Loveland's Independent News Source
Loveland, June 10, 2014

On May 23, following numerous flash flood warnings by the National Weather Service, an incredible
series of cloudbursts over Loveland dumped up to 5 1/2 inches of rain across Loveland before tapering
off by 10:00 PM.

Many families were attending graduation ceremonies that night only to return home to flooded
basements, backed sewers, and broken or flooded downspout's pouring water into their homes through  
chimneys or other openings.  Wilson Blvd. in west Loveland was closed along with sections of Taft
Ave.and other main thorough fares throughout the city.  While the damage was not as catastrophic as
the floods last September, property damage may be comparable within city limits as some estimate over
10% of all Loveland homes received some water damage and mostly in basements.

Two weeks after the record setting rain fall, during a council briefing about the storm's damage,
Councilman Phil Farley raised a common question regarding home owner's insurance and whether it
was a flood or other natural event to assist people with their insurance claims.  Farley asked,

"I am wondering whether or not there is any clarification that the city could provide either to the
citizens or their insurance carrier  because the insurance carriers seem to have responded by
saying 'this is a flood - if you don't have flood insurance nothing is covered.'"

See video clip from meeting of Councilman Farley's question

Can Loveland Residents Make Insurance Claims Related to The Heavy Rain?

It may seem counter-intuitive but sometimes your insurance provider is not the best source to answer
questions about claims following an event of this magnitude.  That is because every situation is different
so when hundreds of claims come into an office from one community they don't have time to evaluate
each claim before making a decision.  Frequently, insurers determine whether the natural event is
coverable (like hail which is covered versus flood which generally is excluded) and proceed either
processing to deny or approve claims accordingly.

The heavy rain fall last May in Loveland is a bit more tricky because whether you are covered depends
really on the specifics of your property and situation and not the type of natural event as was implied by
Councilman Farley's question.  In fact, LovelandPolitics has learned a number of home owners have
made claims they believe were successful because they didn't accept the insurer's first answer that flood
damage is excluded from their policy.  Of course, it depends on the specific language in your policy.

Those who returned home to discover their sump pump in the basement failed (thus flooding the
basement) have a claim under most policies including one family that discovered their sump pump
tubing broke and spewed water across their basement.  In the first instance the failure of the pump
caused the flooding and not necessarily the rain fall.  In the second example of the broken plastic sump
pump tube, the water originally came from the "flood" but once it entered their pump for evacuation from
the basement the water damage became a plumbing failure which under most general home owner's
policies is covered.

Why Aren't All "Floods" Excluded?

In the State of Colorado, all-risk property policies (home owner's insurance) insure your home's
structure from damage unless something is properly excluded from within the policy.  This is the result of
Steamboat Dev. Corp. Vs. Bacjacs Industries Inc. 1985 Colorado Supreme Court decision.  The property
owner does have the obligation of showing a loss within the initial grant of coverage but once that is met
the insurance company must prove the specific damage is already excluded from the policy.  Since
every situation is a little different, one would need to compare the specifics of a particular situation
against the policy language before determining whether or not their loss from water damage is insured.

Large insurance company claims adjusters are well versed in Colorado law so the inquiry to your
particular situation is not to determine simply the extent or type of damage but really whether the loss
you suffered has already been excluded from your existing policy coverage.  Even in cases that appear
straight forward, the result can be surprising.

Most homeowner policies do indeed exclude flood damage which is commonly referred to as any water
coming from the ground not the sky.  A common explanation used by local insurance agents is that if the
water enters your home from the ground you are not covered but directly from the sky you are covered.  
In fact, Councilman Dave Clark repeated this, at least in part, when he responded to Farley's question
by stating if it is in your basement you are not covered; however, that isn't necessarily true.

Historically, Colorado courts have followed the National Flood Insurance Program and Federal
Emergency Management Agency (FEMA) definitions that state a flood can either be caused by natural
events or man made events.  Thus, many people assume the flood loss exclusion applies to any and all
situations when their property is flooded.  However, some policies that may define the type of flood have
been found in Colorado courts to be insufficient given the specific circumstances were not excluded from

Back in the 1980's a house at the base of a mountain in Vail, Colorado flooded due to normal Spring
snow melting.  Of course, the insurance provider denied the owner's claim because their policy excluded
losses incurred by "floods."  However, the Heller family disagreed since near their home someone dug
trenches that redirected the water into their property.  For the previous decade they never suffered any
problems until the ditches were dug by a person never identified.

Earlier that same year the Heller's bought an all-risk insurance policy covering the house from the Fire
Insurance Exchange, a division of Farmer's Insurance Group.  When they were denied the claim the
Heller's sued taking their case to the highest court in Colorado for adjudication.  Ultimately, the court
found for the Hellers presumably causing Colorado insurance providers to again change their policies to
include instances where natural run-off has been altered.
Given the large number of claims resulting from the May 23, storm, insurance companies have been
providing home owners with a form letter denying claims resulting from the "May 23, flood."  This is what
likely prompted the inquiries to Loveland's City Council about whether the city had classified the event
as indeed a "flood" or something different.

We recommend anyone impacted by the water that evening contact a third party engineer or plumber to
help you investigate all the contributing factors to the damage your property may have received.  In the
meantime, you should inform your insurance provider the cause is "under investigation" until you feel
certain the reasons for the flooding of your home are clear.  Once you believe you know exactly how it
happened, consult your insurance policy to determine whether or not it is included and seek the help of
an attorney to assist you in communicating with the insurance company.
Rain Damaged Property Owners
Seek Insurance Help From City
If your basement was flooded

1. Find a copy of your homeowner
policy (full draft not summary) for
what is specifically excluded

2.  Investigate the source of your
damage (ie. failed water pump,
faulty tubing, natural seepage)
and determine whether you are

3.  If there was damage, have a
professional do the work to gain
a witness in case you later need
to go to court.  Having a
professional plumber explain the
sump pump piping in your
basement failed and required
repair is more convincing than
the homeowner making the same
claim to a judge later on.

4. Do not commit fraud.  
Insurance companies will
investigate your claim and if
there is evidence you
manufactured evidence or lied
they can refer you to law
enforcement for making a false