All-Risk Homeowners Insurance Policy: Does it Cover Water Damage Incurred by a Broken and Deteriorated Pipe Under Your House?

Florida insurance claims_fightsforyou.netAccording to a recent case out of the Third District Court of Appeal, this type of policy can cover damages that frequently occur when a pipe failure below one’s floor or concrete slab occurs due to the pipe’s deterioration over the years.  Obviously, each homeowner’s case is different depending on the language within their respective homeowners insurance policy, as well as the facts surrounding the insurance claim loss.

In the case of Cheetham v. Southern Oak Ins. Co., 114 So.3d 257 (Fla. 3d DCA 2013), a Florida homeowner suffered damage to their home when a pipe located on the “residence premises” broke and/or collapsed due to age and deterioration (which usually provides insurance carriers ammo to deny claims under the notable and common “wear and tear exclusion”). As the pipe was located underneath the ground, debris entered the pipe, forming a blockage, which ultimately caused waste water and/or material to back up through the blocked pipe and into the “residence premises” through drains.  The homeowner filed a claim with their insurer, Southern Oak, after their home sustained water damage.   After Southern Oak denied the claim, the homeowner filed suit, claiming the loss was covered by their all-risk homeowners’ insurance policy.   In response, Southern Oak asserted that a “Water Damage” exclusion was applicable, and, therefore, the homeowners loss was not covered.

The Court noted the following relevant provisions within the policy:

HOMEOWNERS 3—SPECIAL FORM

SECTION I—PERILS INSURED AGAINST

A.  Coverage A—Dwelling And Coverage B—Other Structures

1.  We insure against risk of direct physical loss to property described in Coverages A and B.

2.  We do not insure, however, for loss:

a.  Excluded under Section I— Exclusions;

…..

c. Caused by:

…..

(6) Any of the following:

(a) Wear and tear, marring,  deterioration;

…..

Exception To c.(6)

Unless the loss is otherwise excluded, we cover loss to property covered under Coverage A or B resulting from an accidental discharge or overflow of water or steam from  within a:

(i) Storm drain, or water, steam or sewer pipe, off the “residence premises”;  or

(ii) Plumbing … system…  on the “residence premises ”.  This includes the cost to tear out and replace any part of a building, or other structure, on the “residence premises”, but only when necessary to repair the system…. However, such tear out and replacement coverage only applies to other structures if the water … causes actual damage to a building on the “residence premises”.

…..

We do not cover loss to the system … from which this water … escaped.  For purposes of this provision, a plumbing system … does not include a sump, sump pump or related equipment or a roof drain, gutter, down spout [sic] or similar fixtures or equipment.

…..

Section I—Exclusion A.3. Water Damage, Paragraphs a. and c. that apply to surface and water below the surface of the ground do not apply to loss by water covered under c.(5) and (6) above.

…..

B. Coverage C—Personal Property

We insure for direct physical loss to the property described in Coverage C caused by any of the following  perils unless the loss is excluded in Section I—Exclusions.

…..

12. Accidental Discharge Or Overflow Of Water Or Steam

a.  This peril means accidental discharge or overflow of water … from within a plumbing … system….

b. This peril does not include loss:

(1) To the system … from which the water … escaped;

…..

(3) On the “residence premises” caused by accidental discharge or overflow which occurs off the “residence premises”;  ….

…..

c. In this peril, a plumbing system … does not include a sump, sump pump or related equipment or a roof drain, gutter, downspout or similar fixtures or equipment.

d. Section I—Exclusion A.3. Water Damage, Paragraphs a. and c. that apply to surface water and water below the surface of the ground do not apply to loss by water covered under this peril.

…..

SECTION I—EXCLUSIONS

A.  We do not insure for loss caused directly or indirectly by any of the following.   Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.   These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

…..

3. Water Damage

Water Damage means:

a.  Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;

b. Water or water-borne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump or related equipment;  or

c. Water or water-borne material below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure; caused by or resulting from human or animal forces or any act of nature.

