Insurance – Natural Hazard Exclusions – Floods

ARPI policies commonly cover floods but sometimes some policies exclude them or alternatively give the customer the option to extend the policy to cover them as an additional risk. The meaning of flood has been considered infrequently in English courts, and courts must first consider the meaning of flood in the context of politics as a whole. In Young v. Sun Alliance and London Insurance Ltd. [1976] 3 All ER 561, where the word “flood” was incorporated into a phrase with “storm and tempest”, was held that it did not cover the damage caused by three inches of water that leaked into a toilet from an underground spring. most violent event.

In the case of Computer & Systems Engineering Pic v. John Lelliott (Ilford) Limited and Others (The Times, May 23, 1989), during construction operations at the insured’s premises, a metal strap was dropped onto a sprinkler system pipe. The pipeline was damaged, leaking water which in turn damaged the insured’s property. The court was asked to decide whether or not the property owner was obligated to bear the risk of damage under clause 22C: 1 of JCT’s standard construction contract form (1980 edition) because the damage was not caused. for “flood” or “pipe explosion” within the definition of clause 22. First, the court considered what ordinary English would say if asked “What caused the damage?” His answer would have been “the negligent fall of the belt that fractured the sprinkler pipe”;

As a result of the lack of direct jurisprudence, the court referred to the various insurance cases related to the term “flood” *. Relied on Young v Sun Alliance (above) and Commonwealth Smelting Limited v Guardian Royal Exchange Assurance Limited [1986] 1 Lloyd’s Rep 121, supporting proposals that:

– floods must involve some natural phenomena or abnormal phenomena; and

– “burst and overflow” was to be interpreted intransitively, implying some interruption of a pipeline from within. (In other words, without the help of external factors).

Therefore, the damage to the sprinkler system was neither a flood nor a burst or overflow of water from tanks, appliances or pipes. The Court of Appeal upheld the decision by suggesting that the word “flood” suggested invasion of the property by a large volume of water caused by a rapid accumulation or sudden release of water from an external source, generally, but not necessarily, as a result of a natural phenomenon such as a storm, tempest or downpour. Certainly, the US authorities have not distinguished between man-made flooding (such as a dam bursting) and flooding resulting from natural hazards.

Therefore, as when considering the definition of any phrase within the context of ARPI, a court:

– look at the context in which the word is found;

– ask if the word has an ordinary meaning in ordinary language; and

– look at court precedent to see where courts have been asked to consider the word in a similar context.