Tred R. Eyerly | Insurance Law Hawaii
The Florida Court of Appeals affirmed the trial court’s ruling that the homeowner policy’s sub-limit for water damage included tear-out costs. Sec. First Ins. Co. v. Vazquez, 2022 Fla. App. LEXIS 1205 (Fla. Ct. App. Feb. 18, 2022).
A discharge of water from the cast iron pipes caused damage to the home. The water escaped as a result of the failed cast iron pipes due to wear and tear, deterioration, and corrosion. The insurer acknowledged coverage for the water damage and paid $10,000 under the Limited Water Damage Endorsement (LWD Endorsement). The provision recited that “‘[t]he limit of liability for all damage to covered property provided by this endorsement is $10,000 per loss.” The insureds’ suit argued they were entitled to additional benefits for the cost to tear out and replace a part of the concrete slab – an action necessary to reach the corroded pipes. The parties stipulated that the cost of the tear-out would be $40,000.
The parties agreed that the LWD Endorsement provided coverage of both water damage and tear-out costs. They also agreed that the cost to repair and/or replace the corroded pipes was not covered. They disagreed, however, over the proper interpretation of the limitation of liability provision in the LWD Endorsement. The insured argued that the $10,000 limit applied to both water damage and tear-out costs. The insureds argued that the $10,00 limit applied only to water damage to covered property.
A plain reading of the LWD Endorsement supported the insureds’ reading. In the Perils Insured Against section of the policy, the tear-out costs were not included in the definition of water damage. Rather, tear-out costs were referenced as an item that could be covered as part of a loss. The insurer argued that under the policy, a water damage loss necessarily included the tear-out costs. The limitation of liability provision, however, did not use the term “water damage loss.” Rather it used the term “damage to covered property.” The insurer could have expressly recited that the tear-out costs were subject to the $10,000 limit of liability contained in the LWD Endorsement, but did not do so.
Therefore, the court affirmed the summary judgment entered below in favor of the policy holder.
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