Florida Court Finds Constant or Repeated Seepage or Leakage Exclusion Ambiguous

In Hicks v. American Integrity Insurance Company, 43 Fla. L. Weekly D 446 (Fla. 5th DCA 2018), the Fifth District reversed summary judgment in favor of American Integrity, finding that the trial court misapplied a policy provision excluding damages caused by “constant or repeated seepage or leakage of water over a period of 14 or more days.”  The insured purchased an “all risk” homeowners policy from American Integrity.  While the insured was out of town, the water supply line to the refrigerator began leaking.  The leak was slow at first, then steadily increased.  By the time the insured returned home, the supply line was discharging nearly one thousand gallons of water each day. 

The insured filed a claim with American Integrity and American Integrity denied the claim after its expert determined that the supply line had been leaking for five weeks or longer.  American Integrity relied on the following policy exclusion: “We do not insure … for loss … caused by constant or repeated seepage or leakage of water … over a period of 14 days or more.”  The insured filed suit against American Integrity for breach of contract and the parties filed competing motions for summary judgment.  In its motion for summary judgment, American Integrity argued that the policy unambiguously excluded coverage for all of the insured’s losses based on the quoted exclusion.  The insured, in turn, argued that he was entitled to recover damages for those losses that occurred within the first thirteen days of the leak.  The trial court granted summary judgment in American Integrity’s favor and insured appealed. 

On appeal, the Court held that the exclusion “does not unambiguously exclude losses caused by leakage or seepage over a period of thirteen days or less.”  According to the Court, it was not unambiguously clear that the exclusion, which barred coverage for losses caused by constant leakage of water over a period of fourteen days or more, also barred coverage for losses caused by constant leakage of water over a period of less than fourteen days.  Since ambiguous insurance provisions are to be construed against the insurer and in favor of coverage, the Court construed the policy exclusion against American Integrity and reversed summary judgment in favor of American Integrity.  The Court remanded the case for entry of partial summary judgment in favor of the insured on the issue of coverage within the first thirteen days of the leak and instructed that American Integrity had the burden of establishing that a particular loss occurred after the thirteenth day and, therefore, would not be covered under the policy.