A Florida appeals court has reversed a trial judge, finding that a homeowner’s State Farm policy did not cover damages from a septic tank leak because of a fungus endorsement on the policy.
In State Farm Florida Insurance Co. vs. Gonzalez and Diaz, the 2nd District Court of Appeal remanded the case to the lower court, noting that the trial judge had failed to consider the endorsement that excluded damage from mold and fungus.
“We conclude that the policy, when considered with the endorsement, specifically excludes fungus-related damages … and that the trial court therefore erred in ruling that the ‘fungus-related damages’ are covered under the ‘resulting loss’ language,” appeal court Chief Judge Robert Morris wrote in an opinion posted this week.
The 2nd District covers the Tampa area and Florida’s southwest coast. The case originated in Hendry County.
The claim began in 2016, when the homeowners sustained damage to their home from a septic tank overflow. The insureds, Orlinda Gonzalez and Harmodio Diaz, filed a claim for almost $70,000, but State Farm paid just $6,230 and ordered an appraisal.
The appraisal determined that the home had fungus-related damages of more than $39,000. State Farm told the homeowners that most of the damage was not covered because of the fungus exclusion endorsement. The residents, after filing a breach-of-contract suit, argued that the “resulting loss” language of the policy applied, that not all damages were due to fungus, that State Farm had waived its defenses by invoking the appraisal process, and the appraisal found significant damage.
The trial judge, Hendry County Circuit Judge James Sloan, found that the damages were covered. “The fungus-related damages were a resulting loss from the septic tank overflow and that the [insureds] are entitled to recover those damages under the policy,” Sloan wrote.
The appeal court disagreed and found that case law dictates that an insurance policy must be read “as a whole,” giving every provision its full meaning and effect. State Farm did not waive coverage defenses by invoking the appraisal process, the 2nd DCA noted.
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