The Sixth District Court of Appeals rules in favor of the insurance carrier, finding that ensuing water damage is not covered under the insurance carrier’s policy language.

This case arose out of the policyholder’s ongoing plumbing issues in her home. The insured property was built in the early 1960s, and the policyholder had been experiencing a number of plumbing issues as a result of an aging cast iron drain line, which eventually corroded and deteriorated, leading to wastewater escaping and causing damage beneath the foundation. 

State Farm conducted an investigation into the latest water leak claim submitted by the policyholder and determined the policy excluded coverage for the cost of accessing the leaking drain line, part of what is commonly known as “tear-out” coverage. This decision was based on the policy’s exclusion provision concerning wear and tear, and deterioration and repeated seepage or leakage of water. 

A jury initially awarded the policyholder nearly $60,000 in tear-out costs. The Sixth District Court of Appeals ultimately reversed this decision, in part, siding with State Farm’s interpretation of the policy’s exclusions. State Farm successfully argued the repeated seepage or leakage exclusion in its policy applied to the damages in question because the policy excluded losses resulting from gradual or repeated seepage or leakage from any plumbing system. It is noteworthy that the policyholder’s own plumbing expert admitted that wastewater had intermittently escaped the corroded drain line over several months, clearly meeting the definition of repeated seepage or leakage.

In reaching its decision, the court underscored that the exclusion applies regardless of whether the loss occurs abruptly or gradually. Rather, noting that what matters is whether the leak occurred over a period of time, thereby nullifying the tear-out coverage. 

Through this finding, the court reinforces the validity of State Farm’s exclusionary language concerning tear-out and repeated seepage or leakage of water. 

_{Legal Update for Florida Coverage & Property Litigation – December 2024 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}