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February 23, 2018

Florida first-party property insurers have seen a dramatic rise in the number of reported water loss claims over the past five years. Many insurance policies contain an exclusion for losses “caused by constant or repeated seepage or leakage of water over a period of 14 or more days.” Today, one Florida appellate court ruled that “an insurance policy excluding losses caused by constant or repeated leakage or seepage over a period of fourteen days or more does not unambiguously exclude losses caused by leakage or seepage over a period of thirteen days or less.”

The opinion was issued in the case of Hicks v. American Integrity Ins. Co. of Florida (5D17-1282). While Mr. Hicks was out of town for more than 14 days, the water supply line to his refrigerator began leaking, slowly at first, then steadily increasing, until, by the time Mr. Hick’s returned, the supply line was discharging almost one thousand gallons a day. The insurer denied Mr. Hicks claim based on the constant/repeated leakage/seepage exclusion. Mr. Hicks sued for breach of contract. Both sides moved for summary judgment. The insurer argued the loss was excluded. Mr. Hicks argued the damage to his house that occurred within the first 13 days was covered because the exclusion – he argued – only applied to losses occurring after 14 days.

The trial court agreed with the insurer. The appellate court reversed and remanded the case to the trial court with directions. The appellate court appears to have found the exclusion ambiguous. As such, the appellate court directed the trial court to enter partial summary judgment in favor of Mr. Hicks for damage that occurred within the first 13 days of the loss. The appellate court stated the insurer can then try “to prove that a particular loss was sustained after the 13th day and is therefore not covered under the language of the exclusion.”

The opinion is not yet final, so we will keep you updated on any post-opinion motions or alterations to this outcome. For now, this opinion is a setback for insurers trying to deal with the dramatic rise in water loss claims in Florida. This is at least the second case that has significantly weakened the likely applicability of the constant/repeated leakage/seepage exclusion in Florida. See Price v. Castle Key Indem. Co., 152 So. 3d 2 (Fla. 2d DCA 2014).

We have been helping first-party insurers navigate these difficult issues that arise in water loss cases for years. Please contact us if you have any questions about this issue.

For any further questions, please contact Timothy Engelbrecht.