Florida’s Economic Loss Rule has been murky for decades. It’s been expanded, contracted, partially eliminated, and is still generating certified questions to the Florida Supreme Court that go unanswered.
If you’re involved in Florida construction — as a contractor, owner, developer, or insurer — the ELR directly affects what claims you can bring, and what damages you can recover, when something goes wrong on a project.
Here’s where it stands today, and why it still matters.
What Is the Economic Loss Rule?
The Economic Loss Rule is a court-created doctrine that limits tort recovery in certain situations where a product damages only itself and the losses are purely financial — no personal injury, no damage to other property.
The classic example: a blender explodes, destroys itself, injures no one, and damages nothing else. The buyer’s remedy is through warranty law — not negligence. If the warranty is expired, the buyer may be out of luck.
In Florida, the rule was originally designed to protect manufacturers from open-ended tort liability when their products caused only economic losses. The idea was a trade-off: courts expanded liability for physical injury and property damage, but drew a line at purely financial losses when the parties could have allocated that risk by contract.
How the ELR Expanded — and Then Contracted
Over time, Florida courts began applying the Economic Loss Rule far beyond product liability. It became a categorical bar to almost any tort claim seeking only economic damages — negligent repair, negligent misrepresentation, professional malpractice, breach of contract dressed up as a negligence claim. By the 1990s, if you wanted to sue for purely economic loss, the ELR was a serious obstacle.
Then the Florida Supreme Court started pulling it back.
In Moransais v. Heathman (1999), the Court warned against an “unprincipled extension” of the rule and held that professional malpractice claims could proceed even when damages were purely economic. The Court signaled that the ELR was never meant to wipe out well-established common law causes of action.
The bigger shift came in Tiara Condominium Ass’n, Inc. v. Marsh & McLennan Cos. (2013). In Tiara, the Florida Supreme Court eliminated what had been called the “Contractual Privity ELR” — the version that barred tort claims simply because parties were in a contract with each other. After Tiara, the Economic Loss Rule applies only in product liability cases. If you’re not dealing with a product that damaged itself, the ELR no longer bars your tort claim.
That said, Tiara didn’t eliminate everything. The independent tort doctrine survived. Parties in contractual privity still can’t simply repackage a contract claim as a tort to expand damages — the tort claim must be independent of the contract breach.
Construction-Specific Application: Is a Building a Product?
The Florida Supreme Court held in Casa Clara Condo. Ass’n, Inc. v. Charley Toppino and Sons, Inc. (1993) that a building is a product for purposes of the ELR. Homeowners who purchased finished dwellings bought a completed product — and defective concrete that was incorporated into those buildings didn’t damage “other property.” It damaged the product itself. The ELR applied. The tort claims were barred.
After Tiara, Casa Clara appeared to be on shaky ground. For seven years, there were no appellate court opinions applying the product liability ELR to construction defect cases. Trial courts began dismissing tort claims in construction defect matters, but there was no appellate guidance.
That changed in 2020, when the Third District Court of Appeal breathed life back into Casa Clara in 2711 Hollywood Beach Condo. Assn., Inc. v. TRG Holiday, Ltd. The court held that the product liability ELR barred negligence and strict liability claims against a component supplier because the CPVC fittings at issue were “an integral part of the finished product” — the building — and thus did not injure “other property.”
The takeaway: if a party purchased a completed building and a component of that building was defective, the ELR may still bar tort claims against the component manufacturer or supplier. The product is the building. Damage to the building is not damage to “other property.”
Where the Law Still Has Gaps: The Liebherr Question
In February 2024, the 11th Circuit certified a question to the Florida Supreme Court in NBIS Construction & Transport Insurance Services, Inc. v. Liebherr-America, Inc. that got right to an unresolved edge of the ELR.
The facts: a crane boom collapsed. The parties stipulated the crane was not defective. The crane distributor had failed to send a safety bulletin warning the owner about a known danger from incorrectly installed pins. The boom collapsed, causing a fatality and $1.7 million in crane damage. The carrier sought recovery only for the crane damage — not the personal injury.
The question certified to the Florida Supreme Court: does the ELR apply to negligence claims against a distributor of a non-defective product for failing to warn the product owner of a known danger, when the only damages claimed are to the product itself?
The case settled before the Florida Supreme Court could answer. That means the question is still open — and it’s one that construction and insurance practitioners are watching closely, because it goes directly to whether a duty-to-warn claim against a distributor can survive the ELR when no product defect is alleged.
What This Means for Florida Construction Professionals
The Economic Loss Rule in Florida construction law is not a simple rule. It has a complicated history, a current state that still has open questions, and real consequences for how construction disputes are framed and litigated.
If you have questions about how the ELR applies to your project or dispute, contact Bachara Construction Law Group at 727-284-1000 or visit bacharagroup.com.
Want the full presentation? Hugh Higgins co-presented this material as a paid CLE for the Florida Bar’s Real Property, Probate and Trust Law Section. We’re making the slide deck available as a free download — a detailed reference on the ELR’s history, its construction-specific application, and where open questions remain.