Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

In Walker, as in all cases, the specific policy provisions are crucial to understanding why coverage exists. The wording and lack of definitions included within the policy played a major role in the Court’s finding that coverage exists.

The Walkers filed suit against Teachers after Chinese drywall caused damages to their home, personal property and caused them to be displaced from their home. Teachers denied the claim and said there was no coverage for the loss.

Teachers claimed that two exclusions, “wear and tear” and “errors, omissions and defects barred coverage for the loss and relied upon these exclusions as affirmative defenses. The Court first looked for a definition of the terms of the exclusions but, because they were not specifically defined in the policy, the court applied the ordinary and plain meaning of the terms.

The Court found that the damages caused by the Chinese drywall were not excluded under the policy as “wear and tear” because the ordinary meaning of wear and tear would apply to “ordinary or expected degenerative processes occurring naturally over time.”

The Court also did not agree that the damages were excluded for corrosion or latent defect arguments.

Likewise the category included under the ‘wear and tear’ exclusion and identified by the defense – ‘corrosion’ and ‘latent defect’ – do not change this analysis. This event was both sudden and accidental. By its terms, the exclusion applies when the cause of the damage is corrosion, not when the result is corrosion. The latent defect part of the exclusion does not apply because there was no inherent structural deficiency in the drywall itself. Is serves its purpose and function as drywall. The damages in this case are not the result of a latent defect.

Teachers raised one more exclusion as a defense to paying this claim. It argued the policy excluded damages caused by “errors, omissions, and defects.”

We do not pay for loss if one or more of the following exclusions apply to the loss, regardless of whether other causes or events that contribute to or aggravate the loss, whether such causes or events act to produce the loss before, at the same time as, or after the excluded causes or events.

* * *
12. Errors, omissions and defects- We do not pay for loss which results from one or more of the following:
* * *
b. a defect, a weakness, an inadequacy, a fault or unsoundness in materials used in construction or repair whether on or off the insured premises.

The Court was not persuaded because there were no inherent structural defects in the drywall. The drywall still served its purpose as drywall.

The personal property coverage provided under this policy was not all-risk coverage. Coverage for the Walker’s personal property existed only if damages were as a result of one of the specifically listed causes of loss. The policy included smoke damage as a covered peril, and the Plaintiffs based their claims on that cause. The Court agreed. Once again, the Court relied upon the fact that the term “smoke” was not defined in the policy. The Court looked at the plain meaning and consulted the dictionary to conclude that smoke is a suspension of particles in a gas. The facts of this case show that the off-gassing and sulfur released from the Chinese drywall caused damages to the personal property in the Walker home. The Court determined that this off-gassing is a smoke that was emitted from the drywall and covered under the policy.

The Court has ordered a trial on damages.