After weeks of record-break- ing temperatures and op- pressive humidity, much of the country is looking to
cool off. Swimming pools are perfect for
beating the heat, but they can also present
some insurance complications.
Such was the case for an FC&S subscriber’s client, who was insured by a
homeowners’ policy form HO- 3. The client’s above-ground swimming pool collapsed because of deterioration. Water
escaped and seeped into the basement of
the residence through the walls and back
door, causing damage to the building.
Pool Perils and the Water-Damage Exclusion
By Susan Massmann
Q. Does the water-damage exclusion on the
HO- 3 void coverage for this type of loss?
A. Under previous iterations of the HO-
3, an argument could be made for coverage for damage to the building from this
cause. The water-damage exclusion on
older versions of the form voided coverage for damage from natural occurrences
of water, such as floods, surface water
and backed-up sewers.
Even though the pool water traveled
over the surface of the ground to reach
the home and damage it, surface water
generally is held to be water “which is
diffused over the surface of the ground,
derived from falling rains or melting
snows, and continues to be such until
it reaches some well-defined channel in
which it is accustomed to flow and does
flow with other waters.”
This definition was used in George-
town Square v. United States Fidelity and
Guaranty Co., 523 N.W.2d 380 (1994).
However, the 2011 version of the form
added the following wording: “This Ex-
clusion A. 3. [Water] applies regardless
of whether any of the above, in A. 3.a.
through A. 3.d., is caused by an act of na-
ture or is otherwise caused.”
By adding “or is otherwise caused” to
this exclusion, the type of loss described
would no longer be covered. The form
also now states that the water exclu-
sion applies to the escape, discharge or
overflow—for any reason—of water or
waterborne material from a dam, levee,
seawall, or any other boundary or con-
tainment system, which would include
an above-ground pool.
ing the provision that “covered property
does not include... land (including land
on which the property is located), water,
growing crops or lawns.”
Q. While that addresses damage caused
by the escape of water, what about the
A. A country club with a business own-
ers policy (BOP) experienced a loss
when a pipe leading from the swimming
pools broke and water was lost out of the
pools.The insurer denied the claim, cit-
Q. Does the water lost by the insured
fall under this limitation?
A. If one reads the word “water” in this
limitation in context, then it is listed
along with other things that occur in
nature—land, growing crops, and lawns.
The water lost from the pools is not naturally occurring water, such as a stream or
a pond on the insured’s premises.
The water that the country club lost
because of the plumbing failure could be
considered the club’s personal property.
It had already passed through the water
meter, and the club was billed for it. It
should be a covered loss under the BOP.
Read more about other types of
swimming-pool claims and how adjusters handled them by visiting FC&S
staff blog posts at the Coverage Café on
Susan Massmann, CPCU, is managing
editor of electronic publications the
reference division of Summit Business
Media, the parent company of National
Underwriter. She may be reached at