Clear and Unambiguous Exclusion Defeats Claim

Storm Surge by any Name is Still an Excluded Flood

When a court reads an entire policy of insurance and rules on the clear and unambiguous language of a policy exclusion, counsel for the insureds who obtain no coverage, resort to every  possible meaning of the policy wording to require the insurer to pay a claim the insurer excluded.

In Estate Of Ronald Doerfler and Stephanie E. Doerfler v. Federal Insurance Company Stephanie E. Doerfler, v.  Chubb Insurance Company Of New Jersey, DOCKET NO. A-4215-18T1 & DOCKET NO. A-4217-18T1, Superior Court Of New Jersey Appellate Division (May 14, 2020) the trial judge found that the losses claimed by plaintiffs Estate of Ronald Doerfler (the estate) and Stephanie Doerfler (Doerfler) were not covered under their insurance policies when their homes were destroyed by flooding during Superstorm Sandy. As a result, the judge granted the insurance companies’ (defendants’) motions for summary judgment, and denied plaintiffs’ applications.

Plaintiffs appealed.


Doerfler owned a home located in Mantoloking and procured an insurance policy from defendant Chubb Insurance Company of America covering her real and personal property.

The policies provided “deluxe contents coverage,” but clearly stated that damage resulting from flood was not covered. The policies included the mandatory New Jersey notification that the policies did not cover damages from flood which caused the plaintiffs to acquire National Flood Insurance Program flood policies which paid their limits of $250,000 and provided some coverage for the contents of their homes.

On October 29 and 30, 2012, Superstorm Sandy made landfall near Atlantic City, sixty miles south of Mantoloking. Wind gusts were as high as eighty miles per hour. A severe storm surge occurred with tides in Mantoloking rising between nine and eleven feet, not including wave height. The storm surge caused surface water to flood onto plaintiffs’ properties and their homes ultimately collapsed.  Chubb retained an engineering firm to investigate the damage to the estate’s property that reported that wind was not a significant factor in the collapse of the home and instead, the damage was caused by storm surge. Based on the report the claim was denied.

The Policy

The “surface water exclusion” included the following language: “[W]e do not cover any loss caused by: flood, surface water, waves, tidal water, overflow of water from a body of water, . . . ; or spray from any of these even if driven by wind.”

In the exclusions sections, the policies specifically stated: “the words ’caused by’ mean any loss that is contributed to, made worse by, or in any way results from that peril.”


An insurance policy is a contract that will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled. An insurance policy should be interpreted in accordance with the plain and ordinary meaning of its terms. Exclusions in insurance policies are presumptively valid and enforceable if they are ‘specific, plain, clear, prominent, and not contrary to public policy. In contrast, courts will find a genuine ambiguity to arise where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage.

Generally, exclusions are narrowly construed. The insurer has the burden of bringing the case within the exclusion. Courts must be careful, however, not to disregard the clear import and intent of a policy’s exclusion. Far-fetched interpretations of a policy exclusion are insufficient to create an ambiguity requiring coverage.

After reviewing the record through the prism of the rules of insurance contract interpretation, the trial judge correctly concluded that plaintiffs’ policies did not cover the losses they sustained in the flood that destroyed their homes. The record clearly indicates that plaintiffs’ homes were destroyed by the surface water that flooded their properties during the storm. Therefore, the judge properly concluded that the exclusions barred plaintiffs from recovering under their policies.

The judge correctly rejected plaintiffs’ contention that wind was the initiating and efficient proximate cause of the storm surge that destroyed plaintiffs’ homes and, because wind damage was covered under their policies, the surface water exclusions do not apply because the efficient proximate cause doctrine, more commonly referred to as Appleman’s Rule, applies to risks and exclusions where a non-covered peril is set in motion by a covered peril in a chain of causation.

Where a peril specifically insured against sets other causes in motion which, in an unbroken sequence and connection between the act and final loss, produced the result for which recovery is sought, the insured peril is regarded as the proximate cause of the entire loss. The trial judge concluded that Appleman’s Rule was inapplicable under the facts presented in this case. The judge made the following findings:

  1. the wind and the flood waters were not separate events;
  2. when a body of water overflows its normal boundaries and inundates an area of land that is normally dry, the event is a flood;
  3. Appleman’s Rule was not helpful to plaintiffs because there were no sequential causes of their losses;
  4. the term “caused by” in the policies was sufficiently clear and unambiguous; and
  5. plaintiffs’ damages were not caused by the wind.

Plaintiffs’ policies included a “caused by” provision that fulfilled the purpose of an anti-sequential clause. As noted above, this provision stated that “the words ’caused by’ mean any loss that is contributed to, made worse by, or in any way results from that peril.”

Because plaintiffs’ policies excluded them from recovering for any loss contributed to, made worse by, or in any way results from or caused by flood, surface water, waves, tidal water, or overflow from a body of water, their claims were barred regardless of whether wind played any role in the loss.

The exclusion was unambiguous, and defendants were not required to list every synonym that could be used to describe a flood to avoid paying for flood damages. Because the surface waters that destroyed the home was an excluded peril, the judge properly denied coverage. The trial judge, therefore, properly granted summary judgment to defendants.


Chubb effectively excluded flood and surface water that destroyed the subjects of its policy. The plaintiffs knew there was no coverage and that is why they purchased flood insurance. The problem was they limited themselves to the $250,000 limit offered by the National Flood Insurance Program and did not attempt to buy excess coverage. Their only option to recover the entire loss was to convince a court that the flood that destroyed the property was not the efficient cause of the loss, give the $250,000 back to the flood program and get Chubb to pay for their full loss. The argument failed because the policy was written in clear and unambiguous language and, of course, by accepting $250,000 from the flood program the plaintiffs effectively admitted – under oath – that flood caused their loss. Perhaps others will learn the reason for buying high limit flood insurance coverage.

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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