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Exclusions In Standard Flood Insurance Policy

October 7, 2015
By: Scahill Law Group PC

Exclusions In Standard Flood Insurance Policy: Marie Clifford had a residence in Plattsburgh, New York, right on Cumberland Bay, on the Vermont border. A beautiful part of New York, however, frequent floods occur. A Standard Flood Insurance Policy ("SFIP") issued by Preferred Mutual Insurance Company was at issue before the United States District Court, Northern District of New York, in Clifford v. Preferred Mut. Ins. Co., Docket No. 8:12-CV-1331 (N.D.N.Y. Sept. 15, 2015). In a ruling signed by Judge Scullin on September 15, 2015, the plaintiff's case was dismissed on motion. The insurance carrier argued the damage to the plaintiff's premises was caused by earth movement, not covered under the policy.

The Court held, "Under the SFIP, policyholders are not insured for "loss to property caused directly by earth movement even if the earth movement is caused by the flood." See 44 C.F.R. § 61 App. A(1) art. V(C). Courts of Appeals in two Circuits have found that the SFIP specifically excludes damages resulting from "earth movement" as compensable under an SFIP, even where that earth movement was the result of flooding. See Sodowski v. Nat'l Flood Ins. Program of FEMA, 834 F.2d 653, 657-59 (7th Cir.1987); Wagner v. Director, FEMA, 847 F.2d 515, 522-23 (9th Cir.1988)."

Plaintiff's counsel obviously read the Circuit Court decisions and tried to distinguish his facts. A novel argument, that ultimately failed. "Plaintiff further alleges that the earth movement preceding the damage to her house involved a layer of sand placed on top of the ground by the building contractor as a base for pouring the concrete slab foundation for her home. Plaintiff cites the affidavit of the contractor who built her home, wherein he stated that a sand subbase was put on top of the ground beneath her slab to increase the load that the slab could support, to reduce the risk of fracturing the slab, and to prevent water from the ground from moving into the slab. Plaintiff argues, "Accordingly, the layer of sand placed on top of the ground as the base for the slab in this case is a component of the construction of the house and it is separate and distinct from the ground underneath the layer of sand." However, there is no support, in statute or precedent, for Plaintiff's characterization of the sand beneath her foundation as a component of her home and her resulting conclusion that the subsidence exclusion should not apply to the movement of this sand."

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