The Standard Flood Insurance Policy (“SFIP”) Dwelling Form which is issued pursuant to the National Flood Insurance Act covers either: (1) A non-condominium residential building designed for principal use as a dwelling place for one to four families, or (2) a single-family dwelling unit in a condominium building. In the scenario where a homeowner owns property which contains a residential building and a separate building on the property such as a detached garage, guest home or pool house, what coverage is available? The SFIP typically provides coverage for one building per policy. However, there is an exception. The SFIP also provides that detached garages (up to 10 percent of building property coverage) are covered; however, detached buildings (other than garages) require a separate building property policy.
Also, it is important to note that the SFIP excludes coverage for detached garages which are “used for or held for residential (i.e. dwelling) purposes.”1 However, in the event that the detached garage may be connected to the main structure by some type of addition or extension such as a stairway, elevated walkway or roof, the following policy language may afford coverage for the second building:
Section III. Property Covered,
A. Coverage A -Building Property,
2. Additions and extensions to buildings that are connected by a rigid exterior wall, a solid load-bearing interior wall, a stairway, an elevated walkway, or a roof may be insured as part of the dwelling. At the option of the insured, these extensions and additions may be insured separately. Additions and extensions that are attached to and in contact with the building by means of a common interior wall that is not a solid load-bearing wall are always considered part of the dwelling and cannot be insured separately.
However, even if there is some connection between the main structure and the detached structure, an insurer will often deny coverage based on the above language in the SFIP and argue that the detached structure is not connected by an “addition” or “extension” which is “attached to and in contact with” the dwelling. In interpreting whether there is an “addition” or “extension which is “attached to and in contact with the dwelling”, the Courts consider “the relative location of the structures, their accessibility, and their adaptability to a common end.”2 Further, in Aylward v. Fed. Emergency Mgmt. Agency,3 FEMA denied the owners’ claim based on the SFIP language which provided that a detached garage which is “used for or held for residential (i.e., dwelling) … purposes” is excluded from coverage. However, the Court found that the plaintiffs “did not use the detached garage for residential purposes but only used it for the conventional purposes of storing some construction materials and their car.” In Aylward, it appeared that the plaintiffs were intending to use the upper level of their detached garage for residential purposes as it contained a bathroom, kitchen and living room, and the local tax office classified the garage as a residential structure. However, despite these facts, since the water and sewage lines had not been connected to the garage apartment at the time of the flood, and the heating and cooling were not working, the Court held that “facilities such as the bathroom and kitchen lacked the present potential for residential use when the flood occurred.” As a result, the Court held that FEMA improperly denied the owners’ claim for damages. Therefore, based on the language of the typical SFIP, in order for coverage to apply to a detached garage, it can only be used for parking and storage and any other use would void the coverage.
Property owners who own a residence which contains a detached structure which is also damaged by a flood should be mindful of this standard SFIP language and consult an experienced policyholder attorney for guidance if their insurance company is denying coverage based on this policy language.
1 Section III.A.3., Standard Flood Insurance Policy Dwelling Form.
2 See Atlas Pallet, Inc. v. Gallagher, 725 F.2d 131 (1st Cir. 1984) (where the policy did not cover a milldam which was used only to impound water for a sprinkler system as there was no community of use between the milldam and the building).
3 781 F. Supp. 2d 272 (W.D.N.C. 2011).