A question that often arises in insurance litigation is whether your homeowner’s policy covers damages occasioned by backups in your plumbing system. This issue has been litigated for decades and the answer will not surprise you. It depends. There have been cases in which water damage was a covered peril in a policy and yet a casualty caused by a drain pipe back up was not covered, and there have been cases in which water was an excluded peril and drain line backups were found to be covered. For starters, as is always the case in insurance litigation, the specific language in your policy is where the analysis begins.
In one Florida case, the insured’s home had been built in the 1960’s. The homeowner’s water main ran underneath a concrete slab under the kitchen of her home. The drain pipe became corroded after some time and it needed to be replaced. The homeowner’s filed a claim, which their insurer denied on the grounds that the damage was not caused by water, a covered peril, but rather by wear and tear, an excluded peril. The insured argued that the ensuing loss provision in their policy – which provides coverage for covered consequential losses even when caused by a non-covered peril – saved their claim. Their logic was that the drain pipe was leaking water, a covered peril, thus the insurance company was responsible for paying to remove the concrete slab so that the drains could be repaired.
Unfortunately, the court held that the insurance contract did not provide coverage. The court reasoned that the ensuing loss provision would have rendered the insurance company liable for water damage, a covered peril, in the event that water had actually caused damage. However, because the water did not appear to have caused any damage to the home, since it was under a concrete slab and there was no visible damage, the policy did not provide coverage in this instance. Often, wear and tear is not covered, so this part of the analysis is not surprising. However, even if wear and tear is not covered, this case makes it clear that if water damage is actually caused by a dilapidated drain pipe and your water damage is a covered peril then you may be able to recover pursuant to an ensuing loss clause.
In another Florida case, the insured’s home was damaged when a heavy rainfall caused water to build up in the sewer system, which in turn caused a backup in the insured’s plumbing system. The insured’s toilets and sinks began to overflow with water. The homeowner’s filed their claim which their insurance company denied. The policy had a provision excluding damage caused by water backups from sewers or drains, but covered accidental discharges of water from within a plumbing system. The court upheld the insurance company’s denial of the claim. The court reasoned that the accidental discharge language meant that the backup had to occur from within the plumbing system (e.g. a clogged sink) for it to be covered under this policy, and because the backup occurred from the sewer system it was excluded.
Another frequently litigated issue in these cases is the meaning of “water” in these cases. When drain pipes back up, it’s not just water that a homeowner has to worry about. Often, it’s raw sewage that discharges. Often, the policy language will say that water damage that discharges from a drain pipe is not covered. In these cases, policyholders would argue that sewage is not water but is instead its own substance. In these situations, some courts will find the language to be ambiguous. A basic tenet of contract law is to interpret ambiguous language against the drafter, in our case, the insurance company. So when terms are found to be ambiguous, courts typically construe them in favor of the insured. Thus, in these types of cases, a strong argument can be made that sewage is a covered peril because it is not water, an excluded peril. However, even in sewage cases, insurance companies often include clauses that exclude damage caused by contaminants or pollutants. So even if an insured is successful in arguing that the sewage is not water, the insurance company would then try to characterize it as a pollutant. These arguments go back and forth, and ultimately the judge will have to decide who makes a better point and which interpretation is best.
Whether these arguments are successful will depend on a variety of factors. But these cases tend to illustrate just how creative insurance companies can get when a claim is filed. These types of claims can be very emotional to the homeowner because they often come with extensive damage to their home. To top it off, insureds are often left hanging for months on end while the insurance company “investigates” the claim only to be met with friction, and ultimately a denial or a lowball estimate.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].
Homeowners Choice Property & Casualty v. Maspons, 211 So.3d 1067 (Fla. 3d DCA 2017)