A house insured under the National Flood Insurance Program, built near the shore of a lake, was surrounded by water from the lake when the lake level rose abnormally following a lengthy period of heavy rainfall. When the water subsided, the ground under the house shifted or subsided with resulting damage to the foundation and walls. Claim against the defendant insurance company, a participant in the NFIP's "Write-Your Own" program, was denied under a specific exclusion in its policy for earth movement. The insured sued the insurance company to recover its loss.

"Flood" was defined in the policy, in pertinent part, as " . . . a general and temporary condition of partial or complete inundation of normally dry land areas from . . . overflow of inland or tidal waters or unusual and rapid accumulation of runoff or surface waters from any source" and also as " . . . the collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding the cyclical levels which result in flooding from (overflow of inland or tidal waters)."

The policy contained a specific exclusion for loss caused by " . . . land sinkage, land subsidence, landslide, destabilization or movement of land resulting from the accumulation of water in subsurface land areas, gradual erosion, or any other earth movement except (in pertinent part) such erosion as is covered under the peril of flood."

The insurer argued that the damage to the house was not within the policy definition of "flood" and that the earth movement exclusion clearly eliminated it from coverage. The insured contended that the damage incurred was directly caused by flooding and should be covered by the policy that they purchased for the purpose.

The court said it must look beyond the specific language of the policy to federal regulations bearing on the meaning of "flood" as covered in the Standard Flood Insurance Policy. It found that the FEMA director had, additionally, defined "flood" to include land subsidence along the shore of a lake resulting from erosion or undermining " . . . suddenly caused by an unusually high water level in a natural body of water, accompanied by a severe storm . . . "

The court said that the policy definition of "flood" must be construed to include the expanded definition prescribed in the FEMA director's regulations. It found that language pertinent to the damage under consideration. It said that the only remaining issue was whether the subsidence under the house was "a result of erosion or undermining." The court concluded that the land under the insured's house "collapsed or subsided as a result of undermining caused by the unusually high water level of (the lake) . . . " Accordingly, it found the damages to be covered by the policy.

Summary judgment was awarded to the insured in an amount in excess of $23,000.

SMOAK ET AL., Plaintiffs v. INDEPENDENT FIRE INSURANCE COMPANY, Defendant. United States District Court for the District of South Carolina. Civ. A. No. 3-94-521-17. December 14, 1994. CCH 1995 Fire and Casualty Cases, Paragraph 5421.