A recent LinkedIn post showed a dramatic scene of a broken pipe, apparently off premises, sending water racing across the surface and into nearby property. The accompanying message suggested this is yet another reason homeowners should buy flood insurance, even if they are not in a designated flood zone.
That is generally good advice. Water does not consult FEMA maps before it ruins hardwood floors. But as coverage nerds and claims professionals know, labels do not determine coverage. The policy language, along with regulations and statutes, controls.
The National Flood Insurance Program’s Standard Flood Insurance Policy defines “flood” as:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
(a) Overflow of inland or tidal waters;
(b) Unusual and rapid accumulation or runoff of surface waters from any source;
(c) Mudflow; or
(d) Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents exceeding anticipated cyclical levels…
It is a federal policy, codified by regulation, and federal courts construe it strictly.
One LinkedIn commentator suggested that a scenario like this could fall within the “unusual and rapid accumulation or runoff of surface waters from any source” language. She may be correct. I have not found a reported NFIP decision squarely rejecting that argument in the off-premises broken pipe context.
However, the NFIP Claims Manual and FEMA guidance materials distinguish burst or broken pipes from covered flood events. They treat water escaping from plumbing systems differently from naturally occurring surface water or overflow of bodies of water. While the manual is not binding law in the way the regulation is, it is the framework adjusters are trained to follow. Policyholders should not expect National Flood to agree easily that a ruptured pipe, whether caused by freezing, corrosion, construction mishap, or other failure, meets the regulatory definition of “flood.” If that claim is made, it will likely be contested.
That does not mean the loss is uncovered.
This is where Bill Wilson provided a very important reminder. In response to the LinkedIn discussion, he pointed out that the current 2022 ISO open perils homeowners form contains the following exception to the water exclusion:
Exception To c.(6)
Unless the loss is otherwise excluded, we cover loss to property covered under Coverage A or B resulting from an accidental discharge or overflow of water or steam from within a:
(i) Storm drain, or water, steam or sewer pipe, off the ‘residence premises’; or
(ii) Plumbing, heating, air conditioning or automatic fire protective sprinkler system or household appliance on the ‘residence premises’. This includes the cost to tear out and replace any part of a building, or other structure, on the ‘residence premises’, but only when necessary to repair the system or appliance. However, such tear out and replacement coverage only applies to other structures if the water or steam causes actual damage to a building on the ‘residence premises’.
We do not cover loss to the system or appliance from which this water or steam escaped.
For purposes of this provision, a plumbing system or household appliance does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.
Section I – Exclusion A.3. Water, Paragraphs a. and c. that apply to surface water and water below the surface of the ground do not apply to loss by water covered under c.(5) and (6) above.
That language matters. It expressly contemplates coverage for accidental discharge from a water pipe off the residence premises, subject to the form’s other exclusions and conditions. It also clarifies that the surface water exclusion does not apply to water covered under that exception.
In other words, not every dramatic accumulation of water across the ground is a “flood” under a flood policy. And not every water loss that looks like surface water is excluded under a homeowners form. However, there are two significant cautions.
First, not all carriers use ISO forms. Many insurers use modified ISO language, manuscript endorsements, or entirely proprietary forms. The analysis always starts with the actual policy in hand. Many carriers sell cheaper insurance because the policy forms they sell provide less coverage. This is not advertised. But whenever one buys cheaper insurance, how cheap is insurance that does not cover one’s loss?
Second, while buying flood insurance is wise risk management, particularly in an era of unpredictable weather events, policyholders should not assume the NFIP will automatically respond to a burst pipe scenario simply because water ends up on the ground and affects multiple properties. The source of the water is often decisive, and the claims guidance followed by NFIP adjusters suggests resistance to that theory.
Bill Wilson’s contribution here is valuable. He has long been one of the clearest voices explaining how ISO language actually works in practice. If you care about insurance coverage, you would be well served to follow what he writes and says. He reads the forms carefully, and that is where coverage is won or lost.
The takeaway is simple. Buy flood insurance because water damage is financially devastating and increasingly common. But if the loss involves a broken pipe, whether from a freeze or any other failure, do not overlook the homeowners policy. The difference between federal flood coverage and ISO homeowners coverage may turn on a few carefully drafted lines.
Coverage disputes are not decided by photographs. They are decided by words based on facts of the loss.
Thought For The Day
“In matters of truth and justice, there is no difference between large and small problems, for issues concerning the treatment of people are all the same.”
— Albert Einstein