Third Circuit Issues Precedential Decision on First-Party Coverage for Debris Removal from Land.

In the case of Torre v. Liberty Mutual, et al., the Torres suffered post Superstorm Sandy damage at their home in Mantoloking, NJ. The Torres sought first-party coverage for their removal of storm-generated debris from their land under their Standard Flood Insurance Policy. Liberty denied the claim. The basis for Liberty’s disclaimer was that the SFIP coverage only attached for the “removal of non-owned debris that is on or in insured property” and debris on the land outside of the house was not “on or in” “insured property.” In other words, Liberty took the position that only the house was “insured property” and not the land on which the house was located.

The Third Circuit has now endorsed Liberty’s understanding. In its precedential decision, the Court held that the “term “insured property” clearly and unambiguously means property that is insured under the SFIP, that land is not insured under the SFIP, and that the SFIP thus does not cover costs the Torres incurred in removing debris not owned by them from their land outside their home.”

As this is the first US decision on the scope of debris removal from land under a SFIP policy, we expect the case to be frequently cited in the future. It is obviously of great benefit to insurers as it significantly limits the scope of potential first-party damages that a policy might be exposed to.

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