Chinese Drywall and the Survival of the Fittest Insurance Company p2
We’re talking about an appellate decision in Florida that shows just how tough it can be to fight insurance companies over construction defects and faulty building materials. The construction material in this case is Chinese drywall that turned out, as we explained in our last post, to contain high levels of toxic substances. Thousands of homeowners, most of them on the East Coast, suffered health problems or discovered damaged wiring caused by sulfur fumes.
The plaintiffs built their home in 2008 and moved in early the following year. As so many others had, they soon noticed the odor of sulfur. The situation got so bad that they moved out — and they filed a claim with their homeowners insurance company.
The insurance company denied the claim, and the trial court agreed with that decision. So the couple appealed.
The appellate panel recently ruled in favor of the insurance company. The policy was clear, the court said. The damage from the drywall was not covered.
The policy excluded coverage for damages from latent defects of construction materials. A defect is latent if it cannot be discovered through a reasonable amount of investigation. A big pothole in a parking lot is a patent defect: A reasonable inspection of the parking lot would find it. However, the collapsing salt cave below the surface is a latent defect.
With the drywall, the sulfur content could only be confirmed through testing: It was a latent defect.
The plaintiffs crafted a creative counterargument. The policy covers damage from weather events, and humidity is counted among the covered events. The plaintiffs said it was the humidity that caused the drywall to release the sulfur into the air and, so, make the home uninhabitable.
We’ll continue with the court’s response in our next post.
Source: Westlaw Daily Insurance Briefing, “Chinese drywall an ‘excluded peril’ under all-risk policy, Florida panel says (Fla.App. 2 Dist.),” Sept. 29, 2015, via WestlawNext