Background: A homeowner found a leak hidden in the cavity of the walls between his garage and kitchen. The refrigerator hid the damage that grew on the inside. The homeowner noticed it inside the garage and replaced the water heater – thinking that was the problem.

State Farm denied there was coverage for the hidden seepage. I responded to the denial by pointing out the coverage for the hidden seepage and the policyholders' rot endorsement. State Farm responded and said – there was no coverage because rot, deterioration, and possible mold were visible on baseboards.

Is this correct? Does the hidden seepage clause not apply if the leak was inside a wall – but caused damage to baseboards hidden behind a refrigerator?