Judge James Whittemore who sits in the United States District Court for the Middle District of Florida just issued a wonderfully well thought out opinion on the structural damage issue here in Florida. The opinion that was filed on December 7, 2011 is entitled Bay Farm Corporation vs. Great American Alliance Insurance Company. The facts of the case sound familiar. The insurance company denied a sinkhole claim citing the fact that there was no structural damage to the buildings. The insurance company also specifically cited the amendments to Fl. Stat. 627.706, better known as Bill 408. Bill 408 added the now infamous definition of what constitutes structural damage. Judge Whittemore actually addressed two separate issues, both great for homeowners.

Issue 1) can the statutory amendments be retroactively applied? Judge Whittemore noted that the law in Florida is that when a statute is changed the question is: does the change have substantive or procedural effects? Procedural changes can typically be retroactively applied as they don’t effect the parties rights but only how they get their. Substantive impacts mean the statute actually changes the rights of a party to the lawsuit. In this case, Judge Whittemore stated it was clear that the new statute decreased the amount of coverage that would be available the property owner. Therefore, it drastically effects the insureds rights and is a substantive change. That means it can not be retroactively applied.

Issue 2) if the policy does not have a definition of structural damage, what is it? This is the more important and sometimes missed portion of this lengthy opinion. Judge Whittemore notes that if you do not contain a technical definition of what structural damage means in your policy, we must ask what is the most common meaning of structural damage. Judge Whittemore answers that the most common meaning is damage to the structure. He also cites to several state court opinions that have ruled the same way in cases primarily against USAA and Homewise.

This opinion could be the beginning of the end for insurance companies that have been denying claims for lack of structural damage when the insurance policy does not yet contain the proper language saying they can do so. Your worst offenders are Tower Hill (of course), USAA, Liberty Mutual and Universal. Others have also jumped in but not to the degree the above carriers have. Overall, this has been a very good end of the year and beginning to 2012 for homeowners and their attorneys who fight for them.