Holding water (part 3): Water terms used within the homeowners policy
Review how the terms such as plumbing, sewer, drain, overflow, or discharge are applied in the homeowners policy.
Editor’s note: This is the third installment of a four-part series on water losses and claims from FC&S coverage experts. The first piece is available here, and the second installment is here. The series will conclude with a look at some real-life cases.
In the article the first part of this series, we defined terms commonly used in both the commercial property policy and the homeowners policy, while part explained how those terms are used within the commercial property policy and what that meant for coverage. This article does the same for the homeowners policy HO 00 03 03 22.
Plumbing, sewer & drain
Plumbing
The homeowners policy uses the same terms as the commercial policy and has similar issues.
The term plumbing appears ten times in the HO 00 03 Homeowners form: It first appears in the exclusion for: “2.c.(1) freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing.” The exclusion continues with language that explains what is not considered part of the plumbing system: “For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.” This explanation appears in multiple sections of the policy.
Under the exclusion for mold, fungus or wet rot, an exception exists for mold behind ceilings, walls and floors if the cause was accidental discharge or overflow of water or steam from: “a plumbing, heating, air conditioning or automatic fire protective sprinkler system, or a household appliance on the residence premises.”
This is identifying plumbing as a cause of loss, but it doesn’t help define the term. The description of what is not a plumbing system appears after the next clause in the policy for clarification: “For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment,” so that certain equipment is identified as not being part of the plumbing system. However, plumbing or plumbing system is never defined in the policy.
Plumbing is next mentioned in an exception to a series of exclusions that includes wear and tear, marring, mechanical breakdown, smog, rust corrosion, smoke from agricultural smudging, pollution, settling, shrinking, bulging, and animals. The exception provides coverage for damage that results from the accidental discharge or overflow of water or steam from within a: “(ii) Pumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance on the “residence premises.” This includes the cost to tear out and replace any part of a building or other structure on the “residence premises,” but only when necessary to repair the system or appliance.”
That section also includes the description of what is not plumbing that we have seen before: “For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment, or a roof drain, gutter, downspout or similar fixtures or equipment.”
Plumbing next appears in the coverage C named perils under accidental discharge or overflow of water or steam and it is a definition of the peril itself: “a. This peril means accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance.” Again the language describing what is not considered plumbing is included: “c. In this peril, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.”
The coverage C peril for freezing also is defined using the term plumbing as follows: “a. This peril means freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, but only if you have used reasonable care to.”
Again, the language identifying what is not part of the plumbing system is included: “b. In this peril, a plumbing system or household appliance does not include a sump, sump pump or related equipment, or a roof drain, gutter, downspout or similar fixtures or equipment.” This is the last reference to plumbing in the policy.
Sewer
Sewer is used three times in the homeowners policy. First, it appears in the mold, fungus or wet rot exclusion as part of the exception for mold behind ceilings, walls and floors if the cause was accidental discharge or overflow of water or steam from: “(b) A storm drain, or water, steam or sewer pipes off the “residence premises.”
The term sewer is next mentioned in an exception to a series of exclusions that includes wear and tear, marring, mechanical breakdown, smog, rust corrosion, smoke from agricultural smudging, pollution, settling, shrinking, bulging and animals. The exception provides coverage for damage that results from the accidental discharge or overflow of water or steam from within a: ”(i) Storm drain, or water, steam or sewer pipe, off the “residence premises.”
The final reference to sewer appears in the water exclusion as a cause of loss. The policy reads: “b. Water which: (1) backs up through sewers or drains. Unlike the language for plumbing, there is no clarifying language that indicates what is or is not considered part of the sewer or sewer pipes.
Drain
The homeowners policy refers to drain twelve times, but not all references are related to the topic at hand. Other references provide coverage for damage from collapse or advise that certain lines must be drained to prevent loss.
The first reference is within the exclusion for freezing, and refers to drain as follows: “For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.” This is the language that we repeatedly see describing what is not considered to be part of a plumbing system or household appliance, and it will be seen a few more times. Note that it is not just any drain, but a roof drain. A roof drain is a drain on the roof designed to divert water and debris off the roof and into a drainage system.
The next mention is in the mold, fungus or wet rot exclusion as part of the exception for mold behind ceilings, walls and floors if the cause was accidental discharge or overflow of water or steam from: “(b) A storm drain, or water, steam or sewer pipes, off the “residence premises.”
