40 Fla. L. Weekly D14b
unambiguously excluded coverage for sinkhole loss — Fact that policy contains a
provision describing the neutral evaluation process in the event of a sinkhole
loss cannot reasonably be read as creating coverage for a loss that is
Appellee. 2nd District. Case No. 2D12-4575. Opinion filed December 17, 2014.
Appeal from the Circuit Court for Hillsborough County; Sam D. Pendino, Judge.
Counsel: Kristen A. Tajak and Daniel M. Schwarz of Cole, Scott & Kissane,
P.A., Miami, for Appellant. A. Lee Smith of Thompson Trial Group, P.A., Tampa,
insurer, Florida Peninsula Insurance Company, for failure to pay benefits
regarding her claim for sinkhole damages. Florida Peninsula moved for summary
judgment arguing that Ms. Cespedes’ policy excluded sinkhole damage. Ms.
Cespedes countered with a motion for partial summary judgment in which she
argued that her homeowner’s insurance policy was ambiguous regarding sinkhole
coverage. The trial court granted her motion and denied Florida Peninsula’s
motion. Florida Peninsula filed a timely notice of appeal from the final
judgment awarding Ms. Cespedes $125,400. Because we conclude that Ms. Cespedes’
policy unambiguously excluded sinkhole damage, we reverse.
YOUR POLICY PROVIDES COVERAGE FOR A CATASTROPHIC GROUND COVER
COLLAPSE THAT RESULTS IN THE PROPERTY BEING CONDEMNED AND UNINHABITABLE.
OTHERWISE, YOUR POLICY DOES NOT PROVIDE COVERAGE FOR SINKHOLE LOSSES. YOU MAY
PURCHASE ADDITIONAL COVERAGE FOR SINKHOLE LOSSES FOR AN ADDITIONAL
addition, the Special Provisions Endorsement states:
The following Exclusion 1.i. is added to Section I —
i. Loss caused by “sinkhole”
(1) “Sinkhole” means:
(a) A landform created by subsidence of soils, sediment, or rock as
underlying strata are dissolved by ground water.
(b) A “sinkhole” may form by collapse into subterranean voids
created by dissolution of limestone or dolostone or by subsidence as these
strata are dissolved.
(c) This exclusion does not apply to the peril of “Catastrophic
Ground Cover Collapse.”
collapse” as follows:
“Catastrophic ground cover collapse” means geological activity that
results in all of the following:
(1) The abrupt collapse of ground cover;
(2) A depression in the ground cover clearly visible to the naked
(3) Structural damage to the building, including the foundation;
(4) The insured structure being condemned and ordered to be vacated
by the governmental agency authorized by law to issue such an order for that
contained in the Special Provisions Endorsement and states:
The following are additional conditions to Section I — CONDITIONS
of your policy:
17. Neutral Evaluation Program
With respect to a claim for alleged “Sinkhole loss”, a neutral
evaluation program is available as follows:
a. Following receipt by us of a report from a professional engineer
or professional geologist on the cause of loss and recommendations for repair of
property, or if we deny your claim, we will notify you of your right to
participate in a neutral evaluation program administered by the Florida
Department of Financial Services (hereinafter referred to as the
b. For alleged “Sinkhole loss” to property, this program applies
instead of the Mediation and Appraisal condition set forth elsewhere in this
c. You or we may file a request with the Department for neutral
evaluation; the other party must comply with such request.
d. We will pay the costs associated with the neutral evaluation
regardless of which party makes the request.
e. The neutral evaluator will be selected from a list maintained by
The recommendation of the neutral evaluator will not be binding on
you or us.
f. Participation in the neutral evaluation program does not change
your right to file suit against us in accordance with the Suit Against Us
Condition 8 in this policy.
