Water Damage Coverage from Plumbing Failure Can Turn on Subtle Policy Interpretation Issues

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

While damage caused by water  from burst plumbing  pipes are one of the most common causes of harm to homes, claims related to water damage can be some of the most perplexing and complex insurance claims.  Homeowners policies often contain exclusions that limit coverage for some types of plumbing-related water damage, so it is important to consult with an experienced Florida insurance claims attorney if your insurer denies coverage for your plumbing problems.

The 2nd District of the Florida Court of Appeals case Price v. Castle Key Indemnity provides an example of the technical and complex nature of issues that can arise when a house is damaged by a plumbing failure.  In Price, the parties agreed that 195,000 gallons of water was released from the plumbing in an upstairs bathroom.  The homeowners were out of town for at least a month which included the time period during which the water damage occurred.  When the insured’s claim was denied, the homeowner filed a claim for breach of contract against the insurance company.  The insurer moved for summary judgment which was granted by the trial court.

The insured appealed the trial judge’s ruling in favor of the insurance carrier granting summary judgment.  On appeal the insurance company observed that the insurance policy indicated on its face that it provides coverage for a “sudden and accidental direct physical loss to property”.  However, the policy also contained the following exclusion that covered the following:

“seepage, 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.”

Although the insured conceded that water flowed from a pipe that transported water to the upstairs bathroom for at least 32 days, he contended that the loss was not excluded by the “seepage exclusion”.  The insured argued that given the time frame and volume of water that escaped, the volume of water must have been approximately 6,000 gallons per day.  Based on the massive volume of water that escaped from the pipe on a daily basis, the insured claimed that ambiguity existed about whether the claim was covered.  The insured pointed out that the term “sudden” was not defined by the policy, but the term can be equivalent to “unexpected”.

The insured also contended that if the insurer was correct that the damage was caused by age, rust and wear, the claim was covered under another provision that includes physical damage when the origin of the damage causes the “sudden and accidental escape of water or steam from a plumbing” component.

In analyzing these arguments, the court began by distinguishing “patent ambiguities” from “latent ambiguities”.  Patent ambiguities refer to terms that are unclear based on the face of the policy.  By contrast, a latent ambiguity involves a term that is clear based on the face of the policy but extraneous information or facts make the term open to multiple interpretations or definitions.

While the court indicated that the terms “seepage” and “sudden” were unambiguous on the face of the policy, the fact that 6,000 gallons of water per day escaped over at least a 32 day period.  The court reversed the trial court grant of summary judgment based on the question of fact about whether the water from the pipe constituted an escalating leak or as a burst that continued at a constant rate.

The point to take away from this case is that insurance claims disputes over water damage caused by plumbing that fails can turn on subtle distinctions in terms of policy language.  If you have questions about Miami-Dade homeowners insurance claims, you are welcome to contact my Florida insurance claims dispute 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 consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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