Most homeowners are surprised to learn that almost all homeowners’ policies include exclusions for damage caused by sewage water originating outside their home. For example, if your city or county’s sewer main line backs up because of tree roots or debris and the sewage water backs up into your home, the resulting damage will not be covered, or if it is, may be subject to significant limits—often covering only $5,000 or $10,000 of damage. Given the scope of cleaning required in these events, this amount will likely not cover even the costs to clean up the sewage. What’s more, some policies even exclude backups on the homeowner’s own lateral lines. Insurers may offer policy endorsements for coverage at an additional cost, but as many homeowners shop based on price alone, they may not realize they lack the coverage until it is too late.
When sewer main lines do back up and cause damage to property, who can property owners turn to for help? Under inverse condemnation laws set forth by the 5th Amendment of the Constitution, property owners can make claims and sue government entities for the “taking” of their property. Municipalities have the same obligations to maintain the sewer lines as they do flood dams across the country. When they fail to meet their obligations, property owners may proceed against them.
However, the California Supreme Court recently issued its first opinion in over twenty years on inverse condemnation, applying a reasonableness analysis, which generally favors public entities over private property owners. In City of Oroville v. Superior Court (2019) 7 Cal. 5th 1091, the court seems to have shifted from the prior strict liability emphasis in past inverse condemnation cases to that of a reasonableness analysis, that is, a focus on what the substantial cause of the loss actually was.
In the City of Oroville, the property owner suffered a sewer backup when the City’s sewer system backed up. Unfortunately, the property owner did not have a backwater valve plumbing fixture installed at the property, even though it was required by both local ordinance and the California Plumbing Code. In reversing both the trial and appellate courts, the California Supreme Court shifted liability for certain events stemming from public improvements to that the private property owners, based on “an imperfect world of scarce resources, is in the business of weighing safety, the availability of resources, and possible risks that may result from its public improvements.” In other words, the court recognized that governments have limited funds and resources and cannot be held automatically liable in inverse commendation cases as it has ruled in the past.
In California, we anticipate further appellate decisions based on City of Oroville. If your insurance carrier does offer additional coverage for these events, we recommend you secure the appropriate coverage.