Florida Peninsula’s motion, the trial court found that this latter provision
created an ambiguity and that Ms. Cespedes was entitled to coverage for her
summary judgment posing a pure question of law is de novo.” Major League
Baseball v. Morsani, 790 So. 2d 1071, 1074 (Fla. 2001). The construction of
an insurance contract is a question of law, not a question of fact; therefore,
our standard of review is de novo. Kattoum v. N.H. Indem. Co., 968 So. 2d
602, 604 (Fla. 2d DCA 2007). We agree with Florida Peninsula that the trial
court erred as a matter of law in denying its motion for summary judgment
because Ms. Cespedes’ policy clearly and unambiguously excludes coverage for
interpret the policy in accordance with the plain meaning so as to give effect
to the policy as written. Washington Nat’l Ins. Corp. v. Ruderman, 117
So. 3d 943, 948 (Fla. 2013). “In construing insurance contracts, ‘courts should
read each policy as a whole, endeavoring to give every provision its full
meaning and operative effect.’ ” Id. (quoting U.S. Fire Ins. Co. v.
J.S.U.B., Inc., 979 So. 2d 871, 877 (Fla. 2007)). “If the relevant policy
language is susceptible to more than one reasonable interpretation, one
providing coverage and the other limiting coverage, the insurance policy is
considered ambiguous.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29,
34 (Fla. 2000). The plain language of Ms. Cespedes’ policy excludes sinkhole
damage. The fact that the policy contains a provision describing the neutral
evaluation process in the event of a sinkhole loss cannot reasonably be read as
creating coverage for a loss that is unambiguously excluded. Because the
relevant policy language is susceptible to only one reasonable interpretation,
it was error for the trial court to deny Florida Peninsula’s motion for summary
judgment. Accordingly, the judgment in favor of Ms. Cespedes is reversed and
this case is remanded with instructions to enter judgment in favor of Florida
ALTENBERND, J., Concurs and dissents with opinion.)
write to point out that the generally convoluted structure of homeowner’s
insurance policies in Florida did not work an injustice in this case. Even if
Ms. Cespedes’ understanding of the policy was relevant — which it is not in the
face of the policy’s unambiguous language, see SCG Harbourwood, LLC v.
Hanyan, 93 So. 3d 1197, 1200 (Fla. 2d DCA 2012) — the record arguably shows
that she knew that her policy did not include coverage for sinkhole loss. At her
deposition, Ms. Cespedes testified that she specifically recalled being informed
that sinkhole coverage would require an extra premium, and she specifically
elected not to pay that additional premium. Thus, it would be serendipitous
indeed if we were to allow her alleged inability to understand the provisions of
her written policy to supersede her knowledge that she opted not to pay the
additional premium for sinkhole coverage or to operate as some sort of penalty
on Florida Peninsula for using the incorrect font in a warning that Ms. Cespedes
admittedly never read.
less litigation if they devised an alternative to the current “one form fits
all” approach that requires them to customize each “standard” policy through the
use of endorsements and special provisions. This is particularly true for
“sinkhole” coverage. Prior to 2007, all Florida insurers were required to
include “sinkhole” coverage in all homeowner’s policies. This coverage included
damage, however small, from all sinkhole activity, however small. But as of
January 25, 2007, the legislature required insurers to provide coverage only for
“catastrophic ground cover collapse” — a narrower term intended to limit the
mandatory “sinkhole” coverage to only those situations in which, as the name
implies, the top of the sinkhole has actually collapsed. See Ch. 2007-1,
§ 30, Laws of Fla. As of that date, insurers were no longer required to provide
coverage for damage caused by a sinkhole that did not actually collapse,
although they could continue to provide that broader coverage for an additional
premium. While this change in the extent of coverage was significant, the
ungainly terminology of “catastrophic ground cover collapse” has not caught on,
and most insureds — and indeed probably many insurance agents — fail to
appreciate that the standard homeowner’s insurance policy no longer covers all
types of sinkhole activity that could result in damage to the insured’s home.