The Court addressed the following issues: (1) whether the all-risk policy is ambiguous where it provides for coverage for the “accidental discharge” of water “within a … plumbing … system … on the ‘residence premises’ ” caused by “deterioration,” but excludes “water damage” caused by “[w]ater or water-borne material which backs up through sewers or drains,” and (2) whether the exclusion applies when a pipe located within the plumbing system of the “residence premises” breaks due to deterioration, causing debris to enter the pipe and forming a blockage, and as a result of the blockage, waste water and/or material backed up through the blocked pipe “within” the “plumbing system” and then into the “residence premises” through drains.

The Court opined that at first glance, without examining the “Section I—Exclusions,” it would appear that the claimed loss would not be covered because the loss was caused by a deteriorated pipe, ie., one of the most common exclusions insurance carriers cite to deny homeowners insurance claims.

However, the policy also included an exception to the no-coverage provision involving “deterioration,” which provided as follows:

Exception To c.(6)

Unless the loss is otherwise excluded, we cover loss to property covered under Coverage A [Dwelling] or B [Other Structures] resulting from an accidental discharge or overflow of water … from within a:

…..

(ii) Plumbing … system … on the “ residence premises ” ….

Therefore, the Court noted that based on paragraph (ii) under “Exception To c.(6),” an “accidental discharge” of water from within a plumbing system caused by deterioration is a covered loss, “[u]nless the loss is otherwise excluded.” Exclusions pertaining to water damage are found in Section I A.3. of the policy.

SECTION I—EXCLUSIONS

A. We do not insure for loss caused directly or indirectly by any of the following….

…..

3. Water Damage

Water Damage means:

a. Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;

b. Water or water-borne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump or related equipment; or

c. Water or water-borne material below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure; ….. caused by or resulting from human or animal forces or any act of nature.

The Court noted that the exclusion above related to water damage applied to damage caused by outside forces unrelated to the residence premises’ plumbing system.  As such, the Court held that “because the claimed loss in this case was caused by the deterioration of a pipe within the plumbing system, which caused water or water-borne material emanating from the residence premises’ plumbing system to back up into the residence premises,” the homeowner’s loss was a covered loss under the policy.

Moral of the Story: whether you are a homeowner that lives in Hollywood, Dania, Weston, Homestead, Plantation, Aventura, Miami Beach, Bal Harbour, Tamarac, Kendall, Boca Raton or another area within Miami, Fort Lauderdale or Palm Beach, if you sustain water or mold damage to your home due to a pipe beneath your floor or concrete slab that bursts due to deterioration or wear and tear, and if your homeowners insurance carrier denies your claim under the “wear and tear” exclusion, make sure you consult with a homeowners insurance damage claim attorney to verify whether your policy may provide you coverage notwithstanding the letter from your insurance carrier denying your claim.

Florida Homeowners Insurance Claims – HO-2 v. HO-3 v. HO-4 v. HO-6 v. HO-8, Insurance Policies Oh My

When living in South Florida, it is more important than ever for a homeowner or renter/tenant to secure insurance for the many different hazards that may affect one’s property.  After all, we are especially susceptible to tropical storms and Hurricanes in the Miami, Fort Lauderdale and Palm Beach areas.  Yet, even though we have not experienced a Hurricane in quite some time, having homeowners or renters  insurance can provide peace of mind given the many other perils which may occur and that can destroy one’s property, including fires, electrical surges, floods, sinkholes, tornadoes, lightning strikes, vandalism, theft, and/or sudden water losses from a burst pipe, faulty/broken plumbing or a failed seal in a water heater.

