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Hegel v. First Liberty Ins. Corp. - 778 F.3d 1214 (11th Cir. 2015)


Contract interpretation is subject to de novo review. Because insurance policies are considered contracts, interpretation of insurance policy language is also a matter of law, subject to de novo review.


Plaintiffs Severin and Stephanie Hegel held a homeowner's insurance policy issued by defendant The First Liberty Insurance Corporation ("First Liberty"). The policy insured against "Sinkhole Loss" as an exception to the policy's exclusion for damage caused by earth movement. Under the policy, sinkhole loss meant "structural damage to the building, including the foundation, caused by sinkhole activity." The policy, however, did not define the term "structural damage." While the policy was in effect, the Hegels noticed damage to their home, including progressive physical damage to the walls and floors. First Liberty denied their claim for a "sinkhole loss" on the ground that the damage to the home did not qualify as "structural damage," and the Hegels filed a breach of contract action against First Liberty in Florida state court. First Liberty later removed the action federal district court. The parties filed competing motions for summary judgment. The district court granted summary judgment for the Hegels, finding that "structural damage" meant any "damage to the structure." The Hegels were awarded $166,518.17 in damages. First Liberty appealed.


Did the district court err when it concluded that term "structural damage" in the insurance policy meant any "damage to the structure?"




The appellate court reversed the district court's judgment and remanded the matter for further proceedings. The court agreed with First Liberty that the plain meaning of "structural damage" could not be simply any "damage to the structure" in the relevant context. Rather, the phrase meant damage that impaired the structural integrity of the building. Under the applicable 2005 version of Fla. Stat. § 627.706, "structural damage" was not defined, but the legislative history indicated that it was more restrictive than actual physical damage. The court declined to incorporate into the policy the relatively narrow definitions of "structural" set forth in the Florida Building Code and "structural damage" under the 2011 amendment to § 627.706.


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