Certain types of water damage are likely to fall under a water exclusion clause such as damage caused by flood, tsunami, standing water, groundwater and drain or sewage backup. Despite these categories, disputes often arise whether damages caused by water are covered under the standard homeowner’s policy. The type of water damage that may be covered depends on the source of loss, the policy, and if the water loss is accidental and sudden or gradual.

Florida’s Eleventh Judicial Circuit recently confirmed that the loss caused by excess humidity and moisture originating in home’s duct system was subject to the endorsement excluding losses caused by discharge or overflow of water from within an air conditioning “system.”

In Venisse v. Federated National Insurance Company,1 the insured reported water damage to his home as a result of a leaky duct work. Federated National Insurance Company (“Federated”) denied coverage arguing that the water damage exclusion endorsement unambiguously excluded coverage for the loss.

The policy stated:


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1. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.

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C. Water damage, meaning:

(5) Discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system or from within a household appliance;

The insured asserted that the moisture was caused by condensation as a result of a failed leaking duct system, therefore, the resulting water damage was a loss otherwise covered under the policy. Federated argued that the water damage was nonetheless excluded because it originated in the air conditioning system.

The insured contended that the failed leaking duct system that caused the condensation within the roof, is not part of the air-conditioning system because the duct system is a set of tubes that distributes air and is part of the air distribution system. In other words, the duct system and the air conditioning system are completely separate because one distributed the air while the other conditioned it.

The issue on coverage then focused on whether the duct work, which was the source of the leak, condensation, or dispersion of either cold or hot air, is part of the air conditioning “system” for the purpose of the water damage exclusion. The court went on to conclude that a “system” is generally defined as “a complex unity formed of many often diverse parts subject to a common plan or serving a common purpose.”2 It further found that the duct work is an integral part of a unit which serves a common plan or purpose; namely to disburse cooled air (or) hear from the air conditioning unit to the rooms in the house.

Though the word “system” is not defined in the Federated policy, the court concluded the lack of definition did not render an ambiguity as duct work is undoubtedly part of the air conditioning system. Therefore, the water loss was subject to the provisions of the Water Damage Exclusion in a situation such as this one.

It is often difficult to comprehend why a claim is denied. As an insured it is always important to read the insurance policy to confirm you have obtained the best insurance for your needs. Finally, inquire about extra coverages you can add that may be useful to you.
1 Venisse v. Federated National Ins. Co., No. 15-15478 (Fla. 11th Cir. Ct. Jan. 19, 2018).
2 Citing Sch.bd. of Escambia County v. State, 353 So. 2d 834 (Fla.1977). See also Webster’s Third New International Dictionary (unbar. 1960).