Water Damage Claims in Office Buildings in Florida

On a Monday morning in Miami Lakes, the first tenant to arrive at a four-story office building found water running down the stairwell. A supply line to a third-floor kitchenette had failed over the weekend, and water had spread through three suites and the elevator shaft. Sorting out the claim involved the building owner’s carrier, two tenants’ carriers and the elevator contractor.

Water damage is the most frequent property claim in Florida office buildings. How it is covered depends on the source, how long the water ran, and who owns the damaged property.

Sudden Versus Long-Term Water Damage

Commercial property policies cover water that escapes suddenly from plumbing, heating, air conditioning or fire protection systems. They exclude continuous or repeated seepage or leakage over an extended period, commonly 14 days or more, along with wear, deterioration and rot. A burst pipe is usually covered; a slow leak behind a wall that ran for months usually is not.

Sprinkler Leakage

Fire sprinkler systems can discharge accidentally because of damaged heads, freezing, corrosion or impact. Sprinkler leakage is generally covered under commercial property forms, but not when the building has been vacant beyond the policy’s vacancy period. See our article on vacant office building insurance.

Who Pays for What

In a multi-tenant building, the owner’s policy generally covers the building, common areas and building systems. Each tenant’s policy covers its own contents and, depending on the lease, its improvements and betterments. If one tenant’s negligence caused the loss, carriers may pursue recovery from that tenant, unless the lease includes a waiver of subrogation. Clear lease language and tenant insurance requirements make these claims much simpler; see our article on office building insurance requirements.

Backup and Flood

Water that backs up through drains or sewers is excluded under many commercial forms unless the policy is endorsed to cover it. Water from outside the building, such as flood or storm surge, requires a separate flood policy. See our article on flood insurance for office buildings.

Mold

Mold often follows water damage in Florida’s climate. Commercial property policies generally exclude fungus and mold except for a limited amount of coverage when it results from a covered loss. Fast drying is the best protection.