Insurance – Natural Hazard Exclusions – Flood

Floods are usually covered by ARPI policies but, on occasion, some policies exclude them or, failing that, give the client the option of extending the policy to cover it as an additional risk. The meaning of flooding has rarely been considered in the English courts and the courts must first consider the meaning of flooding in the context of the policy as a whole. In the case Young v. Sun Alliance and London Insurance Ltd. [1976] 3 All of ER 561, where the word “flood” was incorporated into a sentence with “storm and tempest,” was held not to cover damage caused by three inches of water seeping into a bathroom from an underground spring. most violent event.

In the case of Computer and Systems Engineering Pic c. John Lelliott (Ilford) Limited and Others (The Times, May 23, 1989), During construction operations at the insured’s premises, a metal strap was dropped on a sprinkler system pipe. The pipe 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 required to bear the risk of damage under clause 22C:1 of the JCT Construction Contract Standard Form (1980 edition) because the damage was not caused by ” flood” or “burst”. of pipes” within the definition of clause 22. Firstly, the court considered what an ordinary Englishman would say if asked “What caused the damage?” negligent of the strap that fractured the sprinkler pipe”;

As a result of the lack of direct case law, the court referred to several insurance cases related to the term “flood”*. It was related to Young v. Sun Alliance (above) and Commonwealth Smelting Limited v. Guardian Royal Exchange Assurance Limited. [1986] 1 Lloyd’s Rep 121, in support of proposals that:

– the flood must involve some natural phenomenon or abnormal event; Y

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

Therefore, damage to the sprinkler system does not constitute a flood or a bursting or overflow of water from tanks, fixtures, or pipes. The Court of Appeal upheld the decision suggesting that the word “flood” suggests the invasion of property by a large volume of water caused by a rapid accumulation or sudden release of water from an external source, usually, but not necessarily, as result of a natural phenomenon such as storm, tempest or downpour. Certainly, US authorities have not distinguished between man-made floods (such as a dam burst) and floods resulting from natural hazards.

Therefore, 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 whether or not the word has any ordinary meaning in common language; Y

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