Property Insurance Coverage and Defective Construction Materials: What Obligations Does the Insurance Company Have?
Moving into a new house is usually an occasion full of excitement and anticipation, and buyers are usually safe to rely on an inspection report that finds no issues with the structure or construction methods used. However, if homeowners discover structural problems in their houses, they normally contact their property insurance provider to file a claim so repairs can be made. Ultimately, it is not uncommon for these claims to turn into insurance coverage disputes. This situation is particularly common for homeowners who purchased homes that used defective drywall manufactured by Chinese companies later found to release sulfur compounds into the air that affect the health of the occupants. These problems were not apparent to the new homeowners until problems visually manifested over time and unexplained health issues started to appear, prompting homeowners to file a claim with their property insurance provider. A couple who recently lost their case against the property insurance company for damage related to defective Chinese drywall is asking the Florida Supreme Court to review their case and argue that the insurance company should be required to cover repairs related to this type of defect regardless of claims that the insurance policy excludes coverage for this kind of issue.
Initial Claim Response
Once a property insurance company learns that a homeowner is filing a claim, the company has 14 days to acknowledge receipt of the claim and either deny the claim or provide the necessary forms to process it. Further, once the insurance company receives proof there is damage to the home that requires repair, it has 10 business days to begin an investigation to determine if the policy will cover anything. Ultimately, the insurance company has 90 days from the time it received notification of a policyholder’s claim to decide if it will pay, deny, or only pay part of it. If it fails to issue a decision within that time frame, it must pay interest on any monies paid to settle the claim.
When it comes to denying a policyholder’s claim for damages, one of the first things an insurance company will look at is whether the policy excludes the issue identified in the claim. Normally, the insured party, or the homeowner, has the burden to prove to a court that the loss directly relates to a covered issue, and the insurer, or property insurance company, is responsible for showing that the policy excludes the homeowner’s problem. Damage intentionally caused by the homeowner should be obviously excluded and such a provision is typically present in all insurance policies, but one exclusion that is often applied to construction defects, including Chinese drywall cases, is referred to as a latent defect. This type of defect applies to damage caused by something hidden or central to the building’s structure that could not have been reasonable foreseen or discovered. Insurance companies will argue that because they had no way to know or prepare for this problem, they should not be responsible for fixing it. It remains to be seen if the Florida Supreme Court will decide to consider this issue, but it is a limitation that homeowners should be aware exists. However, this line of reasoning is not always accepted by courts in insurance coverage disputes.
Hire a Lawyer
Having an insurance claim denied for home repairs is a very stressful situation for homeowners, but there are options to contest the insurance company’s initial decision. Lawyers can challenge the insurance company’s interpretation in court and get you the money you need to fix your home. The Miami law firm of Pita Weber & Del Prado can handle the complex challenge of an insurance coverage dispute and is ready assist you with your case. Contact us to schedule a consultation.