A few weeks ago an area in Michigan had two dam breaks due to heavy storms that rolled through. A couple of cities had severe flooding when a lake drained into the river due to the dam breaks. The homes around the lake did not have flooding issues, but are now having problems with their wells going dry. Well drillers are attributing this to the dam breakage and water rushing out of the lake. Residents are now looking to their insurance policies to assist in either driving a new well or hooking into city water. Is there a justifiable exclusion or is this something that could be covered?

Michigan Subscriber

First, the policy specifically excludes land, including land the property or other structures is built on. Water is also not covered, and both these exclusions have no exceptions or modifying parameters so they are incredibly broad.

Water below the surface of the ground is excluded as well. The water exclusion excludes water that escapes, overflows or discharges, for any reason, from a dam, levee, seawall or other containment system. While it's implied that the water from the dam is causing damage to the property, and here you have no damage, it's not directly stated. The exclusion section states that "we do not insure for loss caused directly or indirectly by any of the following". This is an indirect loss caused by the failure of a dam which affected water under the surface of the ground.

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