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Vague Policy Language Opens the “Floodgates” to Challenge Disclaimers (NJ)

May 2, 2019

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In a <a href="">recent decision</a> by the New Jersey appeals court, the Court ruled that a homeowner disputing their insurance company’s decision to disclaim coverage for damage caused by a burst municipal water main was not barred by a water damage exclusion in his homeowner’s insurance policy.

A three Judge panel reversed the trial court’s decision to grant Massachusetts Bay Insurance Co. summary judgment on plaintiff’s, Adrian Sosa, claim that he was wrongfully denied coverage for damage to his home caused by a burst municipal water main.  Specifically, the Court held that the trial court improperly ruled that the plain language of the water damage exclusion in plaintiff’s policy, which excludes coverage for damage caused by surface water or by flood barred plaintiff’s claim seeking coverage.

The decision indicates that the exclusion, as it was written into the policy, does not bar all claims from damage caused by water, only the types of damage highlighted in the policy regarding surface water and flooding. The Court further stated that neither of those categories fit plaintiff’s claim.

Plaintiff’s claim indicates that his house was flooded, however, that did not mean the water was a flood as reasonably defined. The Court defined a flood as a general inundation and must affect a wide area, which is not what plaintiff claimed to have occurred. The Court noted “This definition is consistent with the view of other jurisdictions that a ‘flood’ connotes a great inundation or deluge affecting a broad area, and not the kind of localized water damage that a water-main break causes.”

Thanks to Jon Avolio for his contribution to this post.  Please email <a href="">Brian Gibbons</a> with any questions.



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