Many of the homeowner policies we review exclude water damage resulting from, “continuous or repeated seepage or leakage of water or stream, or the presence of condensation of humidity, moisture or vapor which occurs over a period of weeks, months or years.” Courts have interpreted this clause to exclude water damage that occurs over 14 days. But what happens when you have a situation where there is significant water damage caused in the first thirteen days? Aren’t coverage clauses interpreted broadly so as to afford the greatest protection to the insured, while exclusion clauses interpreted narrowly?
We recently reviewed a matter where a water line to a refrigerator burst in a vacation home, discharging an estimated 1,000 gallons of water per day. The damage to the home was significant, but the insured did not discover the line burst until more than fourteen days after the line burst. The insurance company denied the claim citing the water damage exclusion noted above. Clearly, the insurance company was attempting to apply a strict reading of the policy language, refusing to cover damage that occurred over a period of weeks. However, the insurance company failed to apply that same strict reading to damage caused in the first thirteen days.
In Hicks v. American Integrity Insurance Company of Florida,1 an appellate court was faced with a similar situation, leakage of a refrigerator line over a prolonged period of time, resulted in a loss. There the court found:
In light of the general principle that insurance policy provisions susceptible to more than one interpretation should be construed liberally in favor of the insured and strictly against an insurer, and that exclusionary clauses should be read even more narrowly, we hold 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. [citations omitted] It is not unambiguously clear that a provision excluding losses caused by constant leakage of water over a period of fourteen or more days likewise excludes losses caused by constant leakage of water over a period of less than fourteen days. And ambiguous insurance provisions—those susceptible to more than one meaning, one providing coverage and the other denying it—must be construed against the insurer and in favor of coverage.
The Hicks ruling did not sway this insurer, and as such we filed a complaint for breach of contract and sought a declaratory judgment on the policy language in Arizona District Court. In Arizona, “The language used in an insurance policy must be viewed from the standpoint of the average layman who is untrained in the law or the field of insurance.”2 Hopefully, the Arizona District Court will agree that damage occurring in the first thirteen days should be covered.
1 Hicks v. American Integrity Ins. Co. of Florida, 241 So.3d 925 (Fla. 5th 2018).
2 Gittings v. Am. Family Ins. Co., 181 Ariz. 176 (App. 1994).