My client’s rental condo was for sale. He and his wife did not live in the condo, but lived nearby. One day their realtor called and advised that he went to show the condo, and found water on the floor in several rooms.
My client reported the loss to his condo insurer, Citizens Insurance. Citizens denied the claim, based on two exclusions: 1) continuous leekage or seepage for a period over 14 days; and 2) water loss in a home that had been unoccupied for a period over 30 days.
Neither of these exclusions apply. The continuous leekage or seepage exclusion only applies to exclude coverage for damage that occurs after the expiration of 14 days of exposure to water. This exclusion does not apply in this case for two reasons: 1) we will be able to show that the leekage/seepage did not occur for more than 14 days; and 2) regardless of how long the leekage/seepage occurred, there was no increased damage as a result of long term exposure to water. In other words, the items that were damaged by water in this case (cabinets, drywall, and carpeting) had to be removed and replaced whether they were exposed to water for 1 day, or 13 days, or 20 days. This exclusion only excludes water damage that would not have occurred, but for the fact that the item was exposed to water for more than 14 days.
Citizens’ adjuster advised my client that the "unoccupied for 30 days" exclusion applies if the condo was "ever" unoccupied for a period of more than 30 days, even if the loss takes place years after it was unoccupied. In other words, say a homeowner leaves for a 6 week vacation in 2005. Years later while the home is occupied there is a fire loss. According to Citizens, this loss is not covered because the home was unoccupied back in 2005. This is ridiculous, and I do not expect that this interpretation of the policy will be advanced by Citizens’ attorneys.
The "unoccupied for 30 days" exclusion also doesn’t apply for two other reasons: 1) the condo was not "unoccupied" for a period of 30 days before the loss; and 2) even if it was unoccupied for more than 30 days before the loss, there is an exception to the exclusion which states that the exclusion does not apply if the insured takes reasonable steps to shut off the water prior to leaving the condo. My client turned off all the water prior to leaving on vacation, and therefore the exclusion does not apply.
As with almost all of my insurance cases, I will take no fees and costs from my client. If I win, the insurance company must pay my fees and costs, and if I lose, I’ll work for free.