Big Print Giveth, Fine Print Taketh Away: When Policy Endorsements and Exclusions Can Help (Or Hurt)

Be honest. When was the last time you read your insurance policy?

If you’re a regular homeowner or property owner, your eyes went straight to the page where it says, “Payment Due” and that was it. You know you should read more, but who really has the time. Besides, you’ve never had any big issues, just small ones you could handle yourself. So really, what’s the harm in not reading the insurance policy?

And then your house or property gets flooded.

You think to yourself, “well, this is what I have insurance for. I’ll just open a claim and get this taken care of.” You get on the phone, or file the claim online, and the representative assisting you is compassionate and understanding, making you confident that all those premiums paid will have been worth it.

And then your Insurance Carrier denies your claim. They send you some letter explaining how, because of some words you never saw before written deep in that policy you never bothered to read, they have determined there’s no coverage. Oh, they also included a reminder that your policy is up for renewal soon and to forward your payment promptly. What choice do you have now?

Policyholders deal with comparable situations every day. And unfortunately, without the right help or guidance, they can end up being at the mercy of their insurance providers for most, if not all of their losses which, arguably, should have been afforded coverage.

Take for instance the following three contemporary cases, all surrounding water losses:

Geovera Specialty Ins. Co. v. Glasser, 4D20-2001 [Fla. 4th DCA 2022]

A home in Broward County, FL suffered a water loss when a water pipe in the guest bathroom burst, causing damage throughout the entire home. The homeowner (“Glasser”), opened the claim and was denied coverage, and as a result, retained a lawyer who initiated the lawsuit. Glasser was confident that the policy covered losses caused by “accidental discharge of water from within a plumbing system.” The Insurance Company, Geovera Specialty Insurance Company (“Geovera”), defended, stating that there was a Water Damage Exclusion Endorsement which precluded Glasser from recovery due to the cause of loss. On Summary Judgment, the trial court sided with Glasser, finding that Geovera’s argument regarding the Endorsement to have been “minor and inconsequential,” and entering final judgment against Geovera.[1]

On Appeal, the 4th DCA found that the Endorsement not only superseded the exclusion, but that it was also much broader than the exclusion. First, the Court found that, although there’s an exception to a provision in Glasser’s policy, the Endorsement effectively supersedes and rules on coverage for this loss. Second, the Court reasoned that, where Cheetham had listed specific causes of water damage that were covered,[2] Glasser’s policy excluded water damage “in any form…regardless of the source of cause of the loss.” Finally, as a last-ditch effort, Glasser argued that Geovera, as the insurer, should have set forth what damages were expressly excluded under the terms of the policy. The Court clarified, stating that, although the policy would require reading multiple policy provisions, the endorsement was unambiguous and plainly did not cover water loss. Thus, Summary Judgment was reverses and remanded in favor or Geovera.

Projekt Prop. Rest. Inc. v. Citizens Prop. Ins. Corp. 4D21-501 [Fla. 4th DCA 2022]

In Broward County, FL, a homeowner assigned his insurance benefits to a remediation services company, Projekt Property Restoration Inc. (Projekt), for services in response to a water leak in a shower. In turn, Projekt sought payment from the Insurer, Citizens Property Insurance Corporation (“Citizens”). Citizens refused to issue payment, alleging the loss was subject to an exclusion for losses caused by “constant or repeated seepage or leakage…over a period of weeks, months, or years.” Projekt retained counsel and filed suit. During litigation, Citizens moved for summary judgment, using the deposition testimony of both its adjuster and expert, as well as an affidavit from the expert, all expressing their opinions that the leak existed for a considerable time in excess of two weeks. In response, Projekt filed its own expert’s affidavit, who only claimed that the other experts opinion was not valid because more testing was needed to determine the cause of the leak. The trial court entered in favor of Citizens, and Projekt appealed.

On appeal, the 4th DCA affirmed summary judgment in favor of Citizens. The Court noted that since Projekt had failed to rebut Citizens argument regarding the length of time the leak had continued for[3], no genuine issues of material fact existed, and thus Citizens was entitled to judgment. The Court goes on to state that despite Projekt raising the Hicks[4] defense, it had only done so on appeal. At no time prior did Projekt plead or argue that it’s services were for damages incurred within the first two weeks of the leak. Therefore, the issue was not properly preserved on appeal for consideration.

