In late September, 2022, Hurricane Ian made landfall in Southwest Florida and traveled across the state. The storm brought with it significant storm surge that caused substantial flooding. The storm also was accompanied by high winds that caused damage.
Many property insurance policies provide coverage for wind, but exclude damage caused by flood. Distinguishing between the damages caused by flood versus wind is often the job of an engineer. That said, there are a few legal principles to keep in mind.
The first is whether the flood and water damages can be separated. Often times, the claim is reported as both wind and flood. In Sebo v. Am. Home Assurance Co., Inc., 208 So. 3d 694 (Fla. 2016), the Florida Supreme Court held that the concurrent cause doctrine applied under the facts of that case. Under that doctrine, “coverage may exist where an insured risk constitutes a concurrent cause of the loss even when it is not the prime or efficient cause.” Id. at 698. Importantly, the court noted that, in Sebo, no efficient cause could be determined. Id. at 700.
An insurance policy, however, can contract around this doctrine by including anti-concurrent cause language. “[A]n anti-concurrent cause provision is a provision in a first-party insurance policy that provides that when a covered peril and non-covered peril combine to cause a loss, all losses directly and indirectly caused by those events are excluded from coverage.” Liberty Mut. Fire Ins. Co. v. Martinez, 157 So. 3d 486, 487 (Fla. 5th DCA 2015). When an insurer explicitly avoids application of the concurrent cause doctrine with an anti-concurrent cause provision, the plain language of the policy controls. Sec. First Ins. Co. v. Czelusniak, 305 So. 3d 717, 718 (Fla. 3d DCA 2020). In such a case, coverage is precluded if an excluded peril causes the damage, even if a covered peril contributes to the damage.
Thus, an insurer, faced with a claim for damage caused by both flood (excluded) and wind (covered), should determine whether the damage can be separated and review the policy to determine whether or not there is anti-concurrent cause language.
Another issue that arises frequently is whether water damage was caused by flood or rain. In this context, there are a few things to keep in mind. First, many policies have surface water exclusions. This exclusion applies to rain that pools on the surface of the ground and then seeps into the property through cracks and separations. Florida Residential Prop. & Cas. Joint Underwriting Ass’n v. Kron, 721 So. 2d 825, 826 (Fla. 3d DCA 1998). However, water flowing from an overflowing storm drainage system caused by heavy rainfall is not a “flood” under an insurance policy. Intrepid Ins. Co. v. Prestige Imports, Inc., 78 So. 3d 583, 584 (Fla. 3d DCA 2011). In addition, an object carried by water driven against a building is generally caused by the water and not covered. As explained in Couch on Insurance.
Most policies provide that the exclusion applies whether the water was driven by wind or not. Under such a policy, when the water that damages the property was driven by wind, or caused in some other way by a windstorm, the resulting damage is not covered. In fact, damage from objects carried by water driven against a building by wind is loss caused by the water and thus is not covered.
Tidal wave, rising and driven waters, and similar conditions, 11 Couch on Ins. § 153:56.
Finally, given the severity of the storm, there are many properties that will be considered total losses. Florida has adopted the Valued Policy Law. Florida Statute § 627.702. The valued policy law sets the value of the property to conclusively establish that value in the event of a covered loss. An insurer cannot challenge the value of the property after a total loss. Florida Farm Bureau Cas. Ins. Co. v. Cox, 967 So. 2d 815, 819 (Fla. 2007). In other words, the insurer owes the policy limits in the event of a total loss, even if the property is actually worth less.
There are two recognized tests for determining whether property is a total loss. The first is the identity test.
A building is considered an actual total loss, under the identity test, if it has lost its identity and specific character as a building, and becomes so far disintegrated, it cannot be possibly designated as a building, although some part of it may remain standing.
Citizens Prop. Ins. Corp. v. Hamilton, 43 So. 3d 746, 753 (Fla. 1st DCA 2010).
In addition, Florida recognizes a “constructive total loss.”
A constructive total loss occurs when a building, although still standing, is damaged to the extent that ordinances or regulations in effect at the time of the damage actually prohibit or prevent the building’s repair, such that the building has to be demolished.
Greer v. Owners Ins. Co., 434 F. Supp. 2d 1267, 1279 (N.D. Fla. 2006).
Importantly, under the constructive total loss doctrine, a total loss occurs only if the ordinance or regulation actually prohibits or prevents repairs to the house, such that it has to be demolished. A substantial damage determination, which often requires the entire structure be brought into compliance with existing flood regulations, but does not require demolition or prevent repair, is not a total loss. Id. at 1280.
The Valued Policy Law does not require an insurer to pay the policy limits when an insured building is a total loss as a result of damage caused by both a covered and non-covered peril. Florida Farm Bureau Cas. Ins. Co. v. Cox, 967 So. 2d 815, 817 (Fla. 2007). However, an insured can recover the policy limits under a policy providing coverage for wind, but excluding flood, if the insured can establish that wind alone caused a total loss before the storm surge arrived. Citizens Prop. Ins. Corp. v. Ashe, 50 So. 3d 645, 652 (Fla. 1st DCA 2010). This is so even if the insured successfully recovers under a flood policy. Id. That said, evidence that the insured recovered under the flood policy is relevant in a claim that wind caused a total loss of the property when determining which force caused the damage. Id.
Flood versus wind claims involve unique challenges and issues. But, ultimately, these claims require the insurer to investigate the claim, determine the causes, and, perhaps, sequence of damage, and apply those facts to the specifics of that claim.