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New Jersey Appellate Court Takes Expansive View of Flood Exclusion in Sandy Case

Blogs, Insurance Coverage

Riccio v. All State Insurance Company, 2015 WL 6181466, (N.J. App., Oct 22, 2015). The New Jersey intermediate appellate court recently held that the flood damage exclusion under a standard homeowner’s policy not only extended to the damage caused by the flood, but also to the loss arising from toxic substances carried by the flood waters and left behind after the water receded. Plaintiffs filed suit against the property insurer, Allstate, for losses following Superstorm Sandy. The trial court granted summary judgment in favor of Allstate, determining that the flood exclusion applied, and that “flood water that encroaches upon the land particularly from rivers and streams is not pristine, but includes that which comes within its path.” The Appellate Division affirmed, stating that to award coverage to plaintiffs “would provide coverage to homeowners who eschew the high cost of flood insurance and maintain only homeowners policies and would render the flood exclusions in those policies meaningless.”