Florida Insurance Claims Litigation: The Role of Public Policy Considerations

If your home or business is damaged by a severe storm or other peril, the scope of coverage, applicable exclusions and policy limits become extremely important.  Insurance companies will often scour the pages of a policy to justify denying a claim.  Because insurers are responsible for drafting the language of an insurance policy, ambiguity in the terms of the policy generally are construed against the insurance company.  While this blog has previously addressed the principles of contract construction that favor policyholders when the relevant language in a policy is unclear, a recent case from the U.S. Court of Appeals for the Tenth Circuit provides an example of a court relying on public policy considerations even when the language of an insurance policy is not ambiguous.

In Glacier Construction Co. v. Travelers Property & Casualty Co. of America, Glacier contracted with a public entity to build a wastewater pumping facility.  Excess water at the sight had to be eliminated before construction could be undertaken.  The insured installed four wells and pumps to dewater the site.  However, an unexpected amount of heavy rainfall caused sediment to accumulate and the soil to be eroded.  These changes caused the wells and pumps to malfunction.  A post-loss investigation revealed that the soil was different from that identified during the initial evaluation of the project site.  Based on this soil difference, the initial dewatering plan was not adequate.  The insured subsequently created a revised dewatering plan.

The insured filed a claim seeking coverage for the cost of the revised plan which was estimated at $473,884 under the insured’s builder’s risk policy.  The insurance policy provided coverage of covered property for “direct physical loss of or damage to Covered Property from any of the Covered Causes of Loss.”  Because the policy specified that “Covered Causes of Loss” involved “risks of direct physical loss or damage,” the policy was essentially an “all risk” policy. 

The policy language specifically provided as follows:

a.Buildings or structures including temporary structures while being constructed, erected or fabricated at the job site,

b.Property that will become part of a permanent part of the buildings or structure at the job site.

(1)While in transit to the job site or at a temporary storage location;

(2)While at the job site or at a temporary storage location.

The policy also contained a “Site Preparation” clause that covered costs incurred to “reexcavate the site, reprepare the site, regard the land, or reperform similar work because of loss of or damage to Covered Property by a Covered Cause of Loss.”

The district court granted summary judgment for the insured finding that the insurer was liable for the cost of reworking or repairing the original wells and pumps in an amount to be established at trial.  During trial, the insurer presented evidence that this amount was $9,142 while the insured presented evidence that the amount was $473,884.  The jury awarded damages in the amount requested by the insurer.

The Tenth Circuit affirmed the trial court on appeal, but it is the reasoning offered by the appellate court that is particularly interesting.  The court did not find any ambiguity in the policy language regarding whether the loss was covered or the scope of the compensation.  The court went further in justifying its decision based on public policy considerations that go beyond the language of the policy.  The court reasoned that construing the policy as requested by the insured would provide an incentive to the construction company to economize on the initial dewatering plan, so the insurer would be on the hook for a more expansive plan if it was subsequently needed.

This analysis reveals that sometimes judges look beyond the policy language and state law to arrive at decisions that support public policy considerations.  In this case, the court considered how interpretation of the insurance policy would impact decisions by builders.  This demonstrates the breadth of issues that an experienced insurance claims attorney might need to evaluate when litigating a coverage dispute.  Sometimes judges will be influenced by the policy implications of their rulings, so lawyers must be prepared to argue how sound public policy supports ruling a particular way.

If you have questions about Miami-Dade insurance claims and you would like to contact an experienced Miami property claims attorney, you are welcome to contact our law firm.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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