Everyone knows that USAA long ago took a stance that if a home does not exhibit structural damage (as they defined it) they could deny coverage. The problem is, again as we all know, is that the policy doesn’t define what structural damage means. USAA was making up its own definition, a very narrow one of course, and using it to deny claims. We discussed how most, if not all, State court judges have told USAA this does not work. There are a good bit of Orders floating around on this. Then the Middle District Court of Florida got in on the action with the Bay Farms decision. Bay Farms essentially told insurance companies you can not retroactively apply the new statutes defining structural damage to existing claims. I believe I wrote that perhaps the most overlooked part of that lengthy and very important decision was that the Judge recognized what the State courts had been doing in telling USAA that, absent a better definition somewhere in the policy, “structural damage” means “any damage to the structure”.
Now the Middle District has done more than just touch on that issue, it has slaughtered it. The case is Albert and Ann Marie Ayers v. USAA Casualty Insurance. In this case, the Plaintiffs filed a Motion for Summary Judgement asking the Court to decide how structural damage should be defined. As a side note, this office had filed nearly the identical motion in every USAA we have several months ago and these are all set to be heard in the upcoming months. The court broke down the analysis wonderfully. USAA argued that the term structural damage was not ambiguous and therefore, the Judge did not have the power to define a term that was not ambiguous. The court pointed out that if the term was so clear and unambiguous, then USAA should not have a problem with the Judge providing a plain and ordinary meaning of “damage to the structure”. Now, if USAA doesn’t like that definition of structural damage, then that means USAA feels the term is ambiguous and therefore, again, the Judge will decide how to properly define it. By law, he will define it most favorable for the homeowners, i.e. damage to the structure.
At the end of the day, the Middle District just told USAA no mater how you argue it, the result will be the same, you will lose and you will start paying these claims. We will see if USAA actually listens but, I doubt it.