What Rainwater Actually Means for Insurance

Last summer Hurricane Henri and Hurricane Ida caused a large amount of flooding in New York City, which resulted in many buildings, including co-ops and condos, submitting claims for property damage caused by the accumulation of rainwater.  

What boards often do not realize, however, is that most standard property insurance policies typically exclude coverage for a flood, requiring buildings to get a separate flood policy or added flood coverage to their standard insurance. As a result, claims for water damage caused by Henri or Ida were not covered unless the building had purchased either an addition to their property policy that covered floods or purchased a separate flood policy. 

But there’s another wrinkle boards need to be aware of. According to standard insurance policies, flood is defined as “unusual and rapid accumulation or runoff of surface waters from any source.” The word “surface” is key, because it means that even if a building purchases flood insurance, that coverage applies only to rainwater that accumulates on the ground. Many buildings did experience flooding from the accumulation of rainwater on the ground. But some buildings also experienced flooding because their roof drains became overtaxed and water overflowed onto terraces and into apartment units or common areas. Given that flood coverage covers only accumulation of surface water, the insurance carriers denied coverage for those buildings.

Boards, along with their property managers, should therefore take note that their buildings most likely do not have coverage for the accumulation of rainwater that overflows from roof drains. The only exception would be cases in which a storm caused damage to the roof or the building’s exterior that allowed water to penetrate the envelope. If water infiltrated the building through a pre-existing condition, then there would be no insurance coverage, even if the building purchased a flood policy. 

Given that storms like Henri and Ida are quite likely to become more frequent in years to come, it is very important to understand clearly when accumulation of rainwater is and is not covered. Also, boards should make sure their buildings’ roof drains and terraces can handle a massive influx of water, since there will likely be no coverage if the drains overflow and water enters the building.

Scott S. Greenspun is a principal at the law firm Braverman Greenspun. Jillian Menna is the general counsel for Genatt V Insurance Solutions.