The magistrate's recommended decision found that damage to plaintiffs' home caused by boats that became loose during Hurricane Sandy was not barred as "water borne material" under the surface water exclusion. Spindler v. Great N. Ins. Co., 2016 U.S. Dist. LEXIS 16532 (E.D. N. Y. Feb. 2, 2016).
Plaintiffs' home abutted the East Bay. The property had an exterior deck and a long dock that floated on the bay. Hurricane Sandy damaged plaintiffs' home and dock. A neighbor witnessed two boats, driven by the storm, repeatedly strike plaintiffs' dock, house, and deck. There was no dispute that water infiltrated plaintiffs' yard prior to the entry of the boats. Plaintiffs spent $286,280 to repair damaged items from the storm.
Plaintiffs had an all risk-policy with Great Northern. The policy did not cover loss caused by flood. The surface water exclusion stated the policy did not cover "flood, surface water, tidal water, overflow of water from a body of water, or water borne material from any of these . . ." An ensuing loss provision stated, "but we do insure ensuing covered loss unless another exclusion applies."
Great Northern denied coverage and plaintiffs filed suit. Cross-motions for summary judgment were filed. Great Northern argued that the boats constituted "water borne material." The policy did not define the phrase. The court found that the usage of "water borne material" suggested that it referred to something other than marine conveyances. The use of "water borne material" commonly included "enter," back up," "discharge," "overflow" or "located in the ground," processes one would generally associate with materials such as sand, silt and sewage. Therefore, "water borne material" appeared to exclude fugitive sailing vessels.
Further, the policy had multiple provisions dealing with "watercraft," a term that plainly incorporated vessels like those that damaged plaintiffs' property. Having failed to clearly define "water borne material" as including watercraft, Great Northern's reliance on this language of the surface water exclusion was misplaced.
Next, Great Northern argued that, even if the "water borne material" language was inapplicable, the damage inflicted by the storm-driven vessels constituted damage from flood, and was therefore excluded. There was evidence, however, that the property was undamaged by flood waters. Instead, the damage was caused by the physical collision with the watercraft, a peril distinct and separate from flood, and therefore not specifically excluded by the surface water exclusion.
Finally, the ensuing loss provision rendered the question of coverage beyond doubt. Because damage caused by the boats followed the entry of water, the boat damage was an ensuing loss to property that was not excluded by the policy.
The district court subsequently overruled Great Northern's objections to the magistrate's recommended decision. Spindler v. Great N. Ins. Co., 2016 U.S. Dist. LEXIS 30255 (E.D. N. Y. March 9, 2016).
