40
Fla. L. Weekly D14b
Fla. L. Weekly D14b
Insurance
— Homeowners — Sinkhole claims — Policy at issue clearly and 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 unambiguously
excluded
— Homeowners — Sinkhole claims — Policy at issue clearly and 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 unambiguously
excluded
FLORIDA PENINSULA INSURANCE COMPANY, Appellant, v. MARICELA
CESPEDES, 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, for Appellee.
CESPEDES, 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, for Appellee.
(KELLY, Judge.) Maricela Cespedes brought an action against
her property 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.
her property 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.
The policy Florida Peninsula issued to Ms. Cespedes
contained an endorsement stating:
contained an endorsement stating:
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 PREMIUM.
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 PREMIUM.
This endorsement was also contained in the Homeowners
Declaration. In addition, the Special Provisions Endorsement states:
Declaration. In addition, the Special Provisions Endorsement states:
The
following Exclusion 1.i. is added to Section I — Exclusions:
following Exclusion 1.i. is added to Section I — Exclusions:
i. Loss
caused by “sinkhole”
caused by “sinkhole”
(1)
“Sinkhole” means:
“Sinkhole” means:
(a)
A landform created by subsidence of soils, sediment, or rock as underlying strata
are dissolved by ground water.
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.
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.”
This exclusion does not apply to the peril of “Catastrophic Ground Cover
Collapse.”
The Special Provisions Endorsement also defines
“catastrophic ground cover collapse” as follows:
“catastrophic ground cover collapse” as follows:
“Catastrophic
ground cover collapse” means geological activity that results in all of the
following:
ground cover collapse” means geological activity that results in all of the
following:
(1)
The abrupt collapse of ground cover;
The abrupt collapse of ground cover;
(2)
A depression in the ground cover clearly visible to the naked eye;
A depression in the ground cover clearly visible to the naked eye;
(3)
Structural damage to the building, including the foundation; and
Structural damage to the building, including the foundation; and
(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
structure.
The insured structure being condemned and ordered to be vacated by the
governmental agency authorized by law to issue such an order for that
structure.
The only other provision in the policy that references
sinkholes is also contained in the Special Provisions Endorsement and states:
sinkholes is also contained in the Special Provisions Endorsement and states:
The following are additional
conditions to Section I — CONDITIONS of your policy:
conditions to Section I — CONDITIONS of your policy:
17.
Neutral Evaluation Program
Neutral Evaluation Program
With
respect to a claim for alleged “Sinkhole loss”, a neutral evaluation program is
available as follows:
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 department).
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 department).
b.
For alleged “Sinkhole loss” to property, this program applies instead of the
Mediation and Appraisal condition set forth elsewhere in this policy.
For alleged “Sinkhole loss” to property, this program applies instead of the
Mediation and Appraisal condition set forth elsewhere in this policy.
c.
You or we may file a request with the Department for neutral evaluation; the
other party must comply with such request.
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.
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
Department.
The neutral evaluator will be selected from a list maintained by the
Department.
The
recommendation of the neutral evaluator will not be binding on you or us.
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.
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.
In granting Ms. Cespedes’ motion for partial summary
judgment and denying 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 sinkhole claim.
judgment and denying 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 sinkhole claim.
“The standard of review governing a trial court’s ruling on
a motion for 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 sinkhole damages.
a motion for 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 sinkhole damages.
If the language in an insurance policy is plain and
unambiguous, a court must 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 Peninsula.
unambiguous, a court must 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 Peninsula.
Reversed and remanded with instructions. (VILLANTI, J.,
Concurs with opinion. ALTENBERND, J., Concurs and dissents with opinion.)
Concurs with opinion. ALTENBERND, J., Concurs and dissents with opinion.)
__________________
(VILLANTI, Judge, Concurring.) I fully concur in Judge
Kelly’s opinion and 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.
Kelly’s opinion and 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.
I also write to point out that insurance companies would be
involved in much 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.
involved in much 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.
These standard homeowner’s insurance policy forms, which
consistently 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 Florida Peninsula.
consistently 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 Florida Peninsula.
__________________
(ALTENBERND, Judge, Concurring in part and dissenting in
part.) Although I 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.
part.) Although I 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.
Without stating the facts in detail, it is fair to say that
Ms. Cespedes and 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.
Ms. Cespedes and 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.
First, neither the transmittal letter with the policy nor
the beginning 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.
the beginning 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.
In this case, the declarations page lists “Forms and
Endorsements.” In that 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.
Endorsements.” In that 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.
These circumstances do not make the policy legally
ambiguous. I am not 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.
ambiguous. I am not 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.
The remaining four factors probably confused Ms. Cespedes
and the insurance 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.
and the insurance 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.
Third, the original HO-3 insurance policy that was commonly
issued in the 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).
issued in the 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).
Fourth, and perhaps most telling, there is a mistake in the
“checklist of 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.
“checklist of 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.
To address the problem of modern insurance policies that are
too complex for 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.
too complex for 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.
Fifth, as the court’s opinion explains, the “Special
Provisions — Florida” 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.
Provisions — Florida” 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.
__________________
1To the extent that Judge Villanti’s
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.
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.
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