Insurance Claims Quandaries

Insurance Claims Quandaries

By Michael J. Gelfand, Esq. / Published July 2020

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Insurance Part I: Does “Wear and Tear” Bar a Damage Claim?

“Why repair the roof? Just wait for a storm and let insurance pay for a new one!”

How many times have we heard that “smart talk”? As we move into South Florida’s rainy season, it is not uncommon to rediscover roof leaks, and the debate begins over whether to repair, replace, or just wait.

What happens when a Florida community association files an insurance claim for water damage caused by a leak? Will the insurer pay? It may depend on the age of the components. It certainly depends on the “fine print” in the insurance policy.

Whether a roof, a wall, or a pipe, a recent Florida appellate court decision will provide guidance for trial court judges and Florida associations! In Kokhan v. Auto Club Insurance Company of Florida, 45 Fla. L. Weekly D 544 (Fla. 4th DCA, March 11, 2020), the leak flowed from the homeowners’ pipe. The decision indicated that the insured obtained an “all risks” policy, which is a policy that provides coverage for all losses unless the policy contains a provision expressly excluding the loss. The policy in this case excluded losses from water damage and losses caused by wear and tear.

The homeowners filed a claim with the insurer seeking payment for water damage to the pool deck and surrounding walls from a leak in the pool’s underground drainpipe. The insurer denied the claims. The homeowners sued the insurer for breach of contract, alleging the leak in the pool’s drainpipe caused the damage.

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In defense the insurer alleged that that policy’s exclusions for wear and tear and for water damage precluded coverage. The homeowners replied that the wear and tear exclusion did not apply because the exclusion only applies to water pressure from outside, not a leak from within the plumbing system. The trial court granted summary judgment for the insurer, finding that the water damage exclusion barred the claim.

The Florida appellate court agreed with the homeowners, finding that the damage caused by the pool’s drainpipe leak was not barred by the water damage exclusion. The court noted that the water damage exclusion “plainly refers to naturally flowing water exerting pressure from outside of the plumbing system, not a leak from within the plumbing system itself.”

Because the trial court did not address whether or not the wear and tear exclusion barred the homeowners’ claims, the case was returned for the trial court to reconsider whether the wear and tear exclusion barred the claims or whether the policy’s “sudden and accidental escape of water from a plumbing system” exception precluded the wear and tear exclusion.

Importantly, the all risk insurance policy excluded coverage for wear and tear. Therefore, if roofs or other building components are old or have a history of leaks or other failures, associations should be aware their insurance policy may exclude coverage for wear and tear which may in turn result in a claims denial. Be prepared for insurers seeking meeting minutes and maintenance records.

If you have questions regarding your insurance policies, you should contact your association’s attorneys.

Insurance Part II: Burden Proving Damage Was Caused by Wind and Hail on the Claimant

In another insurance-related case, a Florida appellate court recently ruled that a wind damage insurer was entitled to defend a lawsuit by presenting non-wind related causes for the damage to buildings. In Citizens Property Insurance Corp. v. Kings Creek South Condo, Inc., 45 Fla. L. Weekly D 597 (Fla. 3rd DCA, March 18, 2020), Citizens issued a policy for a Kings Creek’s condominium for the named perils of wind and hail. The roofs consisted of three roof systems overlaid atop one another, the last installed right before Hurricane Wilma hit.

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Over three years after Hurricane Wilma hit the area, Kings Creek filed a claim for damage to one building’s roof. Citizens determined that there was no evidence of wind-related damage from Hurricane Wilma and denied the claim. Citizens attributed the damages to the installation of three roofs, one on top of the other. Kings Creek sued Citizens for breach of contract and claimed damage to all nine roofs. The trial court granted a directed verdict in favor of Kings Creek for more than $4.8 million.

The Florida appellate court reversed the directed verdict for Kings Creek and remanded for a new trial. Unlike an all risk policy, the court noted that under the named perils policy, Kings Creek had the burden to prove that wind caused the damage to the buildings. The court explained that Citizens then had the right to defend by showing that non-wind factors, such as the tiered roofs, caused the damage. Because this was a named perils policy, the damage would not be covered unless Kings Creek proved the damage was covered by a named peril, the wind.

This case highlights the importance of working with an insurance broker to obtain the type of policy that is right for an association.

Michael J. Gelfand, Esq.

Senior Partner, Gelfand & Arpe, P.A.

Michael J. Gelfand, Esq., the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar Board Certified lawyer in Condominium and Planned Development Law and in Real Estate Law, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is a past Chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at or (561) 655-6224.