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Homeowners Policy Does Not Cover Home Renovations (PA)

April 12, 2017

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In <em>Fazio v. State Farm Insurance</em>, the US District Court for the E.D. Pennsylvania recently discussed an insured’s burden to prove a property damage claim falls within a policy’s coverage terms.  In this declaratory judgment action, the Fazios claimed that they suffered “sudden and accidental direct physical damage” to their property caused by wind, snow and ice. The Fazios sought to replace all of the stucco, most of the windows, and the dining room floor of their home.
In response to the initial claim, State Farm assigned an adjustor, who inspected the Property and determined that the policy covered a portion of the claimed loss and made a payment to the of $4,871.05. Shortly thereafter, the Fazios forwarded State Farm additional estimates totaling $85,275. State Farm assigned a specialist, who determined that an expert was necessary to determine the amount of damages attributable to the March 3, 2015 incident. The expert prepared a report of damages and causation, and State Farm issued a supplemental payment of $12,037.38 to the Fazios.
The State Farm policy at issue stated that the policy insures for accidental physical loss to property, but carved out exclusions to property damage arising from wear, deterioration, latent defect, settling, cracking shrinking, bulging, or expansions. Furthermore, the policy specifically stated that if a loss is aggravated or caused by defective design, construction, materials or maintenance, then the loss would not be covered.
While the Fazios contended that the damage was caused by moisture seeping through the stucco and windows into the interior of the home directly after a storm, State Farm’s expert reported that the stucco was installed at the Property in 2002, thirteen (13) years prior to the claimed date of loss on March 3, 2015. The expert concluded that moisture entering through the stucco at penetration points over time caused cracks and streaking.  These damages were not proximately caused by the storm but, rather, by the general condition of the stucco. In fact, planned restoration of the exterior stucco was in place prior to the most recent reported loss. The Fazios did not present any contrary evidence.
Although the Fazios claimed that fog and water on the windows of their home was caused by ice and water damming, the Court challenged the Fazios to provide proof that they were not just “old windows” that “just let the air and moisture in.” Citing the principle that an insurance policy is intended for restoration to pre-loss conditions and not for the opportunity to “remodel a home at the insurer’s expense,” the Court concluded that State Farm had sufficiently proven that it paid the entire amount owed to the Fazios under the terms of its policy and granted summary judgment to State Farm.
Thanks to Sathima Jones for her contribution.
For more information, contact Denise Fontana Ricci at <a href="mailto:dricci@wcmlaw.com"><u>dricci@wcmlaw.com</u></a>

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