In Liberty Mutual Fire Ins. Co. v. Martinez, 40 Fla. L. Weekly D433a (2015), Florida’s Fifth District Court of Appeal limited the application of an “ensuing loss” exception under a homeowner’s insurance policy. The court held that an ensuing loss provision is not triggered, meaning that it will not add back coverage, when the direct cause of loss falls under an exclusion that contains an anti-concurrent cause provision.

The insureds in Martinez discovered damage to their pool shell, pool deck, rock garden and waterfall the day after a tropical storm and submitted a claim to their insurer. The parties ultimately agreed on the cause of the damage: subsurface water accumulating underneath the pool during the storm had exerted hydrostatic pressure on the partially emptied pool, causing the pool shell to lift out of the ground, resulting in damage to not only the shell, but also to the pool deck, rock garden and waterfall.

The claim was denied by the insurer, however, under the policy’s “water damage” exclusion, which excluded “loss caused directly or indirectly by… flood, surface water…or spray from any of these, whether or not driven by wind” or by “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 exclusion in the policy provided further that “such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”

The insureds filed suit against their insurer for breach of contract, arguing that the damage was covered under the ensuing loss provision of the policy because the damage was caused by the pool shell lifting, a separate event resulting from the hydrostatic pressure---constituting an ensuing loss not excluded or excepted under the policy. In advancing this argument, the insureds relied upon a policy exclusion for losses caused by “weather conditions,” which specifically provided that “any ensuing loss to property not excluded or excepted” is covered.

The court rejected this position, finding that the damage to the pool deck, rock garden and waterfall was not an ensuing loss. In reaching its decision, the court adopted the well-established definition of “ensuing loss” as “a loss that occurs separate from but as a result of an excluded loss.” The court also considered that “[e]nsuing loss exceptions are not applicable…if the ensuing loss was directly related to the original excluded risk.”

Finding no published Florida decisions on point, the court looked to case law in New York and South Carolina, where courts have applied the water damage exclusion when hydrostatic pressure forced pools out of the ground, resulting in damage to the deck or patio and surrounding areas. The court then determined that the damage to the deck, rock garden and waterfall resulted directly or indirectly from subsurface water pressure and thus did not reach the ensuing-loss provision.

Although the case specifically addresses a claim under the water damage exclusion and relies on cases where courts considered similar facts, the holding may be read more broadly. For example, the court’s rationale may be extended to claims for interior damage from a roof leak, where the direct cause of loss is found to be excluded under an exclusion with an anti-concurrent cause provision, such as “Neglect” or “Existing Damage.”

The case finally offers a long-awaited decision on the interpretation of an ensuing loss under a standard homeowner’s insurance policy in Florida, and the court’s decision may be reviewed in its entirety here.