The Third Circuit recently held that “insured property” as it appears in a Standard Flood Insurance Policy doesn’t include land, a ruling attorneys say will restrict the ability of policyholders to recover the cost of removing debris swept onto their land by Superstorm Sandy and future storms.
In a March 26 opinion, the appellate court ruled that a SFIP issued to homeowners by Liberty Mutual Fire Insurance Co. included coverage for certain structures and items but not for the entire parcel of land. As a result, the court concluded that the homeowners weren’t covered for the removal from their land of debris they didn’t own.
Sherilyn Pastor, practice group leader for McCarter & English LLP’s insurance coverage group, said the decision leaves open more questions than it answers.
“The court found that the policy doesn’t cover the entire parcel of land and as a result that parcel cannot be considered ‘insured property,'” Pastor said. “OK, but then what does ‘on insured property’ mean? The policy doesn’t define ‘insured property,’ but does define key terms, such as building. If the policy was supposedly intended to cover only removal of debris from on or in a building, why use the word ‘insured property’?”
In addition, the decision leaves open issues of causation, according to Pastor.
“If the debris hits both the building as well as the land, or the building before or after it hits the land, is that covered?” she said.