A federal court in Texas granted summary judgment to an insurer based on a water damage exclusion that it did not owe coverage for damages resulting from the back-up of water or sewage from outside a plumbing system. Durrett v. Nationwide Property & Cas. Co., 2015 WL 1564783 (W.D. Tex. April 7, 2015).
A house had a waste water storage tank immediately adjacent to it. Inside the tank was a grinder pump and a check valve and quick-disconnect coupling inside the discharge line. The discharge line was an uphill pipe that reached to 100 feet inside the property line where there was a second check valve owned by the municipal utility district. The second check valve and the quick-disconnect coupling failed causing sewage to back up into the house until the broken check valve was replaced. The homeowners made a claim on their homeowners’ policy, but the insurer contended that the damage was excluded by the water damage exclusion except for a 5% policy limit additional coverage which it paid. The water damage exclusion excluded coverage for water or water-borne material which backs up through sewers or drains “from outside the dwelling’s plumbing system.”
The homeowners argued that the application of the exclusion turned on the location of the plumbing failure. They argued that since the dwelling’s plumbing system also failed, the exclusion did not apply. The court held that the policy only required that water or water-borne material come from outside the dwelling’s plumbing system, but that the plumbing failure could happen either inside or outside the dwelling. The court also rejected the homeowners’ argument that the loss was covered as a sudden and accidental discharge from a plumbing system which would be covered. The court stated that such a reading of the policy would effectively read the exclusion out of the policy as if it did not exist.