Water damage claims often lead to disputes between homeowners and their insurance companies. Policy language that seems clear can become ambiguous when applied within the context of an unexpected loss; and, while homeowners may expect their insurance companies to cover any damage caused by a leak or water intrusion, insurers will often seek to use the language of their policies to argue that no coverage was intended.
This was the case in a recent insurance coverage dispute in the Southern District of Florida, where the homeowners lost at trial but won the right to proceed with their claim on appeal.
Water Damage Due to Pipe Failure Covered Under Insureds’ Policy
The case arose out of an “acute pipe failure” at the property owners’ rental dwelling. As described by the 11th Circuit Court of Appeals:
“[A] pipe in the plumbing system of the dwelling collapsed, causing water damage to interior surfaces and necessitating additional damage to access and repair the affected plumbing. The cause of the plumbing problem was an age-related ‘acute pipe failure’ of one of the building’s sanitary lines . . . . [which] was discovered when a tenant reported an overflow of water from a kitchen-sink drain.”
The property owners filed a claim under the provision of their insurance policy which covered, “[a]ccidental discharge or leakage of water . . . as the direct result of the breaking apart or cracking of a plumbing . . . system . . . that is located on the described premises.” However, their insurer, Scottsdale Insurance Company, denied their claim citing an endorsement which excluded coverage for, “[w]ater that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment.”
The trial court ruled in favor of Scottsdale Insurance Company, but the Court of Appeals reversed. In doing so, it relied on the policy’s broad coverage for any “direct physical loss . . . or damage” to the property that was not otherwise excluded. While the policy excluded loss due to corrosion, decay and deterioration, this exclusion included a specific exception for “water damage.”
Piecing together the various relevant terms of the property owners’ policy, the Court of Appeals determined that they were entitled to coverage for the age-related pipe failure. Citing a state court case with similar facts and policy language, the Court of Appeals held that the loss qualified as water damage due to pipe failure; and, contrary to the insurer’s assertion, was not the result of a backup or overflow in the plumbing system. Accordingly, the Court stated that Florida law, “suggests that the [property owners’] claimed loss is unambiguously covered under their policy,” and it remanded the case for further proceedings consistent with its decision.
Contact our Fort Lauderdale Property Damage Attorneys about Your Insurance Claim
If you are facing a coverage dispute with your insurance company, the attorneys at Saavedra | Goodwin can help you enforce the terms of your policy. To learn more, please contact us to schedule a confidential initial consultation. You can reach our Fort Lauderdale law offices by phone at (954) 767-6333, or request an appointment online and we will respond shortly.