What it does
The Water exclusion in the Causes of Loss forms removes water that backs up or overflows from a sewer, drain or sump. CP 10 38 gives back limited coverage at the premises in its Schedule:
- Property Damage: direct physical loss to Covered Property caused by discharge of water or waterborne material from a sewer, drain or sump located on the described premises. The discharge must not be induced by flood or flood-related conditions: surface water, waves, tides, overflow of any body of water, or storm surge. "Drain" includes a roof drain and related fixtures.
- Business Interruption: business income and/or extra expense arising out of that damage, under the applicable coverage form.
Key provisions
- Separate Discharge Limits for property damage and business interruption. They are part of, not in addition to, the policy limits.
- An optional Annual Aggregate Limitation makes the limit the most payable for all occurrences in a 12-month policy period.
- No coverage if the discharge results from failure to maintain the sewer, drain, sump or pump. Sudden mechanical breakdown of a sump pump not caused by negligence is an exception. Sump failure from power failure is also not covered unless the policy is endorsed for it.
- The cost to repair or replace the sewer, drain, sump or pump itself is not covered.
- The fire deductible applies when this is the only coverage triggered.
Quoting and selling notes
- Sewer backup is one of the most common uncovered claims under a commercial property policy. Offer it to any account with a basement or floor drains.
- It is not flood coverage. Pair it with the Flood Coverage Endorsement (CP 10 65) or NFIP where flood exposure exists.
