabama law requires that ambiguous policy terms "be construed most strongly against the insurance company that drafted and issued the policy." Cincinnati Ins. Co., 641 So. 2d at 249. Further, the Kentucky supreme court decided Comely more than a year before the Anniston water main burst. So, Auto-Owners was on notice that a reasonable person (and reasonable jurists) could read its "water" exclusion provision not to apply to damage caused by a burst water main. That Auto-Owners failed to address this known issue cuts against Auto-Owners, not its policyholders. When terms are found to be ambiguous, courts have generally determined that coverage should inure to the insured's benefit, since the insured had no part in drafting the policy language.
Based on these findings, we are of the opinion that the exclusion should not apply to the damage caused by the water main break, and coverage should be provided.