Background: A homeowner found a leak hidden in the cavity of the walls between his garage and kitchen. The refrigerator hid the damage that grew on the inside. The homeowner noticed it inside the garage and replaced the water heater – thinking that was the problem.
State Farm denied there was coverage for the hidden seepage. I responded to the denial by pointing out the coverage for the hidden seepage and the policyholders' rot endorsement. State Farm responded and said – there was no coverage because rot, deterioration, and possible mold were visible on baseboards.
Is this correct? Does the hidden seepage clause not apply if the leak was inside a wall – but caused damage to baseboards hidden behind a refrigerator?
Georgia subscriber
The devil is in the details; while most insureds don't move their refrigerators much, if at all, the exception in the policy is for damage hidden from view within the walls, ceilings, or floors. Damage that would be visible once the refrigerator was moved is not hidden within the walls, ceilings or floors, so unfortunately the exception does not apply in this situation. The way the policy is worded, the damage from the leak has to be both within the walls, ceilings and floors AND unknown by the insured. In your situation, the damage is unknown by the insured, but it is not hidden within the walls, ceilings or floors. If the insured could have moved the refrigerator and discovered mold growing on the outside of the wall, then the exclusion stands.
Christine G. Barlow, CPCU
Christine G. Barlow, CPCU, is Executive Editor of FC&S Expert Coverage Interpretation, a division of National Underwriter Company and ALM. Christine has over thirty years’ experience in the insurance industry, beginning as a claims adjuster then working as an underwriter and underwriting supervisor handling personal lines. Christine regularly presents and moderates webinars on a variety of topics and is an experienced presenter.