PROPERTY INSURANCE EXCLUSION: LEAKAGE OF WATER OVER 14 DAYS OR MORE

shutterstock_196921499The recent opinion of Whitley v. American Integrity Ins. Co. of Florida, 43 Fla.L.Weekly D1503a (Fla. 5th DCA 2018), as a follow-up to this article on the property insurance exclusion regarding the “constant or repeated seepage or leakage of water…over a period of 14 or more days,” is a beneficial opinion to insureds. 

 

In this case, the insured had a vacation home.  A plumbing leak occurred that caused water damage to the home.  The plumbing leak occurred during a period of time that lasted approximately 30 days.  For this reason, the property insurer denied the claim per the exclusion that the policy does not cover loss caused by repeated leakage of water over a period of 14 or more days from a plumbing system.  Summary judgment was granted by the trial court in favor of the insurer based on this exclusion. 

 

The insured countered that the policy did not address whether it covered a loss occurring within the first 14 days.  The insured argued, and the appellate court agreed, that the insurer therefore failed to establish that the water loss did not occur within the first 14 days.  “The undisputed fact that the property was exposed to water for more than fourteen days did not establish that the loss occurred on the fourteenth or later day of exposure pursuant to the exclusionary provision.”   Whitley, supra.

 

This is a beneficial case to an insured because if loss occurred due to the continued seepage or leakage of water over a period of 14 days or more (e.g., continuous plumbing leak), the insured can establish it is still entitled to coverage for loss that occurs during the first 14 days.  This puts the onus on the insurer to argue the loss occurred after the 14th day.  However, the insured will counter that the loss occurred during the first 14 days.  In other words, the insured can make this a question of fact for the jury.  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

COMPETING EXPERT WITNESSES IN AN INSURANCE COVERAGE DISPUTE

shutterstock_363608708Oftentimes, insurance coverage disputes involve competing expert witnesses.  The experts render different expert opinions regarding a topic that goes to coverage and/or damages.  An example of competing expert witnesses can be found in the recent property insurance coverage dispute, Garcia v. First Community Ins. Co., 43 Fla.L.Weekly D671a (Fla. 3d DCA 2018). 

 

In this case, an insured submitted a claim under her homeowner’s policy for water damage due to a roof leak.  She claimed her damage was approximately $23,000.  The insurer denied coverage and an insurance coverage dispute ensued.

 

The insured’s policy, akin to many homeowner’s policies, contained exclusions for loss caused by:

 

h. Rain, snow, sleet, sand or dust to the interior of a building unless a covered peril first damages the building causing an opening in a roof or wall and the rain, snow, sleet, sand or dust enters through this opening.

 ***

i. (1) Wear and tear, marring, deterioration;

 

The insurer sent an engineer to inspect the insured’s property and the engineer (expert) opined that the water intrusion was not covered under the policy based on the aforementioned exclusions.  Her opinion was that the water intrusion through the roof was the result of deterioration from age, tree branch abrasions, and construction defects based on how nails were installed into the shingles.  Based on this opinion, the insurer was denying coverage based on the (i) wear and tear, marring and deterioration exclusion and (ii) rain intruded through the roof based on a peril (construction defect) that was not covered under the policy.

 

The insured, as expected, had a competing expert that opined that a hail impact or high wind uplift (covered peril) in the days leading up to the rain event caused water to intrude through the roof and cause interior damage.   Under this opinion, the insured was presenting an expert opinion for coverage and why the insurer’s exclusions were inapplicable.

 

In this case, surprisingly, the trial court granted summary judgment in favor of the insurer.  However, this was reversed on appeal because the competing opinions as to coverage and the cause of the insured’s loss created a genuine issue of material fact.  Summary judgment cannot be granted if there are genuine issues of material fact.  See Garcia, supra, (“Given this conflict in the material evidence as to the cause of the loss, the trial court erred in entering final judgment in favor of First Community [insurer].”).

