The Federal Emergency Management Agency and the National Flood Insurance Program filed a motion for summary judgment on legal action brought against them by two insureds seeking a declaratory judgment that "basement," as defined in their flood insurance policies, did not apply to their homes.

The lower levels of the dwellings owned by the two neighbors were severely damaged by flooding that followed torrential rains. Each had a flood policy issued under the National Flood Insurance Program that was subject to a "basement" exclusion, the basis for denial of their claims for damage to the lower levels of their homes. "Basement" was defined as "the lowest level or story which has its floor subgrade (below ground level) on all sides." It was not disputed that the coverage was subject to the exclusion.

The insureds contended that the exclusion was ambiguous and was not applicable to their homes, pointing out that their lower levels exited to the backyards by use of only one or a few upward steps. The court determined that the homes were not true walkouts, structures whose lowest levels may be below grade on as many as three sides, but where an exit is at ground level on at least one side. The court said that the standard flood insurance policy "unambiguously excludes from coverage certain losses to a home's lowest level when its floor is subgrade on all sides." It concluded that the lower levels of the homes in question were "basements" as defined.

The motion of the federal agencies for summary judgment was granted. The claims of the insureds were found not covered.

NELSON ET AL., Plaintiffs v. BECTON ET AL., Defendants. United States District Court, District of Minnesota, Fourth Division. Civ. No. 4-88-1110. March 16, 1990. 732 F. Supp. 996. CCH 1990 Fire and Casualty Cases, Paragraph 2611.