1st Circuit on Rain Limitation, Flood Coverage, Surface-Water Exclusion, & Efficient Cause

In Fidelity Co-Operative Bank v. Nova Cas. Co., 726 F.3d 31 (1st Cir. 2013), the United States Court of Appeals for the First Circuit reportedly turned a rooftop drain into a sewer drain (by virtue of an amendatory endorsement that may have simply failed to reiterate sewer backup as an exclusion; or did it expressly state that it was replacing the entire clause containing the sewer-backup exclusion?) and turned "surface" from the land at the property/structure(s) into also including the structure(s) (the roof only and not as a runoff source to the land upon which the structure(s) sit).

Are rooftop drains extensions of the storm-sewer system, per se? Was the drain connected directly to the sewer system? If not, isn't deeming a rooftop drain a sewer drain more than a stretch?

The court also took the words “the unusual or rapid accumulation or runoff of surface waters from any source” and ignored the term "runoff." Rain falling directly onto a roof is not "runoff" from any source unless clouds dropping rain is runoff, which is clearly not the case or language is rendered useless here. Did the court deem the roof itself the source of "runoff" into the upper floors of the building? Apparently so.

The insurers (insurance companies, carriers) will have to rewrite their definitions to clear this up going forward.

See: When It Rains It Pours: The First Circuit Tackles a Conflux of the Rain Limitation, Flood Coverage, Surface Water Exclusion, and Efficient Proximate Cause | Property Insurance Coverage Insights

If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.