Note that it is not a general drain, but a storm drain. Merriam-Webster defines a storm drain as: “A drain that carries water (such as rainwater) away from a street, parking lot, etc.” Also, the drain needs to be off the residence premises for this part of the coverage exception to apply.
This section also includes the provision clarifying what isn’t a plumbing system: “For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.”
Drains are next mentioned in an exception to a series of exclusions that includes wear and tear, marring, mechanical breakdown, smog, rust corrosion, smoke from agricultural smudging, pollution, settling, shrinking, bulging and animals. The exception provides coverage for damage that results from the accidental discharge or overflow of water or steam from within a: “(i) Storm drain, or water, steam or sewer pipe, off the “residence premises.”
Again, this is particular to a storm drain, and not just any drain. That section also includes the description of what is not plumbing that we have seen before: “For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.”, again addressing only roof drains, and not other drains.
Under the water exclusion the policy reads: “b. Water which: (1) Backs up through sewers or drains; or”. This is the first mention of a general drain, and the exclusion applies to a backup of that drain only.
Backup, overflow & discharge
Backup
In the homeowners policy, backup is mentioned one time in the water exclusion. There the policy states that water that “(1) backs up through sewers or drains” is excluded.” So a backup is only excluded if it is a sewer or drain that backs up, and not any part of the plumbing, unless, as discussed earlier, some drains may be considered part of the plumbing.
Overflow
Overflow is listed nine times in the homeowners policy. The first instance is within the freezing exclusion, where the overflow from a plumbing, heating air conditioning or appliance is excluded except for under certain conditions.
The next mention of overflow is within the exception to the exclusion for mold, fungus, or rot as long as the mold, fungus, or rot is behind walls, ceilings, or floors and is caused by “accidental discharge or overflow of water from within . . . ” The section then describes what the water must overflow or discharge from.
In the exception to a series of exclusions that includes wear and tear, marring, mechanical breakdown, smog, rust corrosion, smoke from agricultural smudging, pollution, settling, shrinking, bulging, and animals, ensuing damage from an overflow is covered. The policy reads: “Unless the loss is otherwise excluded, we cover loss to property covered under coverage A or B resulting from an accidental discharge or overflow of water or steam from within a.” The policy then lists that the overflow or discharge must be from a storm drain, water or sewer pipe off the residence premises or from a plumbing, heating, air conditioning, sprinkler system or appliance.
Under coverage C one of the covered perils is accidental discharge or overflow of water or steam. The policy then states that the “overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance.” Not included in the coverage is damage on the “residence premises” if it is caused by “accidental discharge or overflow which occurs off the “residence premises.” While overflow is covered if it comes from a plumbing system, it is not covered if the damage to personal property is caused by an overflow from a system off of the “residence premises.”
The exclusion for water specifically excludes “Flood, surface water, waves, . . . tides, tidal water, overflow of any body of water, or spray from any of these . . . and water which “(2) overflows or is otherwise discharged from a sump, sump pump or related equipment”. Lastly, the exclusion applies to the “. . . escape, overflow, or discharge, for any reason, of water or waterborne material from a dam, levee, seawall . . . ”
Discharge
The term discharge is used thirteen times in the homeowners policy. However, a few references are to unrelated issues such as nuclear discharge, the discharge of pollutants or from animals. The freezing exclusion first mentions discharge as follows: “freezing of a plumbing, heating, air conditioning or automatic fire protective sprinkler system or of a household appliance, or by discharge, leakage or overflow from within the system or appliance caused by freezing.” This connects discharge to a plumbing system.
Discharge is next connected to the exception to the mold exclusion if the cause of the mold was “ . . . accidental discharge or overflow of water or steam from within: “(a) A plumbing, heating, air conditioning or automatic fire protective sprinkler system, or a household appliance, on the “residence premises or (b) A storm drain, or water, steam or sewer pipes, off the residence premises.” This again ties discharge to a plumbing system or a storm drain or sewer pipes.
Similar to overflow, discharge is included in the ensuing damage exception to the series of exclusions that includes wear and tear, marring, mechanical breakdown, smog, rust corrosion, smoke from agricultural smudging, pollution, settling, shrinking, bulging, and animals. The policy reads: “Unless the loss is otherwise excluded, we cover loss to property covered under coverage A or B resulting from an accidental discharge or overflow of water or steam from within a.” The policy then lists that the overflow or discharge must be from a storm drain, water, steam or sewer pipe off the residence premises or from a plumbing, heating, air conditioning, sprinkler system or appliance on the “residence premises”.
