First published: Sep 2025
The Malfunctioning Overflow Drain
TAKEAWAY Courts don’t let insurance companies get away with using overly narrow or confusing policy language to deny coverage. If the wording in an insurance policy is too vague for a condo board or policyholder to reasonably understand, a court may decide the loss should, in fact, be fully covered. That means if a condo disagrees with an insurer’s denial, it’s worth talking to legal counsel and, when necessary, pursuing the issue in court. Also, just because someone admits they caused an accident doesn’t automatically mean they are legally responsible - unless the act was intentional or malicious.
178 SULLIVAN STREET CONDO V. SENECA INS. CO.
WHAT HAPPENED The 1889 four-story townhouse at 178 Sullivan Street in Greenwich Village is divided into two condo units. Nearly five years ago, Mr. Bismarck, who resided in the top 2-floor unit, came home from a party feeling ill and went up to the fourth floor bathroom to take a bath. He put a rubber stopper in the drain, ran the water and then fell asleep on the couch while watching television. By the time he awoke the next day, the tub had overflowed, and because the overflow drain designed to prevent such mishaps did not function properly, water poured into other parts of the building, including the downstairs apartment. Following the incident, 178 Sullivan filed an insurance claim with its carrier, Seneca, for up to $900,000 in damages. Seneca, however, largely denied coverage, paying only $25,000 under a limited endorsement. The condo filed suit against Seneca, and also alleged that Mr. Bismarck was liable for damages.
IN COURT The court ruled that water from a bathtub with a stopper in place should still be covered under the building’s insurance, since the policy wording was too unclear to reasonably tell owners that bathtub overflows weren’t included. The judge noted that even the insurance company had to ask its own lawyers for help interpreting the policy, and it couldn’t point to any legal cases backing its denial of coverage. Because of this, the it found that the incident was an “unforeseeable event” that should not have been excluded. The fact that the resident may have fallen asleep while sick and accidentally left the faucet running was also seen as a possible medical emergency rather than negligence, reinforcing the idea that the overflow wasn’t something the policy should deny coverage for.
COUNSEL for the condo CRAIG BLUMBERG Law Office of Craig A. Blumberg; for Seneca Insurance Company MICHAEL DVORKIN, CHRISTOPHER GRAYSON Litchfield Cavo Law; for Bismarck & Piasecki STEVEN BUNDSCHUH, ANASTASIS SIFOUNIOS Stimpfl, Manashirov & Bundschuh; Justice Nicholas Moyne
