Insured denied coverage on basis that loss was captured by “flood” exclusions in policy

The pooling of rainwater resulting in water damage to a building did not qualify as “the rising of, the breaking out of, or the overflow of any body of water” under the policy of insurance.

Property insurance – Water damage – Coverage – Exclusions – Interpretation of policy – Summary judgments

Parker Pad & Printing Ltd. v. Gore Mutual Insurance Co., [2017] O.J. No. 3292, 2017 ONSC 3894, Ontario Superior Court of Justice, June 26, 2017, R. Charney J.

A building was flooded following significant rainfall. The property owner made a claim under the insurance policy, which the insurer denied.

At issue was whether the pooling of rainwater fell within the policy’s definition of “flood”. The policy defined “flood” as “the rising of, the breaking out of, or the overflow of any body of water whether natural or man-made…”.  The policy excluded coverage for such floods but the insured had obtained a Flood Endorsement which provided an extension of coverage, subject to other exclusions.  The Court held that the flood exclusion did not apply as the phrase “body of water” referred to an existing and identifiable body of water, such as a river, lake, or reservoir.

The policy also excluded coverage for floods occurring “by seepage, leakage or influx of water derived from natural sources through … foundations”. The building did not have a basement and was on a concrete block foundation with a portion of the foundation above ground.  The Court found that the loss fell within this exclusion because it was caused by the seepage of water through the foundation. The water damage to the insured’s premises was also not covered under the Flood Endorsement because the rain that entered the building did not enter the building as a direct result of the “flood”.

This case was digested by Kora V. Paciorek and edited by Steven W. Abramson of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at kpaciorek@harpergrey.com or sabramson@harpergrey.com or review their biographies at http://www.harpergrey.com.

To stay current with the new case law and emerging legal issues in this area, subscribe here.