MONDAY, APRIL 20, 2015
Nigel and Melissa Martinez had their home insurance with Liberty Mutual. The home was located in Florida and after a tropical storm they noticed that their pool was lifted out of the ground. They were told by an expert that subsurface water pushed up the pool from below. It literally life the pool out of the ground. A claim was filed under the Martinez' homeowners insurance policy with Liberty Mutual. A pool would be insured on a home insurance policy as "other structures'. Exactly what risks it is covered for depends entirely on the home insurance policy A risks would be typically a fire, lightning, wind, theft and other related coverages. Flood and earthquake are excluded. So the chances of being able to make a claim for a pool being damaged is very rare. Liberty Mutual denied the couple's claim citing an exclusion in their policy for loss from water damage. The home insurance policy defined water damage as " flood, surface water, waves, tidal water, overflow of a body of water or spray from any of these, whether or not driven by wind and it included exclusion from damage because of water below the surface of the ground, including water which exerts pressure on or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure". The family then filed a law suit against Liberty Mutual saying that the pool should be covered for this loss because of a "policy's ensuing loss provision." The court found in favor of the Martinez's because an expert said the damage of the pool was not due to the hydrostatic pressure rather due to the pool's shell coming out of the ground. Liberty Mutual appealed and the court on the appeal said that an "ensuing loss" was one that happened separate from but as a result of an excluded loss. This court reversed the decision by the first court stating that the claim was a direct loss of something that was directly excluded under the homeowners insurance policy with Liberty Mutual.
This case was featured in the April, 2015 Rough Notes Magazine. I think what's most interesting is that the policy had the exclusion for this type of claim. Unfortunate for this homeowners but they were able to convince the first court that the exclusion didn't pertain Then the appeal's court reversed it. The real moral to this story is that insurance is complicated. It is important to read your policy and understand what's covered. If they had questioned this exclusion prior to the claim then maybe their agent could have found another insurance company that would provide this type of coverage. Not all home insurance policies are the same. We recommend that you read your policy and schedule an annual review with one of our agents.
Posted 3:41 PM