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Florida’s Fifth District Limits Use of “ensuing Loss” Exclusion in Residential Homeowner Policy how Does Florida Interpret the “ensuing Loss” Provision in A Homeowner’s Insurance Policy that Also Contains an Anti-Concurrent Cause Provision?

Pekar Law, P.A. May 26, 2015

When it comes to homeowners’ insurance, policyholders are often bereft to find the intricate interplay between one exclusion and another can quickly lead to a denial of coverage. Such was the case in a recent matter decided by the Florida’s Fifth District Court of Appeal involving one well-known national insurer and a set of homeowners having experienced major tropical storm damage. The following facts are undisputed, and the court ended up sustaining the exclusion asserted by the insurer on the grounds that the policy not only included an “ensuing loss” provision, but also included a concurrent loss provision preventing policyholders from recovering based on the notion that another, interceding event actually caused the damage.

In Liberty Mutual Fire Ins. Co. v. Martinez, an insurance dispute stemmed from the decision of homeowners to drain their in-ground pool due to an incoming tropical storm. During the storm, enough water accumulated underground that the pool shell was actually lifted out of the ground by a force known as hydrostatic pressure. During this event, the pool shell damaged the pool deck, rock garden, and a nearby waterfall.

The plaintiff’s claim for coverage was denied by the insurance company, which relied on the “water damage” exclusion, rejecting claims for “loss caused directly or indirectly by… flood, surface water…or spray from any of these, whether or not driven by wind.” On appeal of this denial, the plaintiffs claimed that the pool shell lifting was a separate event caused by hydrostatic pressure, which is not expressly mentioned in the policy. The plaintiffs supported this argument by pointing to the language in the policy that states “any ensuing loss to property not excluded or excepted” is covered.

However, the insurance company successfully advanced the argument that an ensuing loss is one that occurs separate from, but as a result of, an excluded loss (i.e., flood, surface water). The court upheld this argument after examining several hydrostatic pressure cases from other jurisdictions, and held that “[e]nsuing loss exceptions are not applicable…if the ensuing loss was directly related to the original excluded risk.”

If you are facing an uphill battle with your residential or commercial insurer, please contact the experienced property insurance attorneys at Pekar Law today by calling us.