These days the vast majority of new clients we are meeting with are dealing with a situation I call “no-mans land”. What I mean is they are caught in a situation where they filed a claim after the new law from Senate Bill 408 went into effect but filed the claim before the insurance company has had a chance to include the new law in the policy language. There have been many positive cases previously discussing how insurance companies could not retroactively apply the new claim the existing claims but now we have a case that discusses what happens when the law was in place but the policy did not incorporate it.
The new case discussed is called Shelton v. Liberty Mutual, 2013 WL 1663290 (Fla. M.D. 2013). In Shelton, Liberty Mutual denied coverage after only performing a structural evaluation. The policy did not define structural damage nor did it incorporate any of the new statutory definitions by reference.
Liberty Mutual urged the Court to apply the new statutory scheme from Fl. Stat. 627.706 to the policy. The Court stated the following:
“This request ignores numerous court decisions, including prior decisions of this Court, that hold that the term “structural damage” has a plain meaning of “damage to the structure.” It is important to note that the outcome of this case does not change based on the fact that, unlike the prior cases on this issue, the 2011 amendments were in effect before the inception of the subject policy; this is because it is inappropriate to look to other definitions outside the insurance policy if the Court can apply a plain meaning to the undefined phrase.”
The Court noted that it was not its job to re-write insurance policies or add terms to it. The Court opined that just because a term is not defined does not make it ambiguous and the courts role is to construe the term with a meaning that a person or ordinary intelligence would reasonably give it. In this case that means “damage to the structure”. Finally, the Court noted that Liberty Mutual was ignoring “bedrock Florida insurance law” that an insurer may provide more coverage than what is required by law. Once again, structural damage should be defined as a damage to the structure which places insureds back in a position where they can have sinkhole activity evaluated and coverage provided when they need it.