Tred R. Eyerly | Insurance Law Hawaii | May 13, 2019
The federal district court found there was no coverage under the commercial property policy for loss suffered by the insured condominium association due to a sink hole. Bahama Bay II Condo. Ass’n. v. Untied Nat’l Ins. Co., 2019 U.S. Dist. LEXIS 67487 (M.D. Fla. April 11, 2019).
The plaintiff condominium association had thirteen buildings inside their complex. On December 9, 2016, a sinkhole appeared near Building 43. The building was vacated and declared unsafe. Plaintiff’s board excused Building 43 owners from paying association dues.
Plaintiff submitted a claim to the insurer for benefits under the policy. The insurer inspected and accepted coverage for Building 43 under the policy’s Catastrophic Ground Cover Collapse (CGCC) provision and issued a check for $290,000 for immediate repairs. The insurer denied coverage for Buildings 42, 44, and 45; repairs to the foundation of all buildings, the retaining wall and outdoor fences; land, landscaping, and patios, uncollected association dues, and condominium unit owner property.
Only Building 43 meet the requirements for CGCC coverage, which included:
a) The abrupt collapse of the ground cover:
b) A depression in the ground cover clearly visible;
c) Structural damage to the building;
d) The insured structure being condemned and ordered to be vacated.
Buildings 42, 44 and 45 had not been condemned or ordered to be vacated. Therefore, the insurer was entitled to summary judgment on the counts seeking coverage for Buildings 42, 44 and 45.
Coverage for damage to the retaining wall and fence was excluded because they were not connected to any building. Another exclusion barred coverage for patios, foundations of buildings, trees, shrubs or plants. The insurer was entitled to summary judgment on plaintiff’s claim for damage on these items.
The uncollected association dues for Building 43 were akin to lost business income and an economic loss. The policy only provided coverage for physical property damage, not economic losses. So the insurer was entitled to summary judgment on this claim, as well.
Finally, plaintiff made no argument that condominium property within individual units, owned by unit owners, qualified as Covered Property under the policy. Florida law was clear that property insurance issued to a condominium complex did not cover property within individual units. Therefore, the claim was properly denied by the insurer.
The insurer argued that plaintiff failed to mitigate damages. Whether plaintiff took “all reasonable steps to protect the property and whether other reasonable steps existed and should have been taken were questions of fact for a jury. Summary judgment for this proposition was denied.