The language in a homeowners insurance policy can often be difficult to interpret especially in the context of other provisions of the policy. Ambiguity in a policy generally will be construed to provide coverage when the language is susceptible to conflicting interpretations authorizing and negating coverage. However, our Miami homeowners’ insurance claims attorneys understand this rule must be understood in light of the distinction between latent and patent ambiguity. Patent ambiguity refers to provisions or terms that are conflicting or unclear language within the four corners of the policy. Because the insurance company drafts the policy, such ambiguities will be construed against the insurance company. Latent ambiguities involve situations where the policy is clear on its face, but unanticipated facts emerge that render the policy unclear under the circumstances.
The 2nd DCA, in Price v. Castle Key Indemnity Company considered this distinction in reversing summary judgment against an insured. The court considered whether a loss caused by 195,000 gallons of water over a prolonged period would be considered “seepage.” The parties to a homeowners insurance policy agreed that the massive water loss was caused by a leaking pipe in an upstairs bathroom during an extended absence of the policyholder. The policy covered “sudden and accidental physical loss to property” subject to the following exclusion:
“[s]eepage, meaning continuous or repeated seepage or leakage over a period of weeks, months, or years, of water, steam, or fuel … from, within[,] or around any plumbing fixtures, including but not limited to shower stalls, shower baths, tub installations, sinks[,] or other fixtures designed for the use of water or steam.”
The insured contended that the seepage exception was inapplicable because of the lengthy duration of the water loss and massive volume of water. The insured calculated that about 6,000 gallons daily must have been lost based on the duration and volume of water. Given the amount of water and rate it escaped, the policyholder contended that ambiguity existed in terms of whether the damage was caused by “seepage,” which was expressly excluded under the policy. The insured also argued that “sudden” also was ambiguous because it can be defined as referring to “unexpected” or “unanticipated.” The trial court determined the loss was not covered because it fell within the seepage exception.
On appeal, the court first expounded on the distinction between latent and patent ambiguities in an insurance policy. The court explained that patent ambiguities are apparent based on the face of the policy while latent ambiguities emerge based on extrinsic evidence that creates a need to decide between multiple meanings. The court found that the policy in this case was not ambiguous on its face. However, the court reasoned that the terms “sudden” and “seepage” were not entirely clear given the amount of water that leaked over a prolonged period. The court reversed the grant of summary judgment because there was a genuine factual question regarding whether the water damage was the product of an intensifying leak or a burst with a constant volume.
This case demonstrates the way subtle distinctions in interpreting policy language can have a dramatic impact on coverage decisions. While policy language referred to by an insurer in a denial letter might appear clear and unambiguous, an experienced Miami homeowners insurance claims lawyer might be able to find other language or to suggest an alternative interpretation that entitles you to coverage.
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