New Hampshire: Regardless of Burst, Water an Uncovered Flood, Not a Covered Explosion, Supreme Court Rules

A property insurance policy with a flood and water exclusion does not cover loss caused by water even if the flood was the result of a “burst” that could be construed as an explosion, the New Hampshire Supreme Court ruled recently.

In Bates v. Phenix Mutual Fire Insurance Co., a policyholder sought coverage for real and personal property damaged by water after heavy rains caused water to build up on one side of an elevated road and eventually “burst” through the road. In a declaratory judgment action, the policyholder claimed the damage was “directly caused by the explosion of the road and that the explosion occurred as a result of the pressure of water.”

The policy provided coverage for explosions but excluded coverage for water and flood. In arguing for coverage, the policyholder asserted that the collapse of the road was an explosion under the policy because it was caused by a sudden release of energy.

But the court concluded that it did not matter whether the collapse of the road was an explosion because the cause of the loss was flood rather than explosion. The court pointed out that the policy specifically excludes “loss or damage caused directly or indirectly” by water “regardless of any other cause or event that contributes concurrently or in any sequence to the loss” and noted that the policyholder did not argue that the property damage was “caused by anything other than water.”

“Even if we assumed that the collapse of [the road] was an explosion, neither party has argued that the damage here was caused by, for example, dirt, rocks, or broken pavement from that collapse,” the court noted. “Instead, both parties maintain that the cause of damage to the plaintiff’s properties was water .… Because loss or damage caused by water is an excluded cause of loss, the policy did not cover the damage.”

Direct questions to NAMIC State Affairs Manager Paul Tetrault.

Posted: Tuesday, April 08, 2008 12:00:00 AM. Modified: Tuesday, April 08, 2008 3:35:03 PM.

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