A New Jersey appeals court has upheld a trial court’s ruling that Chubb Insurance Co. is not responsible for damages to two insureds’ homes caused by Superstorm Sandy because of a flood exclusion in their policies.
In October 2012, Superstorm Sandy made landfall near Atlantic City, sixty miles south of Mantoloking, N.J. With wind gusts as high as 80 miles per hour, a severe storm surge occurred with tides in Mantoloking rising between nine and 11 feet, not including wave height, according to the appeals court opinion document.
Plaintiff Stephanie Doerfler, who owned a home in Mantoloking, had previously purchased an insurance policy from Chubb Insurance Company of America covering her real and personal property. Plaintiff Ronald Doerfler, now deceased, lived on the same street as Stephanie and had purchased an identical policy from Federal Insurance Company, a member of Chubb Group of Insurance Companies.
The policies contained a surface water exclusion that barred coverage for “any loss caused by flood, surface water, waves, tidal water, overflow of water from a body of water…or spray from any of these, even if driven by wind.”
The policies also included a mandatory New Jersey notification that they did not cover damages from flood.
Additionally, Stephanie and Ronald had purchased separate flood insurance policies from Fidelity National Indemnity Insurance Company, which insured the structure of each of their homes for $250,000 and provided some coverage for the contents of their homes.
Due to the storm surge during Superstorm Sandy, surface water flooded onto both of the plaintiffs’ properties. Their homes ultimately collapsed.
Stephanie and the estate of Ronald notified their insurers of their losses and submitted claims to Fidelity. Fidelity paid both Stephanie and the estate the maximum available under their flood insurance policies.
Storm Surge Damage
Chubb’s claims adjuster for Ronald’s property, Scott Shearer, retained Kimball J. Beasley of engineering firm Wiss, Janney, Elstner Associates Inc. to investigate the property’s damage.
Beasley reported that wind was not a significant factor in the collapse of the home and that the damage was instead caused by storm surge. As a result of this report, Shearer informed Ronald’s estate on January 18, 2013, that the damage was caused by surface water and was not covered by the policy.
Stephen Constanzo, Chubb’s claims adjuster for Stephanie’s property, obtained a report with similar findings.
On December 3, 2012, Jason Peddle and Harald Greve of Applied Engineering and Technology submitted a report based on their inspection of Stephanie’s property, concluding that the damage had occurred because of storm surge and flood waters, not wind. As a result, Constanzo denied Stephanie’s insurance claim because of the surface water exclusion.
Exclusion Language Dispute
In disputing these denied claims, the plaintiffs pointed to the exclusion language in their policies. Because the policies’ surface water exclusions did not specifically exclude loss caused by storm surge, they contended their claims should be covered.
The trial court judge dismissed this argument, stating the surface water exclusion was clear in barring damages caused by floodwaters.
“The exclusion was unambiguous, and defendants were not required to list every synonym that could be used to describe a flood,” according to the appeals court opinion document.
The plaintiffs also alleged their damages should have been covered since “building collapse” was not an excluded loss under their policies. The trial court judge concluded that while the collapse of their homes was the form of damage, it was not the direct cause of damage.
“…there is no evidence in the record suggesting there was a defect within the walls of plaintiffs’ homes that would account for the collapse of the structures,” the appeals court opinion document stated. “Instead, the record clearly established that the water pressure caused by the flood waters inundating the properties directly caused their collapse.”
After the trial court judge ruled on April 17, 2019, that the losses claimed by the plaintiffs were not covered under their insurance policies, Stephanie and the estate of Ronald appealed.
An appeals court judge upheld the trial court’s decision, finding that the trial court judge correctly concluded that Stephanie and Ronald’s policies did not cover the losses they sustained in the flood that destroyed their homes.
“Here, the record clearly indicates that plaintiffs’ homes were destroyed by the surface water that flooded their properties during the storm,” the appeals court opinion document stated. “Therefore, the judge properly concluded that the exclusions barred plaintiffs from recovering under their policies.”
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