American Home Assurance v. Sebo is a pretty famous case in the insurance world but probably not known at all by your average insured. It is an important decision though that impacts homeowners drastically. The background on the case is complicated but essentially involved an expensive home that was built with numerous defects. In conjunction with this a large storm damaged the home and it was determined that the damage was as bad as it was because of the defects in the home.

Previously in Florida the rule on this was known as the concurring cause rule. This means that when two things cause damage to a home, one covered under insurance and one excluded from insurance, the insurance company would have to pay to fix all the damage. When Sebo first went up on appeal to the Second District Court of Appeals, the Second DCA applied another rule of law known as the efficient proximate cause theory. Under the same scenario above the homeowner would have to prove that the primary reason for the damage was the thing that was covered under insurance. If not, they may not get coverage for any of the damages at all.

The Florida Supreme Court accepted the case and thankfully ruled that the previous concurring cause rule was the appropriate standard here in Florida. This is important to sinkhole claims because almost always there is some other cause of damage in addition to the sinkhole conditions. For example, almost every home in Florida has some minor damages caused by just normal settlement or by simple construction related issues or by our harsh weather here in Florida. Had the original Sebo opinion survived, insurance companies would have tried to get out of these claims by arguing that the majority of the damage was from these other causes and they should not be required to pay the claim at all even though it was admitted that sinkhole activity had caused some damage to the home.

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