Most insurance coverage disputes involve familiar perils such as fire, wind, and water intrusion. Rarely does a court wrestle with whether a giant aquarium inside an orthodontic office qualifies as “covered equipment” under a businessowners policy with equipment breakdown coverage. Yet that is precisely the unusual backdrop of Kawa Orthodontics, LLP v. Depositors Insurance Company.
At the trial court level, the facts were simple but strange. Kawa Orthodontics displayed a massive aquarium system consisting of acrylic tanks connected by an overhead bridge through which fish could swim and patients could gaze. A crack appeared in the acrylic bridge. To address it, Kawa drained the tanks, relocated the fish, and hired Erisa Improvements to remove the cracked bridge.
During the removal work, two more cracks formed in the wall of one of the tanks, captured on surveillance video. Kawa submitted a claim for the damage. Depositors denied it, writing in its denial letter that “the loss was due to the negligent work of Erisa Improvements,” invoking the policy exclusion for “faulty, inadequate or defective…design, specifications, workmanship, work methods, repair, construction, renovation, remodeling, grading, compaction, [or] failure to protect the property.”
Depositors filed for summary judgment in federal court, arguing that multiple provisions in the policy barred coverage. It pointed to the exclusion for “wear and tear; rust or other corrosion, decay, deterioration, hidden or latent defect…[and] settling, cracking, shrinking or expansion,” as well as the exclusion for “mechanical breakdown.” The insurer also insisted that the Equipment Breakdown coverage could not apply because the aquarium was not “covered equipment,” which the policy defined as “Covered Property…that generates, transmits or utilizes energy…or which, during normal usage, operates under vacuum or pressure, other than the weight of its contents.” In Depositors’ view, the acrylic tanks were simply containers rather than machinery.
Kawa responded with its own motion for summary judgment, pointing to the policy’s Additional Coverage for Equipment Breakdown, which promised: “We will pay for direct physical loss of or damage to Covered Property caused by or resulting from an ‘accident’ to ‘covered equipment.’ If an initial ‘accident’ causes other ‘accidents,’ all will be considered one ‘accident.’”
Under that language, Kawa argued, the first crack in the bridge was an “accident” in the form of a rupture from mechanical breakdown, and the later tank cracks were simply part of the same event. It emphasized that both its expert and Depositors’ own expert admitted there was no industry-approved method to repair acrylic aquariums, making it impossible to hold Erisa negligent under any identifiable standard of care.
The district court agreed with Kawa and entered judgment in its favor. 1 Judge Rodney Smith held that the aquarium was covered equipment because it operated “under vacuum or pressure” via a submersible pump that circulated water. He found the cracking was a “rupture” that qualified as a mechanical breakdown.
The court rejected the negligence exclusion, reasoning that since “there is no identifiable standard of care applicable to the repair work in this instance,” Erisa could not be deemed negligent. Interpreting ambiguous policy language in favor of the insured, the court applied the rule of the last antecedent to construe “mechanical breakdown, including rupture or bursting caused by centrifugal force” so that “caused by centrifugal force” modified only “bursting,” meaning a rupture alone was enough. The court entered final judgment in favor of Kawa in the amount of $326,004.33, the actual cash value of the loss.
On appeal, Depositors pressed several arguments. It claimed the district court improperly considered the initial bridge crack because Kawa had not pled it as part of its claim. It argued the court erred in finding no negligence, citing Florida precedent that the absence of industry standards does not negate the duty to act with reasonable care. It renewed its position that the aquarium was not “covered equipment,” that no “accident” as defined by the policy had occurred, and that exclusions for wear and tear and latent defect applied. Kawa countered in its appellate brief that the aquarium system functioned as one unit, that the cracks were accidents within the policy’s definition, and that the negligence exclusion could not apply in the absence of an established duty.
The Eleventh Circuit reversed and remanded. 2 The panel emphasized that the trial court had gone too far in removing negligence from the case. It held that “although industry standards are evidence of the appropriate standard of care, the existence of industry standards is not dispositive,” and that under Florida law “the standard of care is a question of fact for the jury.” Viewing the evidence in Depositors’ favor, a jury could reasonably conclude the cracks were caused by Erisa’s improper use of the aquarium walls as a scaffold and by placing weight on the acrylic.
The appellate court also noted that a jury could find the initial crack did not necessarily cause a “total loss of the entire aquarium system,” as Depositors’ expert testified there were possible temporary fixes. Because factual disputes existed on negligence and causation, the appellate court did not reach the insurer’s other coverage defenses, leaving those arguments alive on remand.
At this stage, Kawa no longer holds a judgment in its favor; instead, the case will proceed with a jury to decide whether the aquarium cracks were the result of negligent repairs or a covered accident under the policy’s Equipment Breakdown coverage. This unusual battle over a fish tank shows how insurance law often turns on definitions, exclusions, and the precise wording of coverage provisions.
I will continue to monitor this matter and report back as it unfolds. I suggest that readers interested in this coverage read an article written by attorney Iris Kuhn, Small Business Manufacturers Should Purchase Equipment Breakdown Coverage, and an article I wrote, Electrical Arcing Versus Fire Damage Claims—What is Covered and Why Equipment Breakdown Coverage Should Be Sold With Every Commercial Policy.
Thought For The Day:
“The difference between the right word and the almost right word is the difference between lightning and a lightning bug.”
—Mark Twain
1 Kawa Orthodontics v. Depositors Ins. Co., No. 21-CV-81884 (S.D. Fla. Sept. 23, 2023).
2 Kawa Orthodontics v. Depositors Ins. Co., No. 23-13662, 2025 WL 2718235 (11th Cir. Sept. 24, 2025).