Florida is replete with houses that contain cast iron pipes. After several years, those pipes deteriorate to the point that water leaks out, causing a loss. The Fifth District Court of Appeal recently addressed this same fact pattern when considering the limits of what an insurer is required to pay according to the “Limited Water Damage Endorsement” (“LWD Endorsement”) of the policy and the ensuing loss for water damage provision of the policy.

In Security First Ins. Co. v. Vazquez, 2022 WL 495211, — So. 3d — (Fla. 5th DCA February 18, 2022), the Court reviewed an order granting summary judgment in favor of the insureds. Like the typical cast iron pipe claim, the insureds had an overflow of water in the home stemming from deteriorated cast iron pipes, causing damage to the property. The insurer acknowledged coverage and only paid $10,000.00 under the LWD endorsement. The insureds claimed they were owed more for “tear out” and to replace the undamaged concrete slab which was necessary to access the pipes at issue. The insurer argued that the $10,000.00 limit applied to both the water damage and the “tear out” cost and no more was owed. Conversely, the insureds asserted that the $10,000.00 limit only applied to the water damage, thereby leaving “tear out” costs to be covered as part of the ensuing loss for water damage provision. The appellate court, reading the plain language of the policy, relied on the policy language stating “the limit of liability for all damage to covered property provided by this endorsement is $10,000.00 per loss,” in determining the “tear out” costs were not “damage” but that “tear out” costs are referenced as an item to be covered as part of a loss under the ensuing loss for water damage provision. Thus, the “tear out” would be considered as part of the limits for the dwelling damage. The appellate court also pointed out that there was no sublimit for “tear out” costs in the LWD Endorsement, which the insurer could have put in the policy. Consequently, the appellate court found that although the LWD Endorsement could be read to include “tear out” costs, any ambiguity is construed against the insurer. Accordingly, the summary judgment in favor of the insured was affirmed.

There are at least two takeaways from this opinion. First, if the insurer wants certain terms in a policy, it must explicitly put those terms in the policy. Second, the LWD Endorsement will not limit the liability for the “tear out” costs, which is usually one of the most costly items to be done in these claims.