This blog has previously addressed the complex issues that arise when trying to interpret voluminous and complex language of a policy. In many cases, a policyholder can benefit from ambiguities in an insurance policy since such ambiguities are often construed against the insurance company. This is a basic principal of contract interpretation that ambiguities should be construed against the drafter of a contract. However, there are different kinds of ambiguities in the language and application of a contract that can make this analysis more complicated. Some ambiguities are present solely based on the language and word choice of a policy while sometimes language that appears clear and unequivocal can become ambiguous when applied to actual facts and circumstances.
The 2nd District case of Price v. Castle Key Indemnity Company provides an informative discussion on how these differing types of ambiguities can impact an insurance claims dispute. Price sought relief from summary judgment in favor of Castle Key in a coverage dispute after his home was damaged by 195,000 gallons of water that escaped from an upstairs bedroom while he was away. The damage to the home was caused by water flowing over a toilet for at least a 32 day period. Price posited that based on this that the volume of water flow was 6,000 per day.
Price contended that the policy provided coverage for the water damage based on a provision indicating coverage for “sudden and accidental direct physical loss to property.” The insurance company countered by claiming the damage was not “sudden” and asserting the following exception to coverage:
“[s]eepage, meaning continuous or repeated seepage or leakage over a period of weeks, months, or years, of water, steam, or fuel…from, within[,] or around any plumbing fixtures, including but not limited to shower stalls, shower baths, tub installations, sinks[,] or other fixtures designed for the use of water or steam.”
Price contended that 6,000 gallons a day raised a question of fact for the jury as to whether such a high volume of water constituted “seepage”. He also argued that the term “sudden” could be construed to mean “unexpected”, so the jury could find that the water flood was encompassed by the term even though the leak continued for over a month. Price finally alleged that the policy provision that provides coverage for “direct physical damage occurring when the identified origins “cause the sudden and accidental escape of water or steam from a plumbing” device.
In analyzing the relevant policy language, the court noted that a provision or language in an insurance policy is ambiguous when it is susceptible to multiple meanings. The court also noted that such ambiguities can come in two forms: (1) patent ambiguities and latent ambiguities. The court pointed out that a patent ambiguity is based solely on the language and terms of the contract without resort to outside facts or circumstances. With a latent defect the language appears clear and unequivocal on its face but becomes ambiguous when construed in terms of specific facts or extraneous evidence gives rise to multiple interpretations.
The court considered the language at issue in this case to constitute latent ambiguities. The court found that the extrinsic fact that as much as 6,000 gallons per day flowed over at least a 32 day period raised a question of fact for the jury regarding whether the water leak was “sudden” or “seepage”. This decision does not necessarily mean the policyholder will prevail in the trial court but merely that the jury could reasonably interpret the language to find coverage.
This case demonstrates the subtle distinctions in policy interpretation that can impact the outcome of a coverage dispute. When your insurance company attempts to avoid paying your claim on these types of hyper-technical policy interpretation issues, you need an experienced Miami homeowners insurance coverage attorney to represent your interests. 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 consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.