 

Another argument the insurer raised was that its engineer inspected the property within months after the date of loss whereas the insured’s expert is basing an opinion on an inspection that occurred three years after the fact.   This fact, albeit true, does not create a genuine issue of material fact.  Rather, it goes to the credibility of the experts at trial.  Which expert is more credible regarding the cause of the loss:  the insurer’s expert that inspected the property a few months after the loss or the insured’s expert that inspected the property years after the loss.  Well, the issue of credibility and how a jury / trier of fact weighs this in consideration of other evidence is not appropriate in determining a motion for summary judgment. See Garcia, supra.

 

Experts are an important part of construction disputes including insurance coverage disputes and it is not uncommon for there to be competing expert opinions as to the cause of a loss, a defect, and, of course, damages.   

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

PROPERTY INSURANCE EXCLUSION FOR CONSTANT OR REPEATED LEAKAGE OF WATER

shutterstock_196921499A property insurance policy, no different than any insurance policy, contains exclusions for events that are NOT covered under the terms of the policy.  One such common exclusion in a property insurance policy is an exclusion for damages caused by “constant or repeated seepage or leakage of water…over a period of 14 or more days.”  

 

The application of this exclusion was discussed in the recent opinion of Hicks v. American Integrity Ins. Co. of Florida, 43 Fla. L. Weekly D446a (Fla. 5th DCA 2018).  In this case, while the insured was out of town, the water line to his refrigerator started to leak.  When the insured return home over a month later, the supply line was discharging almost a thousand gallons of water per day.  The insured submitted a property insurance claim.  The property insurer engaged a consultant that opined (likely, correctly) that the water line had been leaking for at least five weeks.  Based on the above-mentioned exclusion, i.e., that water had been constantly leaking for over a period of 14 days, the insurer denied coverage.  This denial led to the inevitable coverage dispute.

 

The trial court granted summary judgment in favor of the insurer in the insurance coverage lawsuit.  The insured argued at trial and then on appeal that this exclusion only applies to losses caused by water on day 14 and after.  For this reason, the insured attempted to calculate his water damage losses that occurred during the first 13 days of the supply line leaking. The appellate court agreed with the insured:

 

In light of the general principle that insurance policy provisions susceptible to more than one interpretation should be construed liberally in favor of the insured and strictly against an insurer, and that exclusionary clauses should be read even more narrowly, we hold that an insurance policy excluding losses caused by constant or repeated leakage or seepage over a period of fourteen days or more does not unambiguously exclude losses caused by leakage or seepage over a period of thirteen days or less.  It is not unambiguously clear that a provision excluding losses caused by constant leakage of water over a period of fourteen or more days likewise excludes losses caused by constant leakage of water over a period of less than fourteen days. And ambiguous insurance provisions — those susceptible to more than one meaning, one providing coverage and the other denying it — must be construed against the insurer and in favor of coverage. 

Hicks, supra (internal citations omitted).

 

This is a favorable ruling for an insured as it established coverage within the first 13 days of the water supply line leaking. The damages associated with that loss is a material issue of fact to be determined by the jury (or judge if it is a bench trial).  But, importantly, the ruling established coverage under this exclusion, meaning the insurer could not categorically bar coverage because the leak constantly occurred for 14 or more days; rather, the insured’s damages, if any, would be limited to the first 13 days of the leak.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

BURDEN OF PROOF UNDER ALL-RISK PROPERTY INSURANCE POLICY

shutterstock_641983000A recent Florida case, Jones v. Federated National Ins. Co., 43 Fla. L. Weekly D164a (Fla. 4th DCA 2018) discusses the burden of proof of an insured in establishing coverage under an all-risk property insurance policy.  Getting right to this critical point, the court explained the burden of proof as follows:

 

 

1. The insured has the initial burden of proof to establish that the damage at issue occurred during a period in which the damaged property had insurance coverage. If the insured fails to meet this burden, judgment shall be entered in favor of the insurer.