Moreover, it appears that the standard homeowner’s policy forms have not been
amended to account for this change either — providing nowhere on the “checklist
of coverage” to indicate that coverage exists for “catastrophic ground cover
collapse” as distinguished from “sinkhole” coverage.
reference coverage terms and conditions that do not actually apply to any given
policy and which fail to reflect statutory coverage changes that have been in
effect for almost eight years, can be addling to even experienced agents,
adjusters, and attorneys. Florida policyholders deserve better. However, an
insured’s befuddlement resulting from these standard forms cannot create
coverage where none otherwise exists. Hence, I agree that we must reverse the
judgment in this case and remand for entry of summary judgment in favor of
reluctantly agree that Maricela Cespedes is not entitled to summary judgment due
to the plain language in the endorsement identified as “FP CGCC (03/08),” which
is quoted in bold type in the court’s opinion, I do not believe that this
endorsement entitles Florida Peninsula to summary judgment at this stage of the
proceedings. The statutory language in this endorsement is intended to be an
obvious warning provided to the insured about the contents of the insurance
contract, not an endorsement buried deep inside the contract. Thus, while I
agree that the policy does contain a legally unambiguous exclusion for sinkhole
damage, in the absence of a warning on the face of the policy, it is not clear
to me that the exclusion is enforceable.
Florida Peninsula’s field agent both thought this policy provided sinkhole
coverage from the point when she first reported her suspicions that her home had
sustained sinkhole damage in June 2009 through the time when the licensed
professional engineer retained by Florida Peninsula confirmed her suspicions in
2010.1 Apparently, it was only when a more
highly trained case manager reviewed the file that the insurance company
realized that the policy contained an exclusion. Thus, the initial inquiry in
this case might be to determine why both Ms. Cespedes and the trained field
adjuster were unable to determine that the policy “unambiguously excluded
sinkhole damage.” Five circumstances appear to explain their confusion.
sections of the insurance policy contains a warning that this exclusion exists.
Section 627.706(4), Florida Statutes (2008), required insurers offering policies
that exclude coverage for sinkhole damage to “inform policyholders in bold type”
of that exclusion. The majority’s opinion quotes the statutory warning and
relies on it as the primary source of the clear and unambiguous exclusion of
coverage. But, as I read the statute in the context of the insurance code, the
warning is not intended to be an endorsement added to the end of the policy. It
is not supposed to be a part of the contract at all; it is supposed to be a bold
front-end warning informing the insured about the exclusion that is somewhere
within the contract.
list is “FP CGCC (03/08).” This is the warning given to the insured. By
contrast, the declarations page has two issues disclosed in bold type. Section
627.7011(4), Florida Statutes (2008), required a policy to “include” a statement
in bold type concerning “law and ordinance coverage.” Florida Peninsula
dutifully placed that warning on the declarations page. Likewise, section
627.701(4)(a), Florida Statutes, required a bold warning on the “face” of the
policy that the policy contained a separate deductible for hurricane losses.
Florida Peninsula placed that warning on page two of the declarations. But
Florida Peninsula did nothing similar for the sinkhole exclusion.
certain what, if any, remedy is available to Ms. Cespedes if Florida Peninsula
failed to comply with section 627.706(4), Florida Statutes. This is the issue I
would leave open for consideration on remand.
company’s field agent, but they are not matters that will entitle her to any
relief on remand. Nevertheless, they warrant comment. The second factor is the
policy’s four-page “Homeowners Declaration.” As explained above, it reveals the
added exclusion only in the cryptic code listed in the “Forms and Endorsements.”
Because sinkhole coverage is already included within the body of the main
policy, which is identified as “HO 00 03 04 91,” this is not an added coverage
option; it is merely an exclusion. Thus, there is no place on the declarations
page to list an amount of coverage or the price charged for “sinkhole coverage.”
Coverages that may be included within a policy usually are stated on the
declarations page with either a statement of the price charged, the premium, or
with the word “included” or “excluded.” Without that option or a statement that
the premium has been reduced in light of an added exclusion, nothing on the
declarations page directly informs the insured of this exclusion.
