Analysis brought to you by FC&S Expert Coverage Interpretation, the recognized authority on insurance coverage interpretation and analysis for the P&C industry. To find out more — or to learn how to find answers to YOUR coverage questions — click here! Question: We have a homeowners' insurance policyholder (HO-3 5/11) whose yard flooded, which caused the septic system to back up and flood the home. There is some discussion here on coverage and we wanted to get your opinion.

— Virginia Subscriber

Answer: You don't mention if the policy has the water backup endorsement. On the HO 00 03 05 11, water that backs up through sewers or drains is excluded, and that exclusion is preceded by anti-concurrent causation language. For edification, Merriam Webster defines a sewer as: "an artificial, usually subterranean conduit to carry off sewage and sometimes surface water." Septic tank is defined as: "a tank in which the solid matter of continuously flowing sewage is disintegrated by bacteria. While the septic tank isn't carrying the waste off the property, the waste is removed from the house in order for it to be dealt with." We are of the opinion that this is similar enough to a sewer that the backup would not be covered. |

Apartment nightmare

Question: One of our insureds has a commercial policy (ISO CP 00 10 04 02 with CP 10 30 04 02 attached) covering a large apartment complex. The complex is not connected to a public sewer; it has an on-site septic system. Recently, the sewer line leading to the septic system backed up, flooding the lower units of the complex. The damage and cleanup costs are extensive. We think the loss is excluded, but the agent argues that a septic system is not a sewer, and the loss should be covered. His argument is that a sewer is public, but a septic system is private and as such is not a sewer. What is your opinion?

— Florida Subscriber

Answer: We believe that the loss is excluded. Exclusion B.1.g.(3) excludes "water that backs up or overflows from a sewer, drain or sump." Words or terms in insurance contracts are to be given their common everyday meanings. Webster's Collegiate Dictionary defines sewer as: "an artificial usu. subterranean conduit to carry off sewage and sometimes surface water." The definition in Random House International Dictionary is the same. The definition of septic tank is: "a tank in which the solid matter of continuously flowing sewage is disintegrated by bacteria." Therefore, a sewer is simply the conduit to reach either a tank or a public sewer system. Checking Black's Law Dictionary yielded no definitions for either "sewer" or "septic," so there are no differing definitions used in the courts. In the case of State of Maine et al. v. Manchester Heights Condominiums Associates v. Inhabitants of the Town of Manchester, 389 A.2d 844 (Maine 1978), the court was asked to rule on liability for the failure of one party to run a public sewer line to condominiums that were linked to a septic system, and used "sewer" to describe both connections. Therefore, the exclusion appears in common, everyday language. There is no "term of art" that needs a different interpretation. You are correct in denying the claim. |

Turn of events

Question: We have had an unusual claim presented and were initially of the opinion that the loss was not covered. But now, based on additional information, we think the loss may be covered. Our insured homeowner has an HO 00 03 05 01. During recent maintenance, the septic tank was found to have a crack in it, so that there is a slight leak. The crack could have occurred at any time. There is no damage to the dwelling. Our first thought was to deny coverage to replace the tank. We then learned that the septic tank is made of fiberglass, and looked at the additional coverage for glass breakage. We now think this claim should be covered. What do you think?

— Florida Subscriber