Why insurance won’t cover damage from sewer backup

Rent it Right

Q: Last month we had some water damage in one of our units. The floors were ruined, caused by a backup in a sewer pipe. Our insurance company is giving us a hard time. Isn’t this just the sort of thing that insurance is supposed to pay for? –Wendell J.

A: Most people would indeed conclude that damage caused by a backup would be covered by one’s property insurance. But, unfortunately for you, your problem is probably not covered.

Most policies cover for damage caused by the sudden and accidental discharge of water that comes out of a pressurized plumbing system (the part of the pipes that delivers water to the faucets, toilets and appliances). Damage from water that backs up from the street sewer, through unpressurized lines designed to take water away from the house, is generally not covered.

In fact, the exclusion covers not just street sewer obstructions, but also water that enters a home through a backup in any line or drain that takes water to the sewer. The reason is two-fold: The insurance company is not in the business of insuring the city against the consequences of its poorly maintained sewer lines. And your clogged drains are considered a maintenance problem, not a "sudden and accidental" event.

This neat division between water delivered to the house versus water taken away from the house can, however, be sorely tested, depending on what happened and what your policy says.

A California court recently faced this question: The homeowner’s toilet continued to "run" because the fill valve was stuck in the "open" position, but the bowl overflowed instead of draining because of a clogged sewer line 40 feet away. The policy excluded damage caused by water that "backs up or overflows from a clogged sewer or drain." The homeowner claimed that the exclusion did not apply, because the water flowed directly from the toilet bowl, never entering the drain. But the court focused on the word "overflows," and applied the exclusion, to the dismay of the homeowner.

Other courts, facing the same set of facts but dealing with a policy that omitted the word "overflows," have concluded that because the water never entered the drainage system, it could not back up. In these cases, the homeowner was covered.

Here’s another wrinkle: If your policy excludes water that backs up through a drain, rather than from it, would insurance cover given the facts of the California case? Arguably, water that never gets into the drain, as in the California case, cannot be said to have backed up through it, so the exclusion would not apply.

The lesson here is not to despair of the value of insurance. Most of the time, steady and proper maintenance will forestall most plumbing problems. That’s where you should focus your attention.

Q: I have a tenant who receives Supplemental Security Income (SSI) payments, which are his only income, I think. He was late with the rent, and couldn’t pay within the three days, so I terminated his tenancy. He’s claiming that something went wrong at the SSI office, and that I should wait for him to figure it out. Am I obliged to do this? –Jonathan R.

A: Before you hustle off to a courthouse to file an eviction lawsuit, you might give some thought to your tenant’s request.

As a person who qualifies for SSI payments, your tenant is considered legally disabled. This means that if your policies or procedures make it difficult for him to live safely and comfortably on your property, but you can vary them without unreasonable expense or harm to your business, you need to at least consider the accommodation. A classic example involves a wheelchair-using tenant who asks management to vary its "first-come, first-served" rule for parking places; this tenant may need to go right to the top of the list.

You obviously have a policy of expecting the rent to be paid on time, but it’s possible that you may need to vary that policy, at least this once.

A similar case arose recently, in which an SSI tenant had directed that his checks be mailed to a person who managed his affairs. That person died, and the Social Security Administration (SSA) didn’t know where to send the check, so it held on to it. Meanwhile, the rent went unpaid, and the landlord filed an eviction lawsuit. In court, the judge ruled for the tenant, saying that the landlord should have accommodated the late rent while the tenant (and the SSA) got things straightened out. How long must you wait? And must you wait repeatedly, if the problem surfaces again and again? Those are questions that only a judge could answer, in the context of the particular facts of the situation.

Have a talk with your tenant and find out what steps he has taken to get things straightened out. He has every incentive to get the matter resolved, and hopefully he can enlist the help of a friend if need be. Consult with an attorney before you terminate this tenancy, lest you initiate a lawsuit that you end up losing.

Janet Portman is an attorney and managing editor at Nolo. She specializes in landlord/tenant law and is co-author of "Every Landlord’s Legal Guide" and "Every Tenant’s Legal Guide." She can be reached at janet@inman.com.

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