In Liebel v. Nationwide Insurance Company of Florida, ____ So.3d ____ (Fla. 4th DCA October 7, 2009), the homeowner had a leaky plumbing system which led to subsidence under the home, which in turn led to damage to the home itself. Nationwide refused to pay for the damage to the home under an exclusion for losses caused by natural and unnatural earth movement. Nationwide also refused to pay to tear out and replace the leaky plumbing system.
The 4th DCA agreed that the damage to the home was excluded under the earth movement exclusion. The court reasoned that the earth movement in this case was due to an unnatural cause – the leaky plumbing – and was therefore excluded.
The Court next dealt with whether Nationwide was required to pay to tear out and replace the plumbing system. The exclusion dealing with this aspect of the case provided that the Nationwide Policy covers water losses which are due to wear and tear, or deterioration unless "otherwise excluded." In a subsequent sentence, the exclusion goes on to state that: "We also cover the cost of tearing out and replacing any part of a building necessary to repair the system or appliance."
Initially, the Court noted that that water loss in this case was "otherwise excluded" under the earth movement exclusion. But, the held that:
In the instant case, the trial court erred by not holding that the Policy covered the cost of repairing the plumbing system. This is because the Policy, by providing that it does not cover damage caused by water from a plumbing system that is otherwise excluded, but then stating that it covers the cost of repairing a system that caused water damage, has created an ambiguity, as two or more reasonable interpretations of these two intersecting provision are feasible. Specifically, one may interpret the ‘otherwise excluded’ language to preclude coverage for all damages caused by a matter otherwise excluded, including the cost of tearing out and replacing any part of Liebel’s home necessary to repair the ruptured water line. In contrast, a reasonable person could interpret the Policy to exclude from coverage the damage caused by earth movement, but include the cost of repairing the water line that caused the loss, as it is a plumbing system that caused water damage due to its deterioration from wear and tear. As such there is an ambiguity…. [W]e hold that the cost of repairing the water line was covered by the Policy and reverse the trial court’s order to the extent that it held to the contrary.