Floods do all sorts of damage. One aspect of damage often overlooked
is when the flood removes property from one property owner’s land and
deposits it on another’s land. Depending on where your property is
located and the severity of the flood event, the debris on the
policyholder’s property can be extensive and expensive to clean up. The
question naturally becomes, is this a covered loss under the Standard
Flood Insurance Policy?
A quick review of the policy would suggest yes. However, case law
shows that is not always the situation. The Standard Flood Insurance
Policy states “[w]e will pay the expense to remove non-owned debris that
is on or in insured property and debris of insured property anywhere.”
The policy delineates between debris that originated on the
policyholder’s property and debris that does not.
There is no question
that the removal of debris owned by the policyholder is covered
anywhere. The issue here is when will the policy cover the removal of
non-owned debris and it was addressed recently by the 3rd Circuit Court
of Appeals in Torre v. Liberty Mutual Fire Ins. Company.1
In Torre, the plaintiffs sought coverage for the removal of non-owned
debris deposited on their property during Superstorm Sandy. The Court
ruled that the land upon which a policyholder’s structures are built is
not considered insured property under the policy. The court stated:
In sum, the SFIP provides coverage for certain structures and other
items of property but not for an entire parcel of land. The entire
parcel of land thus cannot constitute “insured property” because it is
not insured by the SFIP at all.
And because the entire parcel of land
does not constitute “insured property,” the provision of the SFIP
requiring Liberty to pay for the removal of non-owned debris that is “on
or in insured property” does not apply to the expenses the Torres
incurred in removing non-owned debris from their land outside their
home.
Thus, unless non-owned debris is in or on the structure, the SFIP
will not cover it. There is, however, a more concerning note in this
case regarding government waste and the vexatious litigation strategies
employed by the flood carriers and their attorneys.
The total amount in
dispute in the Torre matter was $15,520. In my experience, I do not
believe there is any way that a matter can proceed through motions for
summary judgment and then a federal appeal for legal costs of less than
$15,000. More likely , the flood carrier spent far more to defend this
case than it would have cost them to settle it. I bet if the flood
carrier’s legal costs were not being covered by federal treasury
(taxpayers), the matter would have been resolved long before getting to
this point.
1 Torre v. Liberty Mut. Fire Ins. Co., No. 14-2733, 2015 WL 1344684 (3d Cir. Mar. 26, 2015).