2. If the insured’s initial burden is met, the burden of proof shifts to the insurer to establish that (a) there was a sole cause of the loss, or (b) in cases where there was more than one cause, there was an “efficient proximate cause” of the loss.

3. If the insurer meets the burden of proof under either 2.(a) or 2.(b), it must then establish that this sole or efficient proximate cause was excluded from coverage by the terms of the insurance policy. If the insurer does so, then judgment shall be entered in its favor. If the insurer establishes that there was a sole or efficient proximate cause, but fails to prove that this cause was excluded by the all-risk insurance policy, then judgment shall be entered in favor of the insured.

4. If the insurer fails to establish either a sole or efficient proximate cause, and there are no applicable anti-concurrent cause provisions, then the concurrent cause doctrine must be utilized. Applying the concurrent cause doctrine, the insurer has the initial burden of production to present evidence that an excluded risk was a contributing cause of the damage.  If it fails to satisfy this burden of production, judgment shall be entered in favor of the insured.

5. If the insurer does produce evidence that an excluded risk was a concurrent cause of the loss, then the burden of production shifts to the insured to present evidence that an allegedly covered risk was a concurrent cause of the loss at issue. If the insured fails to satisfy this burden of production, judgment shall be entered in favor of the insurer.

6. If the insured produces evidence of a covered concurrent cause, the insurer bears the burden of proof to establish that the insured’s purported concurrent cause was either (a) not a concurrent cause (i.e., it had no (or a de minimis) causal role in the loss), or (b) excluded from coverage by the insurance policy. If the insurer fails to satisfy this burden of proof, judgment shall be entered in favor of the insured.

Jones, supra

 

In this case, the insured suffered roof damage and claimed it was the result of a hailstorm, a peril covered under the policy.  The property insurer denied coverage contending the roof damage was not covered under the policy due to certain exclusions including, without limitation: (i) wear and tear, (ii) faulty or defective design, and (iii) existing damage.  The homeowner argued that the concurrent cause doctrine should apply to determine if there was coverage under this all-risk property insurance policy.  (Check out this article for more on the concurrent cause doctrine.)  This doctrine holds that insurance coverage may exist if an excluded peril and covered peril concurrently cause a loss.   The trial court did not apply this doctrine; rather, it applied the doctrine known as the efficient proximate cause doctrine which holds that if there are concurrent causes for a loss, the peril that set the other peril in motion is the peril that the loss is attributable to, i.e., you are looking at the most responsible cause of the loss.  Thus, if an excluded peril set a covered peril in motion, i.e., it is the most responsible cause of the loss, the loss would be attributable to the excluded peril and not covered by the policy.

 

The court, relying on a Florida Supreme Court decision, maintained that it was error to instruct the jury on the efficient proximate cause doctrine without the jury first determining whether an efficient proximate cause of the loss could be determined.  If it could not be determined, the concurrent cause doctrine would apply and the jury would determine if one of the concurrent causes (perils) was covered under the policy.  For instance, if the jury could not determine whether one peril set another peril in motion, the jury would determine whether the hailstorm concurrently caused the roof damage with another peril (e.g., defective design); and, if so, whether the hailstorm is a covered peril such that the roof damage would be covered under the policy.

 

Notably, the court noted that certain exclusions the insurer relied on contain anti-concurrent cause language, which negates the application of the concurrent cause doctrine.  However, since some of the exclusions the insurer relied on did not specifically incorporate anti-concurrent cause language, the jury could have found that the hailstorm concurrently caused the roof damage with an exclusion that did not contain the anti-concurrent cause language meaning the concurrent cause doctrine would apply.

 

I know this is confusing.  I agree, it very well can be confusing.  Nonetheless, what this emphasizes is the importance of strategy when it comes to presenting a property insurance claim to trigger the application of the concurrent cause doctrine and preparing jury instructions, which is the law you want the jury to follow. This also emphasizes the importance of the verdict form which is the form the jury fills out to decide the outcome of the case.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.