The District Court for the Middle District of Florida ruled that an insurer had to cover the costs to tear out and replace part of an insured's home as part of replacing the insured's plumbing. The case is Floyd v. Geovera Specialty Ins. Co., 2020 U.S. Dist. LEXIS 35346 (M.D. Fla. 2020).
David Floyd purchased an all-risks property policy from GeoVera for his home. During the policy period, the master bathroom toilet overflowed and caused extensive water damage. In order to stem the flow of water, Floyd removed the toilet and snaked the drain line. When the drain snake was removed, it brought several plant roots with it, indicating a bigger problem with the underground plumbing in Floyd's home. Floyd timely notified GeoVera of the damage.
GeoVera sent an adjuster to investigate Floyd's claim. Floyd explained the actions he had taken to mitigate the overflowing toilet, but the adjuster declined to investigate the plumbing. GeoVera accepted and paid Floyd's claim without dispute. Floyd, however, claimed the payment was insufficient to cover the repair costs for the water damage.
Floyd sought the opinion of an expert plumber, who stated Floyd needed to replace the deteriorating pipes. The expert plumber also said the deteriorating pipes had been the source of the dysfunctional toilet. His expert opinion was that Floyd should remove and replace the entire system in order to prevent future problems. Almost a year later, GeoVera sent two experts to examine Floyd's plumbing. These experts found the drains for both the kitchen and the master bathroom had been compromised by plant roots. Though GeoVera's experts agreed with Floyd's expert that the plumbing should be replaced, they disagreed over the extent of the necessary replacement.
Floyd sued GeoVera for breach and sought the remaining costs to repair the water damage to his home as well as the costs to remove and repair certain parts of his house necessitated by repairs to the plumbing drains. GeoVera filed a motion for summary judgment, claiming repairs to the actual plumbing system were beyond the scope of the policy, that those repairs were not required, and that Floyd could not definitively show a loss to the plumbing system caused by a covered peril. In his response, Floyd asserted that GeoVera was obligated to cover the costs to tear up and replace the parts of his home necessitated by the repairs to his deteriorated plumbing, that the deteriorated pipes had been the source of the overflowed toilet, and that repairs to the plumbing were necessary in order to prevent future incidents.
The District Court was tasked with determining whether or not GeoVera owed Floyd coverage for the costs necessary to tear out and replace certain parts of his home in order to access the plumbing that needed to be replaced. If the policy did cover those costs, had the overflowed toilet been preceded by deteriorating pipes, as Floyd claimed, or by a clogged toilet, as GeoVera asserted?
Since GeoVera had accepted the claim, or at least part of it, there was no question about whether the loss was covered, only whether GeoVera owed Floyd more money for the costs of accessing the plumbing from inside his house. Floyd's policy was an all-risks policy, meaning it covered losses to property unless the type of loss was specifically excluded. It included an exclusion for loss caused by wear and tear, marring, and deterioration, but there was an exception to the exclusion that stated water damage caused by the overflow of a deteriorated plumbing system was covered unless otherwise excluded. Therefore, said the court, the policy would cover a loss to Floyd's house caused by deteriorated plumbing, but only for the costs necessary to access and repair the system from inside the house.
GeoVera asserted multiple arguments against this conclusion. First, they argued there could not have been a breach because the loss to the actual plumbing system was not covered. The court pointed out that Floyd had not asked for coverage regarding the actual replacement of the plumbing. He only sought the costs required to access the plumbing from inside his house and repair it once the plumbing replacement was complete, and those costs were specifically covered by the policy.
GeoVera also claimed the "tear out" provision in the policy only applied when the plumbing system could actually be repaired. Since Floyd had snaked the drain, GeoVera said, The court was not persuaded. The judges referred to a specific clause in the policy that said GeoVara would pay for the costs "necessary to access and repair only that portion or part of the system or appliance that caused the covered loss, whether the system or appliance, or any part or portion of the system or appliance, is repairable or not." (Emphasis added). Floyd argued that GeoVera's own experts had agreed with Floyd's expert that some parts of the plumbing did need to be replaced, and the toilet had overflowed on more than one occasion following the overflow that caused the water damage.
The court also pointed out that GeoVera was making competing arguments. Though GeoVera argued the costs Floyd had requested weren't covered because he had to replace the pipes as opposed to repairing them, the insurer also argued that, according to its plumbing experts, only part of Floyd's system had to be replaced. The judges said GeoVera could not have it both ways and, at any rate, saying a system needing repairs was equivalent to saying the system needed a partial replacement.
The judges issued a two-part ruling: First, Floyd was owed coverage for the costs associated with accessing the plumbing from inside his house. However, they could not grant summary judgment for either party because there were genuine issues of material fact that could only be decided by a jury over the cause of the initial overflow, how many repairs were actually necessary, and whether GeoVera's first payment to Floyd fully discharged GeoVera's obligations to Floyd.
Editor's Note: For Floyd, the issue wasn't replacing the actual deteriorated pipes. He only sought coverage for the costs associated with accessing the pipes that needed replacing. In order to access the pipes, it was necessary to tear up some parts of his house. Floyd was asking GeoVera to cover the costs to rip out any necessary walls, floors, or appliances in order for someone to replace the actual pipes, and the costs of rebuilding and replacing the walls, floors, and appliances after the replacement was complete.
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