Whether your a single family homeowner that may have an HO-2, HO-3 (also know as an “All Risks” policy) or HO-8 policy, a condo owner that has an HO-6 policy, or a tenant/renter that has a an HO-4 policy, if you sustain a property loss (structure and/or personal property) and require a Miami, Florida, Hurricane or property damage insurance claim lawyer, there are legal issues an insurance company may raise depending on the type of policy you have,  and that you scratch your head and say, what is that.  Some of these issues may include the following:

    1. Actual Cash Value:  if a policy provides for actual cash value as opposed to replacement cost, this would be the amount of money it would  cost to purchase a similar item in like condition and quality in today’s market place, ie, the market value of the property that takes into consideration depreciation.  An example of depreciation is say carpet or other types of flooring that has a useful life of say 10 years but at the time of loss was 5 years old, the market value of the carpet would be less than the replacement cost, as the market value would take into consideration this wear and tear over the years and reduce the value of the property.
    2. Replacement Cost: if a policy provides for the replacement cost of damaged property, this would be the amount of money it would take to purchase the same type of property of like kind and quality in today’s market place.
    3. Alternative Living Expenses: also known as ALE, alternative living expenses may include the reasonable expenses incurred to relocate for the time it takes to repair an uninhabitable property, such as staying in a hotel for days or weeks,  excess food expenses above what one normally would spend, transportation expenses in case you need to travel greater distances than normal, and storage expenses, just to name a few.  It is important to save your receipts in order to prove that these expenses were actually incurred.
    4. Loss of Use: an interchangeable term with alternative living expenses (ALE) on a Miami, Florida, homeowners insurance policy, loss of use damages are paid when a homeowner incurs excess expenses during the time it takes to repair an uninhabitable property.
    5. Deductible: the amount of money the policy holder must pay out of pocket before the insurance company will start paying from your insurance coverage.  For instance, a Miami, Florida, homeowner may have a $5,000 deductible on a windstorm policy, and when a Hurricane damage insurance claim is made, if the property damage claim is adjusted at $15,000, the insurance company will pay you a net of $10,000, ie., minus the $5,000 deductible.
    6. Exclusion: within a homeowner’s policy, there will be certain provisions called exclusions that an insurance company may cite to in order to deny a claim.  Common exclusions cited in a homeowner’s insurance policy could include mold (given that is it something that grows over time), flood (you would need to purchase a separate flood policy), landslides/sinkholes (ie, earth movement), neglect/wear and tear (policies cover water damage caused by sudden and unexpected losses, such as a burst pipe or a water heater that explodes), a sewer backup, loss caused by intentional destruction, and ordinance/law (such as construction to bring a house up to code), just to name a few.  However, insurance companies typically offer a homeowner the opportunity to purchase coverage that normally would be excluded.

As you can see, whether you are a homeowner/tenant in Coral Springs, Cooper City, Hallandale, Boca Raton, Homestead, Key Biscayne, Weston, Pompano Beach, Tamarac, Wilton Manners, Hialeah or another area within Miami, Fort Lauderdale or Palm Beach, there is a lot to think about when it comes to your insurance policy and potential property damage disputes and claims that may occur.

Florida Condo Owner Pipe Plumbing Leak Claims – It’s the Rainy Season Down in Miami, Fort Lauderdale and Palm Beach: Be Prepared

It is currently the rainy season down here in South Florida, and nothing is worse than having one of those downpours cause water damage to your house, apartment or condominium.  Whether it is a leak in your roof, flooding due to a flash flood, or even a gutter or burst pipe/plumbing that overflows with water, it is now more important than ever to have flood and/or homeowners insurance to protect you from water intrusions and the resultant water damage loss.  Many times, not only is the structure damaged, but furniture, electronics and other items are frequently ruined.

As such, when one has to bring Florida Condo Owner Pipe Plumbing Leak Claims, it is important to know the types of property damage insurance coverage available, whether flood or homeowners, so that you are protected in a time of crisis.  Reason being, mold is commonly caused by water intrusions, yet one of the most common exclusions that insurance companies cite to in denying a homeowner’s insurance claim is the mold exclusion.  A Miami, Florida, property damage and homeowners insurance claim attorney can help one navigate the muddy waters of the various types of policies, so that the losses and claims that eventually occur can be dealt with.  Whether you live in Miramar, Deerfield Beach, Coconut Creek, Doral, Lauderhill, Margate, Miami Lakes, Pembroke Pines or another area throughout Miami, Fort Lauderdale or Palm Beach, it is certainly better to be informed and prepared than to suffer a non-covered property loss that causes heartache and headaches.