An all-risk policy should be self-explanatory. You, as a homeowner, pay a higher premium to insure against all risks that could possibly damage your property, and the insurance company, in consideration for the higher premium you paid, covers the loss. Sounds simple. Nonetheless, insurance companies managed to muddy those waters as well. Insurance companies do not have to cover all risks even when you contract them to do so. How is this even possible? The homeowners insurance lawyers from Greenberg, Stone, & Urbano explain how.
The issue arose recently in the case of Peek v. American Integrity Ins. Co. of Florida. The second district for the Florida court of appeals decided this case in 2015. The Peek family filed suit against American Integrity for breach of contract when American Integrity refused and failed to pay a claim on an all-risks policy. The Peeks constructed a home in the Tampa area. The home construction contractors installed a certain drywall called “Chinese” drywall. After the Peeks had moved into the home, they noticed a sulfuric smell permeating the residence. The odor was so pungent that it forced the Peeks to move out of their home. The Peeks also noticed that coils from air conditioning units were rusting inside the walls. The Peeks filed a claim against their homeowner’s policy for the replacement value of the home.
The insurance company refused to cover the loss of the home. They argued that the drywall manufacturer negligently constructed the drywall and that the drywall was replete with pollutants and corrosive material, which gave them an exclusion from covering the Peek’s loss. The Peeks filed a claim in court seeking damages for a breach of contract. The Peeks proved in court that they suffered a loss and their insurance policy was valid at the time of the loss. The insurance company offered a botanist who testified about the corrosive material on the wall. The botanist also testified that the Florida humidity contributed to the smell. At trial, the Peeks had to show that the humidity was the proximate cause of the loss and not negligent construction because humidity is a “water event” covered under the policy.
Florida has a general rule for recovering the loss under an all-risks insurance policy. All the plaintiff needs to prove is that a valid policy was in place at the time of the loss and the damage happened to the insured property. But, if there was another cause of the damage not covered under an all-risks policy then the plaintiffs must prove that the covered loss is the primary reason for the losses. If the plaintiffs meet that burden, then the defendant insurance company must show that the insurance policy does not cover the most substantial cause.
The Peeks lost their case. The court granted judgment for the insurance company because the Peeks did not prove that the humidity was the primary cause of the damage and not the defendant’s burden to prove defective drywall. The proof at trial centered around testimony that the drywall company manufactured it improperly. The negligent manufacture caused the odor and subsequent corrosion of the pipes. Humidity might have played a role, but it was the plaintiffs’ burden to prove that fact and not the burden of the insurance company to disprove their theory. Unfortunately for the Peeks, their house was a total loss.
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If your home suffered damage and you are arguing with an insurance company, contact South Florida homeowner’s insurance attorneys Greenberg, Stone, & Urbano. Together, they have over 130 years of litigation experience at your disposal. Moreover, Martindale Hubbell gave the firm an AV rating for their attention to detail, their high success rate, and client satisfaction. Call Greenberg, Stone, & Urbano today at (888) 499-9700 or (305) 595-2400 to learn more about how we can make a difference for you!