What do you mean, “Flood”?

Posted in Media, General, Insurance Tips, Home Insurance, Did you know?, In the News

It is important to understand the terms of your policy, and the extent of it, especially when it comes to losses regarding floods and water damage. 

Flood information, Youngs Insurance, Ontario

Understanding the coverage outlined in your policy is extremely important. The case of Parker Pad & Printing Ltd. v. Gore Mutual Insurance Company demonstrates why.

What Happened?

In Haliburton, Ontario, heavy rainfall caused water to enter the building of Parker Pad and damaged flooring, walls, products, and equipment. No problem, the company was insured under an All Risks Policy with Gore Mutual Insurance Company.

Was Parker Pad’s Coverage Enough?

But Gore denied the claim because the loss fell under the “flood” exclusions in the policy. The policy defined “flood” as the rising of, the breaking out, or the overflow of any natural or man-made body of water. Damages caused by seepage, leakage, or an influx of water from natural sources through the walls of the building were excluded from the policy.

Parker Pad also had “flood endorsement” added to the policy to cover losses caused by wind, hail, rain, or snow entering the building because of a flood. Again, Gore denied this coverage because the loss was not caused by a “flood”.

What Would the Judge Say?

Parker Pad tried to sue Gore for coverage, and the broker, but a judge ruled that the policy did not cover the loss. In the context of the policy, to be considered a “flood” a body of water needed to exist prior to the rainfall. In Parker Pad’s case, a pool of water did not exist before the rain so it could not have risen, broke out, or overflowed from a predetermined boundary or level.

The flood exclusions in the policy applied because the loss was actually a result of seepage, leakage, or an influx of water from natural sources through the building.

Something to think about…

The judge pointed out that the Parker Pad premises were not anywhere near a “body of water”, so Flood Endorsement might not have been the right coverage for that building.

Let us help you navigate the terms and conditions of your policy. Contact Youngs Insurance if you have any questions or would like a no obligation personal property insurance quote.

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Source: www.insblogs.com

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