Security First Ins. Co. v. Vazquez, 5D20-2528 [Fla. 5th DCA 2022]

In Orange County, FL, homeowner (“Vazquez”) suffered damage to his home due to discharge or overflow of water from a failed cast iron plumbing system. The insurer, Security First Insurance Company (“Security First”), issued coverage pursuant to a Limited Water Damage Endorsement (“Endorsement”) which limited the relief to $10,000.00. Vazquez, however, believed that the tear-out and replacement of the concrete slab which gives access to the corroded pipes should also be covered independently. Security First disagreed, claiming that it had met its obligation under the Endorsement and that no further payment was warranted. As a result, Vazquez retained counsel and filed suit. During litigation, the parties moved for final summary judgment, with Vazquez claiming that the tear-out costs were not subject to the Endorsement since the tear-out was not “water damage to covered property,” and Security First alleging that it applied to both water damage and tear-out costs collectively. Ultimately, the trial court ruled in favor of Vazquez, and thus Security First appealed.

On appeal, the 5th DCA ruled that the Endorsement cap did not prevent Vazquez from recovering for “tear-out” costs. The Court found that the language of the Endorsement was plain and unambiguous that encompassed “all damage to covered property.” The concrete slab that needed to be removed to access the pipes was not damaged by the discharge or overflow of water. Therefore, recovery was not limited by the Endorsement. Further, in the “Perils Insured Against,” reference was made to tear-out costs as an item that can be covered as part of a loss. While Security First argued that the water damage loss did include associated tear-out costs, the Court found that the Endorsement authored by Security First did not say “water damage loss,” but instead opted for “damage to covered property.” Security First alluded to another endorsement that included tear-out costs, but the Court refused to insert the language of one endorsement into the relevant Endorsement as a means to limit liability. Plainly stated, if Security First intended to include costs such as tear-out and replace as part of the relevant Endorsement, it should have done so expressly as it had done in other endorsements of the policy. The Court goes on to further opine that even if it accepted Security First’s argument that the Endorsement included both amounts, nowhere in the Policy was there a requirement to find coverage under a single liability sublimit. While the Endorsement expressly set forth the sublimit for damage to covered property, it remained silent at to any sublimits for costs such as tear-out.[5]

So, what’s the takeaway? Well, first: READ YOUR POLICY. Don’t have it or can’t find it? ASK FOR A COPY. Yes, it’s tedious. Yes, you have better things to do. But if you encounter some portion of your policy that doesn’t quite make sense, then you can be proactive.

Second: Do some research (which might have led you to this article). There are great sources of knowledge to be found on the internet, and some which make subjects even more confusing. Take your time and go at your own pace.

Finally: if you’re already dealing with a loss to your property, make sure you retain competent professionals (ahem) who can get involved early and give you their insight as to how the claim might go. As seen in the cases above, sometimes there’s a valid argument made by counsel, but only when its raised in a timely fashion and argued equally as effective. Remember, the insurance company will not only evaluate whether there’s coverage for your property under the policy, but also whether there are exclusions to coverage as well (constant or repeated leakage, wear tear and marring, passage of time, etc). Regardless, YOU have the right to the coverage you pay for, and our firm is willing to fight and help you get the coverage you need.

If you have a question regarding this article, or your claim in general, follow the link here, email us at info@SchirmerLaw.com, call us at (754) 240-3774, or stop by our Fort Lauderdale office for a free consultation. Your Loss is Our Concern.

DISCLAIMER: This blog/article, and its representations, do not equate to legal advice. All representations, characterizations, and impressions made directly or inadvertently are solely those of the Author/Law Firm and cannot be taken as legal advice. Such material is being made available to the public for educational purposes only as well as to give a general understanding of the laws upon which it speaks. By using this article, You, the reader, understand that there is no attorney-client relationship formed between you and the Author/Firm which publishes this blog/article. This Blog/Article should not be used as a substitute for competent legal advice from a licensed practitioner of law in your State.
 

[1] In Geovera Specialty Ins. Co. v. Glasser, 4D20-2001 [Feb 16, 2022], the trial court relied on Cheetham v. Southern Oak Ins. Co., 114 So. 3d 257 (Fla. 3d DCA 2013) and Cameron v. Scottsdale Ins. Co., 726 Fed. Appx. 757 (11th Cir. 2018) for its ruling since they both had comparable exclusionary provisions, but did not have the Exclusion Endorsement, which it considered “minor and inconsequential.”

[2] Cheetham excluded water damage caused by 1) human forces 2) animal forces or 3) acts of nature.

[3]Projekt’s expert only stated that the facts did not support a finding that damage occurred over a long period of time but did not create a question of fact.

[4] Hicks v. American Integrity Ins. Co. of Florida, 241. So. 3d 925 (Fla 5th DCA 2018)

[5] The Court reaffirms that residential policies frequently place different liability sublimits for different types of loses.

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