New York’s Top Court Rules that Water Damage Exclusion Barred Coverage and Rejects Plaintiffs’ Interpretation of Ensuing Loss Protection

March 6, 2015 | Appeals | Insurance Coverage

The New York Court of Appeals, in Platek v. Town of Hamburg, has reversed an appellate court’s decision and ruled that a water damage exclusion in a homeowners’ insurance policy precluded coverage for a claim that the insureds’ basement was flooded after a water main ruptured.  In so ruling, the Court also rejected the plaintiffs’ attempt to acquire coverage under the policy’s “ensuing loss” provision.

The Case

Frederick and Mary Platek alleged that a subsurface water main abutting their home ruptured and water flooded into and severely damaged their finished basement. The Plateks filed a claim under their homeowners’ insurance policy, issued by Allstate Indemnity Company.

Allstate disclaimed coverage, based on item 4 of the policy’s water loss exclusion, which provided:

[Allstate does] not cover loss to the property . . . consisting of or caused by:

  1. 1. Flood . . .
  2. Water . . . that backs up through sewers or drains.
  3. Water . . . that overflows from a sump pump, sump pump well or other system designed for the removal of subsurface water . . .
  4. Water . . . on or below the surface of the ground, regardless of its source[, including] water . . . which exerts pressure on, or flows, seeps or leaks through any part of the residence premises.

We do cover sudden and accidental direct physical loss caused by fire, explosion or theft resulting from items 1 through 4 listed above.

(Emphasis added.)

The Plateks sued Allstate and moved for summary judgment. They asserted that because they had “sustained a water intrusion loss” caused by “an explosion of the … water main,” their claim fell within the policy’s “ensuing loss” provision.

The trial court ruled in favor of the Plateks and declared that their loss was covered under the policy and that Allstate was required to pay their claim.

After Allstate appealed, the appellate court held that the policy was ambiguous and should be construed in favor of the Plateks.

Allstate appealed to New York’s highest court, the New York Court of Appeals.

The New York Court of Appeals Decision

The New York Court of Appeals reversed, ruling that Allstate was entitled to summary judgment.

The Court held that the policy’s “unambiguous language” excluded the water damage to the Plateks’ home from coverage, and that the ensuing loss provision did not nullify the water loss exclusion or render it ambiguous.

The Court explained that the Plateks’ loss had occurred when water from a burst water main flowed onto their property, flooding the basement of their home. Accordingly, the Court continued, their loss “clearly” fell within item 4 of the policy’s water loss exclusion.

The Court then rejected the Plateks’ argument that the policy’s ensuing loss provision afforded coverage because the water damage to their basement had been “caused by an explosion of the … water main.” The Court explained that interpreting the policy as the Plateks’ proposed would “contravene the water loss exclusion’s purpose, as expressed in unambiguous language,” which was to “preclude coverage for damages caused by the entry of water onto an insured’s property.” To apply the ensuing loss provision to provide coverage for what was essentially a flood would “subvert the intent of the parties,” the Court concluded.


Significantly, the Court reiterated the principle that although the insurer has the burden in the first instance to prove the applicability of an exclusion, it is the insured’s burden to establish the exception to the exclusion, in order to obtain coverage. With that said, the result reached by the Court – that there was no coverage for the Plateks’ claim – is clearly correct, given the unambiguous water damage exclusion in their insurance policy. The Court also correctly decided that the policy’s ensuing loss provision did not help the Plateks, as it cannot create coverage for an excluded peril. The ruling in Platek  helps to further clarify the proper application of the ensuing loss provision contained in most property insurance policies.

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