The U.S. Eleventh Circuit Court of Appeals recently held that, when undefined in a policy, the plain meaning of the term “structural damage” means “damage to the structural integrity of a building” as opposed to “any damage to the structure.” Hegel v. First Liberty Ins. Corp., 2015 WL 821146 (11th Cir. Feb. 27, 2015).

The insureds had a homeowners’ policy that insured against “Sinkhole Loss” as an exception to the policy’s exclusion for damage caused by earth movement. Under the policy, the term “Sinkhole Loss” means “structural damage to the building, including the foundation,” caused by sinkhole activity. The policy, however, did not define the term “structural damage.” The insureds submitted a claim for a suspected sinkhole loss, and it was undisputed that the insured property was impacted by sinkhole activity. However, a dispute existed as to whether the sinkhole caused “structural damage” as the adjuster observed “damage consisting of widespread, minor cracking to both the exterior and interior of the home.” The district court granted summary judgment for the insured. The insurer appealed.

The Eleventh Circuit reversed, finding that the plain meaning of the phrase “structural damage to the building” in an insurance contract means “damage to the structural integrity of a building” and not merely “any damage to the structure.” The case is remanded with instructions for the district court to decide if a genuine dispute of material fact exists regarding how much, if any, structural damage to the property is due to sinkhole activity.