Pipe systems in cast iron actively corrode all over the country. Florida’s commercial properties and residential properties are even more susceptible to corrosion due to Florida’s salt and moisture rich environment. Unfortunately, insurance companies often try to deny claims for pipe damage based on carefully worded exceptions such as “wear and tear” or claims that the pipes have reached the natural end of their life. Even in accepted claims, insurance companies will often lowball a policyholder, leaving them with expensive excess repair fees that they are unprepared to take.
In a recent case,1 the fifth court of appeal reviewed a decision that gave the policyholder a legal judgment. Like most cast iron pipe claims, policyholders had an overflow of water in their home due to deteriorating cast iron pipes, which caused damage to the property. The insurance company recognized coverage but paid only $ 10,000 under the limited water damage coverage (“LWD approval”).
The policyholder claimed that there was additional cover and claimed that they were more responsible for the “demolition” to replace the undamaged concrete slab, which was necessary to access the pipes that caused the loss. The insurance company did not agree and claimed that the limit of $ 10,000 LWD applied to both the water damage and the cost of “tearing it out”. Therefore, no additional insurance benefits were due.
The Court of Appeal did not agree, relying on the clear meaning of the insurance language, “the limit of liability for any damage to property covered by this Recommendation is $ 10,000 per loss”, when it was determined that the costs of “tearing out” was not “damage” but that “demolition costs” are referred to an item to be covered as part of a loss during the subsequent loss of water damage. Therefore, the “demolition” would be considered part of the limits for the housing damage.
The Court of Appeal also concluded that there was no lower limit for the “tear out” costs in the LWD, which the insurer could easily have included in the insurance. Finally, the Court of Appeal held that even if the LWD could be read to include “deduction costs”, all ambiguities against the insurer would be interpreted. The Court of Appeal therefore upheld a summary judgment in favor of the policyholder.
While the LWD approval limited the coverage for water damage, it did not provide a “tear-off” limit. It can be repeated: “[W]When interpreting an insurance, the granting of cover must be interpreted broadly in favor of the existence of insurance, while limitations thereof, or exceptions, must be interpreted narrowly vis-à-vis the insurance company. “2
If Security First intended to limit “demolition”, it should have done so by unequivocally stating that the limit applies to “direct physical loss through discharge of water from inside a HVAC system” and for “the cost of demolishing and replacing any. part of a building that is necessary to repair the system. “
In fact, it is important to note that Security First knows how to clearly and unambiguously include the cost of demolition and replacement in LWD if it had been its intention. For example, the primary policy includes a $ 10,000 sub-limit for fungi, mold, wet or dry rot or bacteria. The mold limitation specifically states that the $ 10,000 lower limit includes: “The cost of demolishing and replacing any part of the building or other covered property as needed to access the” fungi “, mold, wet or dry rot or bacteria.”
- If the insurance company wants certain conditions in the insurance, it must explicitly set these conditions in the insurance.
- LWD Endorsement will not limit the liability for the costs of “tearing out”, which is usually one of the most costly things to do in these claims.
Today’s thoughts: “I live in opportunity.” – Emily Dickinson
1 Security First Ins. Co. v. VazquezNo. 5D20-2528 (Fla. 5th DCA February 18, 2022).
2 Cochran v. State Farm Mut. Car. Ins. Co., 298 So. 2d 173 (Fla. 5th DCA 1974).