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Surface Water...What Is It?

Author: Bill Wilson

One of the most common questions we get in our "Ask an Expert" service goes something like this: "Our insured suffered water damage to his basement when rain puddled and was blown in under or around the basement door." While the HO policy generally covers rain, it excludes "surface water," a term not defined in the policy. In this article, we'll take a look at what constitutes covered or uncovered water damage from rain.


Question"Our insured suffered water damage to his basement (wall-to-wall carpeting, baseboard, sheetrock, wallpaper, etc.) when rain was blown in around and under the basement door. Apparently the door did not fit tight against the frame or floor, allowing wind driven rain to enter the basement."  -- Maryland agent

Answer?On at least a monthly basis, our "Ask an Expert" service gets a question very similar to the one above. Usually it involves the issue of grade floor or basement water damage to carpets, flooring, baseboards, or other property following a heavy rainstorm. Whether this damage is covered or not depends on exactly what is the efficient proximate cause of the damage and whether or not that cause is covered by the policy in question. So, using the question above as the model, let's take a look at coverage under the HO 00 03 10 00 form.

The question implies two possible originating sources for the water damage. The first is a scenario where rain is blown directly by the wind through, for example, a door frame crack or even an open window. The second involves rain that puddles or pools and runs under a door or through an opening before it can drain away.

Looking at the first scenario under the HO-3, if water damage results from rain accompanying a windstorm, there is no specific exclusion, so most such losses would be covered. However, under a named perils form like the HO 00 02 10 00, there would be no coverage. Since perils comparable to the HO-2 apply to personal property in the HO-3, there'd be no damage for nonstructural property under that form either. The reason for this is the restrictive wording under the Windstorm or Hail peril:

This peril does not include loss to the property contained in a building caused by rain, snow, sleet, sand or dust unless the direct force of wind or hail damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening. [emphasis added]

As you can see, damage that results from rain blown through an existing crack or window opening isn't covered under this named perils wording. However, no such wording appears in the HO-3 form. Therefore, the HO-3 covers damage to property like that described in this claim under Coverage A but excludes damage to Coverage C personal property.

With regard to the second scenario, we have to move to the Section I - Exclusions area of the HO-3 which includes the following wording:

A.  We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

     3.  Water Damage
          Water Damage means:
          a.  Flood, surface water, waves, tidal water, overflow of a body
               of water, or spray from any of these, whether or not driven
               by wind; [emphasis added]

So, IF the damage results from "surface water" (undefined in the HO policy), there is no coverage. This exclusion applies even if the surface water results from a covered peril because of the concurrent/sequential causation wording of this set of exclusions.

Therefore, at issue is what is "surface water"? This issue has been examined by a number of courts with mixed results. However, the dominant position appears to be that losses resulting from an accumulation of rain water that then enters a structure is not covered by the policy. A notable decision is State Farm Fire & Casualty Company v. Paulson, a 1988 Wyoming Supreme Court case.

In this decision, the court found that the "surface water" exclusion applied where the accumulation of rain water entered a basement through ground level windows. In reaching this decision, the court cited several other cases where the issue of "surface water" had been considered:

  1. Transamerica Insurance Company v. Raffkind, Tex.Civ.App., 521 S.W.2d 935, 939 (1975), defines "surface water" as:  

    "natural precipitation coming on and passing over the surface of the ground until it either evaporates, or is absorbed by the land, or reaches channels where water naturally flows." 

  2. In Richman v. Home Ins. Co. of N.Y., 172 Pa.Super. 383, 94 A.2d 164, 166 (1953), quoting Fenmode v. Aetna Casualty & Surety Co. of Hartford, Conn., 303 Mich. 188, 6 N.W.2d 479, 481 (1942), it states:  

    "Surface waters are commonly understood to be waters on the surface of the ground, usually created by rain or snow, which are of a casual or vagrant character, following no definite course and having no substantial or permanent existence." 

  3. Urse v. Maryland Casualty Co., 58 F. Supp. 897, 899 (D.C.N.D. 1945) accepted two definitions of surface water, one from the Supreme Court of Appeals of West Virginia:  

    "'Surface water is water of casual, vagrant character, oozing through the soil, or diffusing and squandering over or under the surface, which, though usually and naturally flowing in known direction, has no banks or channel cut in the soil; coming from rain and snow, and occasional outbursts in time of freshet, descending from mountains and hills, and inundating the country; and the moisture of wet, spongy, springy, or boggy land. Neal v. Ohio River R. Co., 47 W.Va. 316, 34 S.E. 914, Pt. 2 Syl." 

