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(Article from Insurance Law Alert, April 2015)

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In the wake of Storm Sandy and other recent storms, disputes over the scope of first-party coverage have proliferated. In a recent decision, the Third Circuit addressed the unsettled question of whether the term "insured property" in a flood insurance policy encompasses the parcel of land on which a home is built. The court held that a standard flood policy does not cover the expenses of removing debris from the land surrounding an insured house. Torre v. Liberty Mut. Fire Ins. Co., 781 F.3d 651 (3d Cir. 2015).

The standard flood policy at issue provided coverage for the expense of removing debris "that is on or in insured property." The homeowners argued that the undefined term "insured property" should be read to encompass the entire parcel of land. The insurer contended that it should be read to apply only to the specific structures and items of property listed in the policy. Agreeing with the insurer, the court held that "insured property" unambiguously referred only to the structure or other items specified in the policy. In so ruling, the court deemed it insignificant that the address of the land parcel was listed on the policy’s declarations page, emphasizing that the policy distinguished between the "described location" (i.e., the address) and the "insured property" (i.e., the structure).