Exclusion Wording Not Clear, Florida Appeals Court Says in Air Quality Case

Despite repeated references to “water damage,” the ambiguous wording of a policy exclusion by Southern-Owners Insurance Co. does not necessarily bar those types of claims, a Florida appeals court found in a temporary win for a well-known mold testing firm.

“While the policy plainly excludes water damage caused by flood, surface water, waves, tidal water, or overflow of a body of water, the policy does not plainly exclude water damage caused by rain,” the 1^st District Court of Appeals said in Air Quality Assessors Inc. vs. Southern-Owners.

The Oct. 26 opinion reversed a trial court’s decision that had dismissed the lawsuit brought by Air Quality Assessors, a firm owned by contractor Richie Kidwell, who has filed dozens of suits against property insurers over assignment-of-benefits claims. The case was remanded to the county court in Calhoun County for further proceedings.

The appeals decision, written by Judge Ross Bilbrey, also said the lower court would have to decide a key point – whether the insurance policy was still in effect after the law was enacted, the court said.

Another appeals court this year found that it’s the date of the AOB agreement, not the date of the insurance policy that matters in some cases. But in that April case, Total Care Restoration vs. Citizens Property Insurance Corp., the 4^th DCA examined a different 2019 AOB reform law, Florida Statute 627.7152. The Southern-Owners case looked at Statute 627.7153, which specifies that it “applies to a policy issued or renewed on or after July 1, 2019,” explained Allan Rotlewicz, a Tampa insurance attorney who writes about court decisions.

The court added: “There is nothing in the amended statement of claim which would indicate that any of the statutory prerequisites for issuing an insurance policy which limits the right of assignment have been met,” the court wrote. “Thus, an issue of fact remains as to whether section would apply to the policy assigned.”

Although Florida courts have long upheld an insured’s right to assign benefits, Statute 627.7153 allows insurers to restrict AOBs if certain prerequisites are met, such as premium discounts. Southern-Owners had argued that the assignment to Air Quality was invalid because the insurer did not approve the assignment, as required by the insurance policy. The lower court did not address that issue but will likely examine it now.

Other questions remain.

“The amended statement of claim and its attachment do not make it plain that the claim pertains to mold or mildew so as to trigger that exclusion,” the appeals court opinion noted. “Given the plain language of the policy and the allegations of the amended statement, it cannot be said on this record that the claim is excluded. That is, the policy language is reasonably susceptible to the interpretation that coverage is available given the allegations of the amended statement.”

Southern-Owners is part of Auto-Owners Insurance Co., based in Lansing, Michigan. It had about 7,100 policies in force in Florida in the second quarter of this year.