Sandy Damage Falls Within ‘Flood and Flowing Substance’ Exclusion, N.J. Appellate Court Affirms

NEWARK, N.J. — Property damage sustained during Superstorm Sandy is not covered because it falls within the homeowner policy’s “flood and flowing substance” exclusion, a New Jersey appellate court has affirmed, rejecting the policyholders’ argument that the damage was caused by “substance in the water, not a flood.”

In an Oct. 22 ruling, the New Jersey Superior Court Appellate Division said the exclusionary term “property loss caused by or consisting of flood damage” includes “damage caused by organisms or other particulate matter that flows into the insured's property as part of the water and is left behind when the water …