The Eleventh Circuit Court of Appeals recently ruled that a policy’s exclusionary language did not apply to an insured’s previously denied water loss.

In the case, Cameron v. Scottsdale Insurance Company, the insured, Ken and Michelle Cameron (“the Camerons”), suffered a loss to their residential rental dwelling when a pipe in the plumbing system collapsed, causing water to overflow from the kitchen sink drain and damage the dwelling. The pipe damage was due to age-related failure. The Camerons filed a claim with their insurance company, Scottsdale Insurance Company (“Scottsdale”), which ultimately denied the claim based on exclusionary language in an endorsement to the insurance policy.

The Camerons brought suit, arguing that the water damage was covered by the policy language which provided coverage for a loss caused by, “accidental discharge or leakage of water…as the direct result of the breaking apart of cracking of a plumbing…system…that is located on the described premises.” Scottsdale claimed that the damage was excluded based on the policy’s water exclusion endorsement. The endorsement excluded damage caused by water that overflowed from a sewer or drain.

The U.S. District Court for the Southern District of Florida held1 that the water was caused by a drain backup, and therefore, the plain language of the endorsement applied. Accordingly, Scottsdale’s Motion for Summary Judgment was granted.

The Camerons appealed, and the 11th Circuit Court of Appeals agreed with the Camerons’ assertion2 that the policy’s exclusionary language did not apply because the loss was originally caused by the deterioration of the pipe, which then lead to the drain’s overflow. Since the loss was caused by the plumbing system failure, it was covered under the policy.
1 Cameron v. Scottsdale Ins. Co., No. 16-cv-21704 (S.D. Fla. Mar. 28, 2017).
2 Cameron v. Scottsdale Ins. Co., No. 17-11907 (11th Cir. April 16, 2018).

  • We have a similar case, with the water coming from an AC line under the slab. The insurance company adjuster tried valiantly to spare us the time and effort, assuring us it was not covered, could not be covered, and most certainly would not be paid. “I’m just trying to help you not waste your time” he said, over and over. What a guy! My hero! – with sarcasm gushing more than any pipe leak. They sent a denial that included, “water penetration through the roof system or exterior walls or windows”. Yep, on a slab leak.

  • Anyone care to guess how many claims with substantially similar facts have been denied, are currently being denied, and will continue to be denied well into the future? And the dollar values? Staggering.

  • Perry Neblett

    I have a case in Federal Court with very similar facts wherein the insurer was using this “order” as their basis of denial.
    The insurer seems to now agree that they were wrong – as we advised that they were previously – however, we are pretty deep into the case (depositions all over the country) and may not be able to resolve same prior to trial.
    The insurer’s counsel advised that the insurer was willing to “bet on” this case being correct and that they had made a number of internal (and likely) policy changes in line with the underlying Order.
    Millions of dollars spent/wasted on this.