“Structural damage,” referred to in a Sinkhole Loss Claim, is defined as damage that impairs the structural integrity of the building.

In Hegel v. First Liberty Ins. Corp., 2015 U.S. App. LEXIS 3024, this case involves an insurance-coverage dispute that began in 2011 between Severin and Stephanie Hegel (the Hegels) and The First Liberty Insurance Corporation. The Hegels claim that First Liberty improperly denied their claim for a sinkhole loss. As defined under their homeowner’s insurance policy, a sinkhole loss is “structural damage to the building, including the foundation, caused by sinkhole activity.” First Liberty argues that the damage to the Hegels’ residence does not qualify as “structural damage,” a term that was not defined in either the policy or the version of the Florida sinkhole-insurance statute applicable to their claim. In February 2014, the district court granted summary judgment for the Hegels, finding that “structural damage” meant any “damage to the structure” and awarding them $166,518.17 in damages. First Liberty timely appealed.

The Court of Appeals for the Eleventh Circuit found that the district court awarded the Hegels damages for all subsurface and cosmetic repairs based on the parties’ stipulation that there was “physical damage to the Hegels home.” The Court of Appeals agreed with First Liberty that the plain meaning of “structural damage” could not be simply any “damage to the structure.” The Court of Appeals stated that the phrase instead meant damage that impaired the structural integrity of the building. The Court reversed the judgment and remanded the case back to the district court to decide if a genuine dispute of material fact exists regarding how much, if any, structural damage to the Hegels’ house is due to sinkhole activity.