Appellate Division Addresses Water Damage Exclusions in Homeowner’s Policy

May 21, 2019

In a case involving a homeowner’s policy, the Appellate Division recently held that water damage exclusions in a homeowner’s policy did not clearly bar plaintiff’s claim and, therefore, reversed a grant of summary judgment in favor of the carrier.  Sosa v. Massachusetts Bay Ins. Co., - N.J. Super. – (App. Div. 2019). 

Plaintiff, Adrian Sosa, was insured by defendant, Massachusetts Bay Insurance Company.  In September 2015, a municipal water-main pipe broke causing water to flow from the street into plaintiff’s driveway and then into the garage and basement apartment of his home. 

Essentially, the policy provided coverage for damages caused by water from sewers, drains or sump pumps, except if caused by a flood.  The policy also excluded coverage for damages caused by water below the surface of the ground.  The trial court granted summary judgment and the Appellate Division reversed.

The Appellate Division held that neither exclusion precluded coverage.  Combing through the policy language, the Appellate Division held that the exclusion was ambiguous in the definition of certain terms and construed those ambiguities against the insurer.  It further noted that certain policy terms were not conspicuously displaced but rather buried in endorsements with misleading titles.  Ultimately, the court held that the water that entered and damaged plaintiff’s property was neither “flood” water nor “surface” water as defined by the rather confusing policy.  Finally, the court quickly dismissed the exclusion barring coverage for water below the surface of the ground, as the water that damaged plaintiff’s home was no longer below the surface of the ground when it reached his property.