1970s was a relatively short and readable contract that could be comprehended by
a high school graduate. It has evolved in this case into a seventeen-page form
identified as “HO 00 03 04 91.” Because that form is intended for use in many
states, it does not align with Florida law or the underwriting desires of
Florida insurers. As a result, the seventeen-page form is followed by a
fourteen-page “Special Provisions — Florida” endorsement, identified as “FP 23
04 08,” that adds and deletes contract language from the national form. In my
opinion, while not legally ambiguous, it has become structurally ambiguous and
exceedingly difficult for Florida’s homeowners to read and understand. Except in
the eyes of trained lawyers and insurance agents, there is nothing plain and
unambiguous about the standard homeowner’s insurance policy. But under the
applicable Florida law, the homeowner is not treated differently than a large
corporation with a lawyer in charge of risk management; the fact that the policy
is “complex or requires analysis” does not render the policy ambiguous.
Penzer v. Transp. Ins. Co., 29 So. 3d 1000, 1005 (Fla. 2010) (rule stated
as to commercial coverage); Garcia v. Fed. Ins. Co. 969 So. 2d 288,
290-91 (Fla. 2007) (rule stated as to homeowner’s coverage).
coverage” that was provided with this policy. The checklist was inserted
immediately after the declarations page and before the main sections of the
policy. In the checklist, the box next to “sinkhole” coverage contains a “Y,”
which is the letter for “yes, you have this coverage.” A reasonable person might
think that a mistake or misrepresentation of coverage in such a checklist would
create an ambiguity within the policy. But the legislature does not agree.
average Floridians to understand, the legislature requires insurance companies
to give the homeowner an “outline of coverage” either with the policy or before
it arrives. See § 627.4143, Fla. Stat. (2008). Florida Peninsula’s
“checklist of coverage” is its compliance with this statute. But subsection
627.4143(5) requires the insurer to tell the homeowner that the checklist is for
“informational purposes only.” The checklist cannot change the provisions of the
contract. Id. Subsection 627.4143(6) even attempts to create a rule of
evidence prohibiting the admission of the checklist into evidence in a civil
case. Thus, this serious mistake in the outline of coverage provides no avenue
of redress for Ms. Cespedes.
endorsement contains both a sinkhole exclusion and a “Neutral Evaluation
Program” section. In other words, Florida Peninsula has included the procedures
for addressing a sinkhole claim in its standard form, while also excluding
sinkhole coverage in that form. By including the sinkhole procedures in a
standard form that never covers sinkholes, Florida Peninsula may not have
created an ambiguity for a trained attorney, but I understand why the trial
court concluded that it created an ambiguity for the homeowner. The supreme
court has stated: “However, in construing insurance policies, courts should read
each policy as a whole, endeavoring to give every provision its full meaning and
operative effect.” Auto-Owners Ins. Co. v. Anderson, 756 So. 2d 29, 34
(Fla. 2000) (citing Excelsior Ins. Co. v. Pomona Park Bar & Package
Store, 369 So. 2d 938, 941 (Fla. 1979)). In this instance, the neutral
evaluation portion of the policy cannot be given effect because there are no
covered claims to which it can apply. This useless portion of the policy under
the case law does not seem to create an ambiguity. Thus, I agree with the
majority on this point because the law compels me to do so.
concurrence suggests that no remand is necessary to make factual determinations
in this case because Ms. Cespedes knew her 2009 policy did not include coverage
for sinkhole loss and that she had not elected to pay for that coverage, I
believe he may read too much into the deposition. She testified that she asked
for “anything that covers my house.” The declarations page simply has no
information from which an insured can determine whether a premium has been
charged for this coverage. Ms. Cespedes testified that her agent thought she had
sinkhole coverage when she reported the claim in June 2009. She knew that she
had no coverage in the policy issued after the claim in 2010.
* * *