DIFFERENT FLOODS - DIFFERENT RESULTS The anticipated flood of Court decisions that will be generated by Superstorm Sandy cases has begun! A recent decision in the United States District Court for the District of New Jersey adheres to the strict interpretation of the standard flood insurance policy (SFIP) that has been the hallmark of this area of the law. Flood Policy In Torre v. Liberty Mutual Fire Insurance Company, decided on April 24, 2014, Senior Judge Anne Thompson denied the homeowners' claim for debris removal coverage for storm debris blown/washed onto their yard. Judge Thompson began her analysis by noting that since all flood insurance payments are a direct charge to the United States Treasury, strict adherence to the conditions precedent to payment is required. Thus courts strictly interpret the terms and conditions of the SFIP. The Court found that the SFIP covered the cost to remove debris that originated, prior to the flood, beyond the boundaries of the insured premises only when that debris ends up "in or on the building," citing a 2002 case from the Eastern District of Pennsylvania. In this action, the homeowners' property on Ocean Avenue in Mantoloking, New Jersey was inundated with debris that they did not own prior to the flood. To their dismay, the Court found that the approximate cost of $10,000 to remove that debris was not covered under their flood policy. Thus, the debris of the neighbor's house, their personal property (including boats and autos), driftwood, sand, etc. that ends up in your insured's yard is your insured's problem. A possible small saving grace is that removal of owned debris is covered anywhere. Thus if your insured can identify the owner of the debris, that party would have coverage under their own flood policy (if they have one!) to pay for the removal of their property from your insured's yard. The important lesson of this decision going forward is the continued practice of the Courts to strictly construe the SFIP. However pro-insured the Courts might otherwise be, when the policy is underwritten by the American taxpayers, strict construction applies. The usual touchstones of contract interpretation, including giving effect to the reasonable expectations of the insured, construing the policy to avoid a forfeiture, giving the insured the benefit of perceived ambiguities, etc. are of no avail. Do not let the continued extensions of the time to file a sworn statement in proof of loss lull you into a sense that the National Flood Insurance Program will become the ally of the insured. You are still in dangerous waters. Homeowner Policy Liberty Mutual was not as fortunate in another case decided by the Appellate Division of the New Jersey Superior Court in a flood of a different kind. In Huggins v. Liberty Mutual Insurance Company, decided April 29, 2014, the homeowners discovered that their policy did not cover damage resulting from a sump pump failure. The issue in the case was whether the insurer's agent advised the homeowner of the availability of that coverage. The homeowner testified that she asked for the most inclusive policy possible. The agent asked the insured to describe the house, floor by floor, and the insured did advise that the basement contained a sump pump. The insured claimed that the agent did not advise her that coverage for damage caused by a failure of the sump pump was excluded, but could be obtained by a separate endorsement. The agent claimed he did so advise her, but she declined the additional endorsement. Liberty won on motion in the trial court, but the appellate court found the existence of a factual question whether the agent failed to advise the insured or the insured declined the offered coverage and remanded the case for trial. The Court noted the proposition that insurance brokers and agents are obliged to inform insureds of "available coverage." Aden v. Fortsh, 169 N.J. 64 (2001). An agent also has a duty to explain other coverage options available to the client, even if not specifically requested. Sobotor v. Prudential Property & Casualty Inc. Co., 200 N.J. Super. 333 (App. Div. 1984). As mentioned in a previous issue of The Adjuster's Advantage, some companies recognize their obligation to reform their policy to provide coverage that the insured would have purchased had they been advised of it. For instance, mold remediation coverage is routinely written at $10,000. Some companies offer up to $50,000 coverage for mold remediation at little additional premium. When an insured confronts a mold problem in excess of the minimal coverage, you should inquire if he/she was ever offered the increased coverage and make the request for the insurer to provide the coverage if it failed to offer it. You can cite the two cases referenced above. If you or your insureds encounter any similar situations or have any questions, please feel free to contact us at 973-538-4100 or by email at tmaloney@thomasmaloneylaw.com. We are here to help! | 
