The Earth Movement Exclusion: New Jersey and New York Hurricane Sandy Victims Being Wrongfully Denied Foundation Damage
Almost half of the Hurricane Sandy homeowner flood insurance cases in New York and New Jersey that I have in my office are the direct result of flood insurance companies denying foundation damage under the Earth Movement Exclusion of the Standard Flood Insurance Policy (SFIP). In some circumstances the insurance company’s assessment may have been correct. However, if the cracks in the foundation, floors and walls are new and did not exist prior to the Hurricane Sandy, the Earth Movement Exclusion should not apply and the claim should be paid.
The SFIP is supposed to cover for “direct physical loss by or from flood to your insured property ….” “Direct physical loss by or from flood” is defined as a loss or damage to insured property, directly caused by a flood. There must also be evidence of physical changes to the property.
The Earth Movement Exclusion states: We do not insure for loss to property caused directly by earth movement even if the earth movement is caused by flood. Some examples of earth movement that we do not cover are:
• Land subsidence;
• Destabilization or movement of land that results from accumulation of water in subsurface land areas; or
• Gradual erosion.
However, the SFIP goes on to state: We do, however, pay for losses from mudflow and land subsidence as a result of erosion that are specifically covered under our definition of flood. Note that sections of SFIP define flood as:
1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
• Overflow of inland or tidal waters;
• Unusual and rapid accumulation or runoff of surface waters from any source;
2. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined… above.
Further, FEMA defines, and expands, the definition of flood and flooding to mean:
a) A general and temporary condition of partial or complete inundation of normally dry land areas from:
(1) The overflow of inland or tidal waters.
(2) The unusual and rapid accumulation or runoff of surface waters from any source.
(3) Mudslides (i.e., mudflows) which are proximately caused by flooding as defined in paragraph (a)(2) of this definition and are akin to a river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water and deposited along the path of the current.
(b) The collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels or suddenly caused by an unusually high water level in a natural body of water, accompanied by a severe storm, or by an unanticipated force of nature, such as flash flood or an abnormal tidal surge, or by some similarly unusual and unforeseeable event which results in flooding as defined in paragraph (a)(1) of this definition.(emphasis added).
Reading all these provisions together, the SFIP should pay for losses from land subsistence when a natural body of water over flows its banks as a result of a flood and the waves or currents of water undermine and damage insured buildings located on its banks. In the cases that I have seen, it is undisputed that the tidal surges, including those along rivers, of Hurricane Sandy caused a “flood” as defined by the SFIP and the currents of water came into direct contact with the dwellings and caused immediate damage. Accordingly, coverage should be provided.
Also read our post “Why Aren’t Flood Insurance Companies Covering Cracked Foundations Caused by Flood?” http://www.floodinsuranceattorneys.com/why-arent-flood-insurance-companies-covering-cracked-foundations-caused-by-flood/.
About the Author: Christopher W. Gerold is an attorney in Wolff & Samson’s Disaster Recovery Claims Group. Chris represents homeowners, condominium associations and businesses with their Sandy related insurance claims with a special focus on flood insurance. For more information on flood insurance and ways Wolff & Samson can help you with your flood insurance claim, please contact Chris at (973) 530-2061.