Court Rules Sewer Backup Clause Does Not Include Internal Plumbing

Jason Cieri | Property Insurance Coverage Law Blog | February 13, 2019

Back in January 2017, I blogged about the landmark case of Pichel v. Dryden Mutual Insurance Company,1 where New York’s Third Department ruled that the insurance policy contained an ambiguity when differentiating between loss caused by backup to a sewer or drain and a loss caused by backup to an internal plumbing system.

The court stated:

“[T]hat water damage caused by a backup/overflow that originates from a pipe or clogged drain located within the insured’s property line comes from the insured’s plumbing system and is covered by the policy; conversely, if the cause of the backup/overflow is from outside the insured’s property boundaries – such as a clogged municipal sewer that forces water from outside the insured’s plumbing system to overflow – the sewer or drain exclusion is applicable.”2

While this is good case law for New York counties in the Third Department, other jurisdictions had yet to adopt the same reasoning—until now.

Recently, the Honorable Jack Libert in the Supreme Court, Nassau County, had this same issue before him.3 On December 6, 2016, Plaintiff, Hix Brix LLC, sustained a water loss to their basement when a pipe broke and clogged, causing water to back up into the basement. The insurer investigated the claim and paid money solely due to a water-backup endorsement, and without that endorsement the claim would be excluded under the “water” exclusion which read:

B. Exclusions
g. Water
(3) Water that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump, or related equipment.

Also contained within the AmGuard policy was an exclusion for “frozen plumbing.” Due to the term “plumbing” being used within this exclusion, I asked the court to recognize a distinction between the terms “plumbing” and “sewers and drains” – the plumbing being on the plaintiff’s property and the sewers and drains being off premises.

The court ruled in favor of the insured noting that an ambiguity existed in the policy regarding the exclusionary clause. The court noted, “[t]he language excluding damage from ‘sewer, drain, sump pump or related equipment’ is not specific and clear with respect to internal plumbing.”

I leave you with a quote from British philosopher, Thomas Reid, who stated: “There is no greater impediment to advancement of knowledge than the ambiguity of words.”
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1 Pichel v. Dryden Mutual Ins. Co., 117 A.D.3d 1267 (N.Y. App. 3rd Dept. 2014).
2 Pichel at 1269.
3 Hix Brix v. AmGuard Ins. Co., No. 600249/18 (N.Y. Sup. Ct., Nassau County Sept. 27, 2018).

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