Under coverage C the accidental discharge or overflow of water or steam peril states: “This peril means accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance.” It also states that the peril does not include damage that occurs on the “residence premises” if it is caused by a discharge or overflow which occurs off the “residence premises.” Therefore, if a sewer off-premises discharges water that damages personal property within the dwelling, there would be no coverage.
The water exclusion is the next place discharge is mentioned. Water which “b.(2) overflows or is otherwise discharged from a sump, sump pump or related equipment” is excluded. Note that it must be water discharged from a sump, sump pump or related equipment and it does not exclude a discharge from a drain or sewer. The exclusion also applies to the “ . . . escape, overflow or discharge, for any reason, of water or waterborne material from a dam, levee, seawall or any other boundary or containment system.” Otherwise, unless otherwise noted in the policy, a discharge is covered.
Analysis
Plumbing
Plumbing in the homeowners policy is used in connection with heating, air conditioning, or other equipment or appliances. Discharge or overflow is used in connection with freezing of the equipment or accidental discharges from the equipment that damages personal property. While freezing of plumbing etc. is excluded, an exception exists if heat has been maintained in the building or the water is turned off and the pipes drained.
Another exception exists for discharge or overflow from the plumbing if mold, fungus or wet rot is found behind ceilings, walls, and floors and the cause of the mold or rot was the discharge/overflow from the plumbing, heating, or appliances.
The policy goes to some length to explain multiple times that a plumbing system does not include a “sump, sump pump, or related equipment, or a roof drain, gutter, downspout or similar fixtures or equipment”. Therefore, the plumbing system in the homeowners policy would be the appliances such as hot water heater, dishwasher, clothes washer, incoming potable water lines, and sinks, tubs, showers, and toilets.
Sewer
If a sewer pipe overflows or discharges and that discharge causes mold or rot behind ceilings, walls, or floors and the sewer pipe is off-premises, there is coverage for that mold damage. It’s important to note that the sewer must be off the premises; the sewer lines carry wastewater and other products to the municipal treatment facilities or disposal points. Otherwise, the backup of a sewer is excluded. If there is a discharge or overflow from a sewer off-premises, then ensuing damage from that discharge or overflow would be covered.
Drain
While according to the dictionary definition, drains could be considered part of the plumbing, the policy explicitly states that in certain instances drains are not to be considered as part of the plumbing system.
However, that particular language is talking about a specific type of drain, a roof drain. Roof drains are not considered part of the plumbing system, therefore ordinary drains would be part of the plumbing. If a drain, other than a roof drain, freezes and causes water damage, that would be covered as long as the conditions for freezing coverage applied.
Drain is referenced in the exclusion and exception for mold, fungus or rot behind walls, ceilings or floors if the cause is an overflow or discharge in part from a storm drain. Remember storm drains are those that carry water away from a street, parking lot, etc. In order for coverage to apply here, water would need to originate from a storm drain off the premises that discharges or overflows and causes mold or fungus to grow hidden behind the walls/floors/ceilings of the premises. Note that backup is not used here, so the storm drain that takes water from the insured’s street must fill to capacity and overflow or discharge into the dwelling behind the walls. So if heavy rains overflow the city’s storm drainage system and that water enters the insured’s basement causing damage, that would be covered.
Acts of water analysis
Discharge and overflow
The ensuing loss exception to the list of exclusions for wear and tear, mechanical breakdown etc. is for discharge or overflow of water from a storm drain off the premises. Again, the water must discharge or overflow from that storm drain, and the storm drain takes water away from the street or parking lot; for coverage to apply, that drain must fill to capacity and cause water to enter and damage the premises. So if the heavy rains overflow the town’s storm drains and water enters causing the refrigerator to break down, that mechanical breakdown loss would be covered.
Next is the coverage C named peril for accidental discharge or overflow of water or steam from within a plumbing system or appliance. Again, roof drains are excluded, but we determined earlier that a regular drain from a tub or sink would be part of the plumbing system. So if the pipe under the sink leaks, damage to personal property would be covered.
Freezing is another coverage C peril that includes plumbing and excludes roof drains, meaning that if the normal drains freeze and cause damage, there would be coverage barring the standard conditions. Roof drains are again excluded.
Backup
Lastly, the water exclusion excludes coverage for water that backs up through sewers and drains. This is a regular drain, not a roof drain or storm drain. So if water backs up through the sewer or the drains leading away from the dwelling, there is no coverage.
This article includes copyrighted material of Insurance Services Office, Inc., with its permission.
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