Coverage Corner

BACKUP VS. OVERFLOW

By Bill Wilson

I used to work with a lady whose extended family reminded me of The Waltons … the TV show, not the box store family. They all lived on a mountain, well, actually a large hill, and where they lived on their property was determined by where they fell within the family tree.

Her great grandparents lived in a large 19th century house at the very top of the hill. Her grandparents lived a little further down the hill in an even older, but smaller, home. Below them resided her parents. Horizontally at several levels on the hill were aunts, uncles, cousins, and siblings in various sized dwellings and mobile homes.

She lived at the very bottom of the hill next to the public highway. That’s material to this story. She went with a sibling and a mutual friend on vacation for a week one summer. Unbeknownst to her and to everyone on the mountain, somewhere around the time she departed a blockage occurred in the sewer line between her house and the highway.

While she was gone, when higher status family members flushed their toilets or took a bath or shower, the contents made it all the way down the hill … where they encountered the blockage and began to back up until, cumulatively, they made their escape into and throughout her house.

While she was gone, when higher status family members flushed their toilets or took a bath or shower, the contents made it all the way down the hill … where they encountered the blockage and began to back up until, cumulatively, they made their escape into and throughout her house.

Initially, the contents backed up through her toilet and into her home, then simply discharged into her house whenever a toilet was flushed or water was used higher up on the hill. Unfortunately, since she was gone for a week, no one higher on the hill was aware that water and sewage were escaping into her house and not the main sewer line at the highway.

This is true backup from a sewer or drain which, unfortunately, is arguably (see below) not covered by most homeowners’ policies. For example, the ISO HO 00 03 excludes:

“Water or waterborne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump, or related equipment.”

Needless to say, unless coverage is endorsed onto most homeowners’ policies, insureds can suffer damage and remediation claims in the tens of thousands of dollars when sewage backs up into a home.

Contrast this with a simple toilet overflow where the water overflowing into a home never passes through a sewer line or drain. There are a number of ways a toilet drain can be blocked, ranging from excessive use of paper to a child stuffing a toy down the drain. Someone flushes the toilet, unaware of the blockage, and the tank fills and continually overflows from the toilet, for the most part, without ever entering the toilet drain or sewer line.

Now, note the wording of the ISO exclusion which only applies to “backup” through sewers or drains. The part of the exclusion attributable to “overflow” only applies to overflow from a “sump, sump pump, or related equipment.” An overflow of this type is not excluded by language like that in the ISO homeowner form, nor is there any reverse flow backup.

In fact, one might argue in the “Waltons” example above that only the initial backup of water and sewage from the blockage near the highway into the home is excluded. The remainder of the damage arguably arose from an overflow, not a backup, from a sewer line but not from a “sump, sump pump, or related equipment.”

While this column is devoted to personal, not commercial, lines coverage issues, it’s interesting to note that in ISO’s primary commercial property forms (e.g. the BP 00 03 and CP 10 30), a similar exclusion applies to both backup and overflow from a sewer or drain.

So, what do you think, and what has been your experience with similar claims?

Bill Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including “When Words Collide…Resolving Insurance Coverage and Claims Disputes,” which BookAuthority ranks as the #1 insurance book of all time. He can be reached at Bill@InsuranceCommentary.com.