After a July 3, 2013 Florida Supreme Court decision, it is crystal clear that ambiguous terms in an insurance policy must be construed in favor of coverage and of the insured without first resorting to extrinsic evidence to attempt to resolve the ambiguity.
In Washington National Insurance Corp. v. Sydelle Ruderman et al., Case No. SC12-323, the Florida Supreme Court clarified an apparent conflict among previous decisions that had created confusion for the Eleventh Circuit. The key case creating the confusion was Excelsior Insurance Co. v. Pomona Park Bar & Package Store, which states that policy provisions may be construed against an insurer only "[w]hen a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction." Excelsior, 369 So. 2d 938, 942 (Fla. 1979). The Florida Supreme Court explained that nothing in Excelsior requires consideration of evidence beyond the four corners of the policy: when the relevant policy language is susceptible to more than one reasonable interpretation—one providing coverage and another limiting coverage—the ambiguity is resolved for the insured without any additional inquiry.
This decision is expected to curtail discovery-intensive secondary arguments by insurers that, even if the policy is ambiguous, it still should be read in their favor given alleged facts outside the policy, such as underwriting negotiations and marketing materials. Such arguments often have generated considerable expert and litigation expense for insureds.
Article by Stephanie Biddle and Rob Stonebraker. For more information about the Insurance Coverage and Recovery Group, please visit our website at kslaw.com.
Stephanie Biddle, firstname.lastname@example.org; Rob Stonebraker, email@example.com