Water damage has become a common point of coverage negotiation on property policies and can often be sub-limited or even excluded from coverage. Two recent decisions from the Florida appellate courts highlight the ambiguous nature of water damage claims and how they are interpreted by the courts.
A Florida appellate court recently found in favor of an insurer ruling that the water damage exclusion endorsement was broad enough to exclude any water damage claim regardless of whether the source was external or internal. Interestingly, in another recent ruling where the insured’s policy contained a $10k sublimit of water damage coverage, the court ruled that the costs to tear out the corroded pipes and concrete slab, were not restricted by the sublimit of coverage since those were not damaged by the water.
Ideally there should be no restriction on water damage coverage, but careful attention to policy wording should be employed to determine if coverage is limited to a particular source or conversely if an exclusion is broadly encompassing of any source. Moreover, be on the lookout for carriers to modify policy wording to clarify that any costs related to the event, even if not directly damaged by the water, fall within any applicable sublimit of coverage.