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Florida Appellate Court Panel Finds Policy's Windstorm Damage Exclusion Is Unambiguous

Property Coverage Update

July 2011
By: Bruce Celebrezze

Fourth District Florida Court of Appeals

In Certain Interested Underwriters at Lloyd's, London v. Chabad Lubavitch of Greater Fort Lauderdale, Inc., -- So.3d --, 2011 WL 2200756 (Fla. Ct. App. 4th Dist. June 8, 2011), a panel of the Florida Court of Appeals held that the "ensuing loss" provision of the windstorm exclusion in the insured's property policy was not ambiguous as to whether it excluded coverage for property damage that occurred when a crane landed on the insured's property during a tropical storm.


During Tropical Storm Barry, a nearby crane fell from its perch and damaged the insured's building.  The insured submitted the damage claim under an "all risk" policy issued by the insurer.  The insurer denied coverage under the windstorm exclusion in the policy.  The insurer argued that the exclusion provided that coverage was inapplicable for any loss or damage caused "directly or indirectly" by "windstorm or hail" or "rain, snow, sand or dust, whether driven by wind or not, if that loss or damage would not have occurred but for the windstorm or hail." 


The insured argued that the crane striking its building, not the wind, was the cause of the damage, and coverage was applicable based on the "ensuing loss" exception within the windstorm exclusion.  The "ensuing loss" exception provided that a loss would be covered "if the Windstorm or Hail results in a cause of loss other than rain, snow, sand or dust, and that resulting loss is a Covered Cause of loss.  For example, if the Windstorm or Hail damages a heating system and fire results, the loss or damage attributable to fire is covered...."  Alternatively, the insured argued the windstorm exclusion was ambiguous and should be strictly construed against the insurer.  The trial court sided with the insured, finding the windstorm exclusion was ambiguous. 


In a 2-to-1 decision, the Fourth District Florida Court of Appeals reversed the trial court and held the "ensuing loss" exception was unambiguous and only applies if the windstorm sets in motion another intervening cause, which is not excluded by the policy.  The court noted that, in this case, unlike the fire in the heating system example noted within the "ensuing loss" exception, if the crane fell onto the building as a result of the force of the wind, then there was no intervening cause of the damage.  In a published dissent, one judge stated that he agreed with the trial court's finding that the windstorm exclusion was ambiguous because "a crane falling on [the insured's] building is a 'cause of loss other than rain, snow, sand or dust."

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