Flood and Inundation are covered under a Fire policy either as a basic cover (as in India) or as an add-on cover.

Most Fire policies do not define Flood or Inundation.

In a Supreme Court of India case “Oriental Insurance Company Ltd vs J K Cement Works”, wherein the insurance company repudiated a claim pertaining to coal stored in open which was washed off due to heavy rains.

The learned advocate of insurance company contended that the term `flood’ refers to overflowing of water bodies such as rivers, ponds, lakes etc. Accordingly, he submitted that since it was not the case of the Respondent that there was a water body near the factory which had overflown into the coal yard, the loss cannot be said to have been caused by a `flood’.

With respect to the term `inundation’, he argued that the same refers to `accumulation of water’ and could thus not be applied to the instant case as the coal had merely been washed off due to heavy rains.

Honorable Judge ruled that “Coverage of ‘Flood & Inundation’ insurance includes damage caused by heavy rains and not just overflowing of river”.

Some of the international policies define flood and expand the definition by clearly excluding damage caused by:

A)  “Water or rain other than by water or rain entering the building through openings made in its fabric by the direct force of the storm or tempest”

B) “as a result of doors, windows or roof lights being left open or in a defective condition”.

C) ” caused as a result of inability of gutters, pipes, downpipes and apparatus to convey rainwater off and out of the building”

D) “Solely attributable to change in water table levels”

Indian insurers can consider whether they need to introduce the above in their wordings.

Blog by Atmaram Cheruvu