Holding water (part 1): Definitions needed to understand water losses
Water issues are often confusing and involve multiple undefined terms. Reviews the terms and how they can be defined.
Editor’s note: This is the first installment of a four-part series on water losses and claims from FC&S coverage experts. Subsequent installments will review how commercial and home policies handle these losses. The series concludes with a look at some real-life cases.
One of the biggest issues is determining exactly what is covered and what is excluded — the policies use everyday terms such as backup, discharge, and overflow, and plumbing, sewer and drain. But what exactly do these terms mean? Both the HO 00 03 homeowners form and the CP 10 30 commercial property causes of loss form contain these terms without any specific definitions.
When terms are not defined in a policy, courts will turn to a standard desk reference to identify what the terms mean, since most insureds have access to a standard desk reference. We use Merriam-Webster online. Whatever dictionary you decide to use, be consistent.
Sewer
Merriam-Webster defines sewer as: “an artificial, usually subterranean conduit to carry off sewage and sometimes surface water (as from rainfall).”
Note that the purpose of the sewer, as defined, is to carry contaminated water or rainwater away from the location. Various online sources state that sewers carry wastewater and surface water run-off from drains to treatment facilities or disposal points. The sewer lines are outside the boundary of the property, so they are not part of the building, such as lines from the tub to the drain lines.
Therefore, the sewer carries wastewater and waste from the building to the municipal facilities off-premises or a septic system on premises. It could be water and waste from toilets, but also water from washing machines, dishwashers, tubs, and sinks.
Drains
Drains are defined as: “a means (such as a pipe) by what usually liquid matter is drained; a gradual outflow or withdrawal.”
Again, the various plumbing references state that drain lines are the exit lines for used water to leave the dwelling, such as the water from sinks, tubs, showers, dishwashers, clothes washers, and toilets. These lines drain into the sewer lines. So drains are still carrying water away from the building, but they are only the lines from one particular building.
The drains are the lines before you get to the sewer line – the sewer could be located on- or off-premises, but used water from sinks, tubs, toilets and washing machines travels down a drain line to reach the sewer line.
Plumbing
Plumbing is defined as “the apparatus (such as pipes and fixtures) working in the distribution and use of water in a building; an internal system that resembles plumbing especially: one consisting of conduits or channels for conveying fluids.”
The plumbing system moves water into the dwelling, including the drain lines from sinks, tubs, washers and toilets. One part of the system brings fresh water in while the other takes used or dirty water out towards the sewer.
Therefore, the plumbing in a building can encompass the tubs, toilets, sinks, and showers, as well as lines bringing potable water into the structure, and the drain lines carrying wastewater from the tub, sink, toilet or shower to the sewer line.
While sewers and drains can both be considered parts of the plumbing system, the policies use these terms separately, so we need to be deliberate in how the terms are used and understood. Not all plumbing is a sewer or drain and not all drains are sewers.
The next three terms deal with what the water is doing: is it backing up, overflowing, or discharging? Again, the three terms need to be specifically identified so that we understand what policy language is referring to.
Backup
First a note about the spelling; backup is spelled as one word when used as a noun or adjective and two words when used as a verb. Merriam-Webster online defines backup as “to accumulate in a congested state; an accumulation caused by a stoppage in the flow.”
If something is blocking water from traveling down the pipe, the water has no place to go. If it’s a small amount of water it may sit there; however, if it’s a larger volume of water, the water will not travel forward but will reverse direction and return from where it came, either through the sink, the tub or the toilet. The key factor is that the water reverses direction and goes back to where it came from. It then often spills out of the sink, tub, or toilet and runs onto the counter or floor.
Overflow
Overflow is defined as: “to flow over the brim of, to flow over bounds, to fill a space to capacity and spread beyond its limits.” In this situation, a receptacle such as a tub or sink is filled to overflowing; an insured may be filling the sink to wash dishes and run out to chase squirrels away from the bird feeder, leaving the water running. When she comes back, water is running onto the floor because the sink filled with water and then overflowed; there was no more room in the sink for the additional water, so it spilled onto the floor.
This is different from a backup in that the water didn’t reverse direction – it wasn’t really going anywhere other than filling a receptacle and the receptacle could not contain any more fluid. In some situations, the blockage is deliberate — the insured stopped up the tub or sink by putting in the stopper designed for that purpose.
There are times when both a backup and an overflow occur. For example, if a child puts a rubber duck in the toilet and that blocks the flow of water, technically that is a backup since there is an “accumulation caused by a stoppage in the flow.” But the water that then flows onto the ground is also an overflow, since the water flowed over the brim of the receptacle. Making a determination between the two can be difficult and policy language plays a part.
In Cardio Diagnostic Imaging, Inc. v. Farmers Ins. Exchange, water overflowed from a toilet in a suite on the third floor of an office building and the water flooded offices on the first floor, damaging medical equipment. The insured’s claim was denied by the insurer due to an exclusion for “water that backs up or overflows from a sewer, drain or sump”. The insured filed suit, claiming that the exclusion meant the water must come out of the sewer for the exclusion to be applied to the loss.
The blockage that caused the overflow was 20 to 40 feet down the sewer line and that blockage caused the water in the toilet to overflow. The insured argued that water must come out of the sewer or drain and the exclusion did not apply to water that cannot proceed forward down an interior drain. The lower court granted summary judgment for the insurer and the insured appealed.
On appeal, the insured argued that the water exclusion was ambiguous because there wasn’t a clear distinction between a water backup and water that overflowed. The appellate court disagreed. The judges held that the policy language was not ambiguous. The insured’s interpretation treated the exclusion as though it did not cover damage from “water that backs up and overflows from” a sewer or drain.
However, the exclusion specifically applied to “water that ‘backs up or overflows from’ a sewer or drain”. The insured’s interpretation had overlooked a critical part of policy language. The court found that the exclusion applied even though the water overflowed from a toilet and not a drain, and affirmed the judgment.
The wording of the exclusion is important because of the word “or” — both a backup or an overflow are excluded, not just one or the other. The court in Cardio Diagnostic found this difference to be critical, and interpreted the exclusion to give meaning to both water that backs up and water that overflows from a sewer or drain. When the insured argued that the water overflowed from a toilet and not the drain, the court disagreed. The court stated that the toilet was attached to a drain, and that water/substances that enter the toilet flow through the drain into pipes that enter the sewer system. A blockage in those pipes or sewer pipes will cause the pipes leading to the drain to be filled with additional water that will overflow into and eventually out of the toilet, and that is what happened in the loss in question.
Discharge
The next term to review is discharge; Merriam-Webster defines discharge as: “to pour forth fluid or other contents; a flowing or issuing out, a rate of flow; something that is emitted.”
If a pipe breaks, water will flow out of the pipe and onto the floor; that is a discharge. It doesn’t matter if that release is sudden or occurs over a period of time. The discharge may be from a water or storm drain, a steam pipe, a sewer pipe or other containment used to move water.
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