SEWER BACKUP ENDORSEMENT
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SEWER BACKUP ENDORSEMENT - 9/17/2005 4:47:26 AM
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MLHARRIS_FL
Posts: 6
Joined: 9/8/2005
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Here is an interesting coverage question about sewer backup endorsement application.
A policyholder has a sewer backup endorsement limited to $5,000.
The policyholder has a backup into the dwelling from the commode causing blackwater damage to the dwelling. The cause of the backup is determined to be from blockage in the main drain outside of the home but on the insured premises. The blockage was not in the municipal sewer system.
Under the case law in Florida (Old Dominion Vs. Elysee (1992)), it was found that if the blockage is on the premises, it is considered a discharge from a plumbing system and is covered under the normal insuring agreement. The carrier agrees with this.
However, the carrier states that because there is a sewer backup endorsement, the coverage is limited to $5,000.00.
My opinion is that this is an attempt to have your cake and eat it too.
If the blockage is on the premises, the sewer backup endorsement is not applicable, nevertheless the carrier wishes to apply the limit of the endorsement to the loss.
In this case the policyholder purchased the endorsement to broaden the coverage, and the carrier's position is that instead it limited the coverage. I wonder what their position would have been if the policy did NOT have the endorsement?
Any opinions on how the policyholder should proceed? This is not an appraisal issue, it is a coverage issue.
< Message edited by MLHARRIS_FL -- 9/17/2005 4:48:59 AM >
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RE: SEWER BACKUP ENDORSEMENT - 9/17/2005 6:46:01 AM
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JimF
Posts: 1323
Joined: 4/19/2004
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quote:
ORIGINAL: MLHARRIS_FL
Any opinions on how the policyholder should proceed? This is not an appraisal issue, it is a coverage issue.
Given the facts as you have presented them, including that the carrier seems to have made a coverage determination, albeit contrary to the interests of the insured, it would seem to me that the coverage question is now a legal one. My suggestion for such an affected insured would be to contact and engage the opinion of an attorney in Florida. Sounds like this particular claim might be headed to litigation.
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RE: SEWER BACKUP ENDORSEMENT - 9/17/2005 10:26:45 AM
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gvmorgan
Posts: 54
Joined: 9/4/2005
Home base: Houston, TX
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If I were the insured, I would check with my Agent to see if I was charged a higher premium or lower premium for adding the endorsement. If I was charged a higher premium, it would be clear that the "intent" was to broaden coverage. There are provisions uner the Deceptive Trade Practices Act and Unfair Claims Practices Act that should immediately get the carrier's attention and resolve the issue.
If after presenting excerpts from the above resources the carrier wouldn't budge, then there would be no alternative but to retain representation.
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RE: SEWER BACKUP ENDORSEMENT - 9/17/2005 10:52:07 AM
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gvmorgan
Posts: 54
Joined: 9/4/2005
Home base: Houston, TX
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I might add that if you are an IA, you are in a precarious position. As an IA, when there is no other representation for the insured, you are bound to fairly represent the interest of both the carrier and the insured equally, even though the carrier is paying for your services. One of the reasons an IA is used is to provide a layer of exposure relief for the carrier.
Your ability to communicate with the carrier, verbally and in writing, and understanding the "chain of command," will be critical. On ANY file, you should always assume the claim may end up in a court room, and your work may be scrutinized. Good file documentation is critical.
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RE: SEWER BACKUP ENDORSEMENT - 9/17/2005 1:03:04 PM
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wscook
Posts: 85
Joined: 4/19/2004
Home base: Orlando, Fl
Status: offline
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What is the sum total of the loss absent coverage limitations.
William S Cook
Public Adjuster
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RE: SEWER BACKUP ENDORSEMENT - 9/18/2005 3:10:11 AM
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noblernash
Posts: 10
Joined: 8/15/2004
Status: offline
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Discharge from a plumbing system or sewer back up. seems to me the carrier is going to half to ---- or get off the pot on this one. If the named endorsed peril (sewer back up) did not result in the loss, then the limit should not apply. The last time my camode ran over it sure did not cause 5000+ damage. Are you sure this was not a back up? Seems to me the insured has had this problem before, Why the named endorsement ? In the end the carrier is going to make the call, remind your E&O carrier of that fact.
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RE: SEWER BACKUP ENDORSEMENT - 9/18/2005 6:50:19 AM
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MLHARRIS_FL
Posts: 6
Joined: 9/8/2005
Status: offline
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CADO Member WS Cook asked what the total value of the loss was without the application of any endorsement. Including replacement of all wood flooring and content damage, the estimated RCV is approximately $35,000.00.
_____________________________
MICHAEL L. HARRIS
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