Exception to exclusion under endorsement provided coverage for humidity-induced rot damage.

The insurer claimed that coverage for property damage due to the deterioration of floor joists was precluded under an exclusion for damage caused by groundwater; however, expert testimony and evidence presented at trial indicated that the cause of the damage was long-term humidity and moisture, not groundwater. Thus, the court concluded coverage was warranted under the Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement, an exception to the exclusion for “seepage or leakage of water or the presence or condensation of humidity, moisture, or vapor…[where] the resulting damage is unknown to all ‘insureds’ and is hidden within the walls or ceilings or beneath the floors or above the ceilings of a structure.” The plaintiff’s adjuster noted that the elderly homeowner and her terminally ill husband could not have known of the humidity and resulting damages. Accordingly, the plaintiff was entitled to coverage for the damage to her home.

Case Law Alerts, 4th Quarter 2013