A manufacturer of ship propellers made claim under flood insurance, obtained under the National Flood Insurance Program (NFIP), for damage to one of its buildings allegedly caused by flood-related soil erosion.
The insured asserted that ” . . . floodwaters from heavy northeastern storms spilled over into the insured property, saturated the foundation soils and then washed them away.” The result, the subject of the claim, was settlement of the foundation and damage to the building.
The Federal Emergency Management Agency (FEMA) administrator of the NFIP, denied liability, contending that the building damage was caused by continuous erosion and not by “flood” as defined in the standard flood insurance policy and federal legislation
By mutual agreement of the parties, resolution of the dispute was entrusted to a federal court. The court found that the standard flood insurance policy incorporates the language of federal legislation, which defines “flood” or “flooding” to include “flood-related erosion,” meaning:” . . . collapse or subsidence of land along the shore of a lake or other body of water as a result of 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 a flash flood or an abnormal tidal surge or by some similarly unusual and unforeseeable event which results in flooding.” (44 C.F.R.59.1)
The court said that the insured must prove that its loss occurred within the scope of the quoted definition The insured attempted to show that a drainage ditch adjacent to its property was a body of water as contemplated by the legislation and policy provisions. The insured was unable to present case law or otherwise establish that the ditch was representative of a body of water. The court determined that the subject property was not “on the shore of a body of water.”
The evidence, including testimony of the insured’s expert witness, made clear that the building damage was the result of soil undermining from heavy rains that could not be handled, in large part, because a drain pipe in the ditch was clogged.
Judgment was entered in favor of the insurer (FEMA) and against the insured.
CHESAPEAKE SHIP PROPELLER COMPANY, Plaintiff v. STICKNEY, Defendant. United States District Court, Eastern District of Virginia, Norfolk Division. No. 2:92cv514. May 18, 1993. 820 F.Supp. 995. CCH 1993-94 Fire and Casualty Cases, Paragraph 4457.