Restoration contractors, public adjusters and some attorneys feasting on "chipped tile claims" in South Florida got hammered yesterday in a very problematic decision Ergas v. Universal Property and Casualty Insurance Company.1 From a claims standpoint, South Florida is ground zero for "chipped tile claims." The frequency of that type of loss is geographically extraordinary because it infrequently occurs in other areas of the United States.

I noted "chipped tile claims" three years ago in Broken Tile Claims, Oil Spill Issues and Internet Problems:

The post, Public Adjusters Arrested in Broken Tile Insurance Fraud Scheme, set records for “hits” on this site. I also received all kinds of emails and discussion from others. At lunch with six attorneys in our firm, I mentioned that I have been doing this line of work since 1983 and have never handled a broken tile claim. Four others had the same experience, one attorney had a couple, and only Michelle Claverol, in our Coral Gables office, had more than a few.

I learned that some experts conducted tests regarding the breaking of tile. They found that breaking tile is not as easy at it may seem. A pot, shoe, or falling object has got to hit a tile just right or the tile has to be loose or set improperly for breakage to occur. They are not fragile. The back side of a hammer is sharp enough to cause the breakage quite easily with a strong strike.

I was reminded that an attorney friend of mine advertised for broken tile claims at the Windstorm Conference several years ago. Apparently, he had a fake million dollar check with his firm and that of a public adjuster as payees. The space in the bottom left had “one cracked tile’ written on the explanation line. The Florida Bar certainly would not have approved of such an advertisement. Indeed, it is quite unprofessional. To imply to public adjusters and the public that attorneys can help obtain large recoveries for a small cracked tile loss begs for the type of conduct that happened as indicated in the post. This past legislative session, some in the Florida Legislature mentioned this type of conduct as a reason to change longstanding consumer protections regarding insurance. If public adjusters and policyholder attorneys want a bad reputation to be developed, all we need is for some to continue this type of conduct. Insurance adjusters and insurance company management are rightfully upset, and so are the rest of us. A few bad apples are harming legitimate and law abiding public adjusters and consumers.

Nevertheless, the facts of Ergas are as follows:

Benjamin and Beth Ergas were insured under a homeowner’s insurance policy with Universal. Mr. Ergas dropped a hammer on the tile floor in the home and chipped it. The chip was about the size of the hammer head, which appears from the pictures in the record to be the size of a quarter. The Ergases then filed a claim to recover for this damage under their homeowner’s policy. Universal denied the claim on grounds that the policy excluded coverage. Section I of the policy provides: “We insure against risk of direct loss to property… We do not insure, however, for loss: . . . 2. Caused by: . . . (e) Any of the following: (1) Wear and tear, marring, deterioration . . . .

The bottom line of the ruling is pretty simple:

As did the trial court, we conclude that the damage caused by the hammer dropping constituted marring and thus was excluded from policy coverage.

I will write more about this decision and the legal analysis after I read the briefs and pleadings. My initial impression is the opinion seems to dismiss the sudden and accidental concept of damage. It may cause many insurance companies to not pay previously paid losses and legitimate claims where physical damage is worth more than the deductible.

1 Ergas v. Universal Prop. & Cas. Ins. Co., 4D11-3803, 2013 WL 1748574 (Fla. 4th DCA April 24, 2013).