    The other definition was from Kinney on Irrigation and Water Rights, § 318 at 516 (1912):  

    "'Surface' water may be defined as water on the surface of the ground, the source of which is so temporary or limited as not to be able to maintain for any considerable time a stream or body of water having a well-defined and substantial existence." 58 F. Supp. at 899. 

  4. Poole v. Sun Underwriters Ins. Co. of New York, 274 N.W. at 660 also used this definition from Kinney, together with that set forth supra by Richman v. Home Ins. Co. of N.Y., 94 A.2d at 164, and Fenmode v. Aetna Casualty & Surety Co. of Hartford, Conn., 6 N.W. at 479.

  5. Sherwood Real Estate & Investment Company v. Old Colony Insurance Company, La.App., 234 So.2d 445, 447 (1970) states: 

    "In 56 Am.Jur., verbo water, Sec. 65, it is stated:  

    "'The term "surface water" is used in the law of waters in reference to a distinct form or class of water which is generally defined as that which is derived from falling rain or melting snow, or which rises to the surface in springs, and is defused over the surface of the ground, while it remains in such defused state or condition....'" 

  6. Everett v. Davis, 115 P.2d at 823 states:  

    "Surface waters are those falling upon, arising from, and naturally spreading over lands produced by rainfall, melting snow, or springs. They continued to be surface waters until, in obedience to the laws of gravity, they percolate through the ground or flow vagrantly over the surface of the land into well defined watercourses or streams." 

  7. Ferndale Development Co., Inc. v. Great American Insurance Company, 527 P.2d at 940, adopts the definition of "surface water" from 5 Appleman, Insurance Law and Practice, supra at 463, as:  

    "...water which is derived from falling rain or melting snow, or which rises to the surface in springs, and is diffused over the surface of the ground, while it remains in such a diffused state, and which follows no defined course or channel, which does not gather into or form a natural body of water, and which is lost by evaporation, percolation, or natural drainage." 

  8. Aetna Fire Underwriters Insurance Company v. Crawley, 132 Ga.App. 181, 207 S.E.2d 666, 668 (1974) states that "surface water"  

    " used as a part of a series of contingencies all of which have in common the property that they comprise water flowing on the surface of the ground at the time they enter the home of the insured." 

  9. In Hatley v. Truck Insurance Exchange, 261 Ore. 606, 495 P.2d 1196, 1197 (1972), the court said:  

    "The term 'surface water,' particularly when used in conjunction with flood, waves, and tidal water, was intended to mean water 'diffused over the surface of the ground, derived from falling rains or melting snows.' Price v. Oregon Railroad Co., 47 Or. 350, 358, 83 P. 843, 846 (1906)."


More recently, in Georgetown Square v. United States Fidelity and Guaranty Co., 523 N.W.2d 380 (1994), surface water was defined to be that "which is diffused over the surface of the ground, derived from falling rains or melting snows, and continues to be such until it reaches some well defined channel in which it is accustomed to flow and does flow with other waters."

In addition, IRMI just reported on the case of Crocker v. Am. Nat'l Gen. Ins. Co., S.W.3d, 2007 WL 29708 (Tex. App., Jan. 5, 2007) where the court ruled that water damage arising from rain water accumulating on a patio was excluded. In fact, check out this complete IRMI article:

In dissentions in these cases, and in a few other cases, the exclusion was reputed not to apply because the attempt, based on the grouping of terms in this exclusion, was to avoid coverage for "widespread" flooding-type claims. ISO has addressed this issue in the 2000 edition of their forms by adding the wording (see exclusion above):  "These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area."

Based on a literal reading of the exclusion and the court cases cited above, it appears that water damage resulting from surface water accumulations, however widespread, is not covered.

Note: Most of these court cases are based on naturally occurring water, as opposed to a water source such as a broken water main. Several state courts (e.g., Texas, Arkansas, Pennsylvania, and Nebraska, to name four) have held that "surface water" does not include water from "unnatural" sources. For example, one court (Ebbing v State Farm Fire & Casualty Co., Arkansas Court of Appeals, 1999) said that "surface water" refers to "natural precipitation [rain or melted snow] coming on and passing over the surface of the ground until it evaporates, is absorbed by the land, or reaches channels where water naturally flows." The 2000 ISO HO-3 form makes a specific exception for coverage due to water damage that originates from a water line off the premises.

For another look at this issue, check out this article:

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