Imagine you are walking around your house one night, and the lights suddenly flicker. You immediately investigate the issue, open a living room wall, and determine that the electrical wiring behind the wall is burned due to water leaking down from the bathroom above. You shut the main valve to the bathroom right away and call an electrician. Prior to this, there were no signs of any plumbing or wiring issues that would have tipped you off that you had a problem in your home. It is subsequently determined that the wax ring on your toilet, which is hidden and not visible, failed and has been leaking. You submit an insurance claim only to be told that the loss is excluded.

The above is the scenario that played out for my clients in their lawsuit. The insurance carrier cited to multiple exclusions in its policy, which included the following:

[W]e do not cover loss consisting of or caused by any of the following:

a) Wear and tear, aging, marring, scratching, deterioration, inherent vice, or latent defect

If any of (a) through (g) cause the sudden and accidental escape of water or steam from a
plumbing, heating or air conditioning system, household appliance or fire protective sprinkler
system within your dwelling, we cover the direct physical damage caused by the water or

The insurance company’s Corporate Representative was deposed as to why the ensuing loss provision would not apply under this set of circumstances. The representative opined that the failed wax ring does not constitute a “sudden” loss under the policy. The representative did concede, however, that the loss was “accidental” Therefore, the question before the court was whether the water leak due to the failure of the wax ring is considered a “sudden” loss in conjunction with the ensuing loss provision contained in the “wear and tear” exclusion.

The policy did not define the term “sudden” or the phrase “sudden and accidental.” Merriam-Webster defines the term “sudden” as happening or coming unexpectedly. The insureds argued that they did not expect that the wax ring under their toilet would fail, causing water to leak behind their walls and, therefore, coverage should apply. Or, in the alternative, coverage should apply because the policy was ambiguous as to what constituted a “sudden” loss.

Judge Ferrelli of the Burlington County Superior Court of New Jersey agreed with the insureds’ argument. In overturning the coverage denial, Judge Ferrelli concluded:

Defendant has provided an insurance policy with an ambiguous, undefined term. New Jersey case law is clear that any ambiguities are to be construed against the insurer and in favor of coverage for the insured. See, e.g., Doto, 140 N.J. at 556, and cases cited above. The subject policy involves an exclusionary clause that warrants a strict analysis, and where, as here, the court finds that there is more than one reasonable interpretation of a policy’s language, the court applies the meaning that supports coverage rather than the one that limits it. Cobra Prods., 317 N.J. Super. At 401.

This Court must engage in a fair interpretation under Stafford, 309 N.J. Super. 97, to determine whether the policy language is in fact ambiguous. Because Defendant chose not to define the term “sudden” within the policy, the insureds were left to their own reasonable interpretation based upon the plain meaning of the language chosen. A fair and reasonable interpretation of the meaning of “sudden” as evidenced by the various dictionary definitions noted above, demonstrates that the subject policy contains an ambiguity that must be construed against the insurer, the drafter of the policy, and in favor of the interpretation supporting coverage on behalf of the insureds, the Plaintiffs here. Therefore, this Court finds that the term “sudden” in the exclusionary phrase “the sudden and accidental escape of water or steam” refers to an escape of water that was “unexpected” or “unforeseen” without a temporal requirement of immediacy as urged by Defendant. The water damage to the Plaintiffs’ home was both unexpected and unforeseen by the Plaintiffs, irrespective of how long it took to manifest itself, and therefore the Court finds coverage for Plaintiffs for the damages to their property under the plain language of the subject policy.

A copy of the Order can be read here.

Policyholders shouldn’t accept an insurance carrier’s denial as gospel. If a homeowner feels that an insurance carrier has improperly denied their claim, then they are going to need someone who knows the ins and outs of policies to make the proper arguments to overturn the improper coverage determination. If you would like a copy of the motion briefs in relation to this Order, please reach out to me at

This case will be one of the cases I will be discussing as part of my case study presentation at the upcoming PPAANJ event on November 10, 2021, at Hotel LBI. If you are a public adjuster and haven’t registered, please reach out to me at the email mentioned above.