Swimming pools are fun to have, but they can often be an expensive addition to a home. A swimming pool is a concrete shell placed in a hole in the ground and held there by the weight of the water kept in the shell. Sometimes science gets in the way; when water gets deep into land, the dirt expands and pushes itself upward. If the push from the expanding earth is greater than the weight of the concrete shell and the water in it, the shell will pop out of the ground and cause damage to the hardscape around the pool. Homeowners insurance is not necessarily intended to indemnify for such a loss caused by science and water.
In Liberty Mut. Fire Ins. Co. v. Martinez, 2015 Fla. App. LEXIS 1918 (Fla. App. 5th Dist. Feb. 13, 2015), the Florida Court of Appeal was called on to determine the appeal filed by Liberty Mutual Fire Insurance Company to set aside a summary judgment entered in favor of its insureds, Nigel and Melissa Martinez, and determine if the water damage exclusion applied.
Liberty issued an all risks insurance policy to the Martinezes insuring their residence and other structures located on their property. During a tropical storm, Nigel Martinez partially emptied his family's in-ground swimming pool because it was overflowing. The following day, he discovered that the pool had lifted out of the ground. As experts would later agree, subsurface water accumulated underneath the pool during the storm, which exerted hydrostatic pressure on the partially emptied pool. This pressure caused the pool shell to lift out of the ground, damaging the shell as well as the pool deck, rock garden, and waterfall.
Thereafter, the Martinezes filed a claim with Liberty, which was denied on the ground that the water exclusion provision in the policy excluded damage caused by hydrostatic pressure from coverage.
The questioned exclusion provided:
We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. c. Water Damage, meaning: (1) Flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind; ¶ …. (3) 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. (Emphasis added).
In response, the Martinezes filed suit for breach of contract and argued that their damage was covered under the ensuing loss provision in the policy.
Both sides moved for summary judgment. The trial court found that the direct cause of the Martinezes' damage was the pool shell coming out of the ground, rather than the hydrostatic pressure. Accordingly, the court found that the damages were ensuing losses covered by the policy, denied Liberty's motion for summary judgment, and granted the Martinezes' motion for summary judgment.
The issue on appeal was whether the water exclusion provision excluded the Martinezes' losses from coverage. Insurance policies are construed in accordance with the plain language of the policy and must be read as a whole, giving each provision its full meaning. As a general rule, insurance coverage must be broadly construed in favor of the insured, while exclusions must be narrowly construed against the insurer. Insurance policies may contain exclusionary provisions that exclude certain risks from the scope of coverage, and exclusionary provisions may carve out coverage exceptions for losses that ensue from an excluded cause of loss. The court of appeal noted that ensuing loss exceptions were not applicable, however, if the ensuing loss was directly related to the original excluded risk.
Although there were no Florida cases on point, courts in New York and South Carolina have interpreted similar anti-concurrent cause provisions and applied those provisions to analogous facts. For example, in Jahier v. Liberty Mut. Group, 883 N.Y.S.2d 2836 (N.Y. App. Div. 2009), rainfall increased hydrostatic pressure surrounding the insureds' drained swimming pool and forced it out of the ground. As a result of the pool lifting out of the ground, the pool, surrounding patio, and plumbing were damaged. The insureds filed a claim with their insurer for those damages. Notwithstanding the rainfall and drainage of the pool contributing to the losses, the court held that the water damage exclusion clearly and unambiguously applied to the insureds' losses.
Similarly, in South Carolina Farm Bur. Mut. Ins. Co. v. Durham, 671 S.E.2d 610 (S.C. 2010), the court found that the insureds' damages—which were sustained when rain increased hydrostatic pressure around their pool, forcing the pool out of the ground and damaging their deck—were excluded from coverage because the policy contained an anti-concurrent cause provision that applied to water damage. Because water pressure was one of the causes that forced the pool out of the ground, the court concluded that the water damage exclusion applied.
The court of appeal agreed with Liberty that under the policy's plain language, the damage to the Martinezes' pool deck, rock garden, and waterfall was not an ensuing loss. Rather, the policy expressly excluded the Martinezes' loss, as it specifically excluded losses that occurred directly or indirectly from subsurface water pressure. The damage to the deck, rock garden, and waterfall resulted, directly or indirectly, from subsurface water pressure, so the court found no reason to look to the ensuing loss provision.
Although the thought of something as big and heavy as a swimming pool popping out of the ground like a cork popping off a bottle of sparkling wine is difficult to conceive, it happens more often than one might believe. The effect of hydrostatic pressure is not unusual and is scientifically well known. For that reason, the homeowners policy contains the exclusion applied by the court because insurers cannot properly calculate a premium to accept a risk of losing a swimming pool or other property by hydrostatic pressure.
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