Like most states, Florida follows the rule that an insurer’s duty to defend is separate from and broader than its duty to indemnify for a potentially covered occurrence. Last week, in South Winds Construction Corp. v. Preferred Contractors Insurance Company Risk Retention Group, LLC, a Florida appellate court addressed the extent of that duty to defend in a construction dispute relating to damage to a condominium building. The appellate court upheld the trial court’s summary judgment order in favor of the insurer that it had no duty to defend South Wind, the contractor accused of damaging the condominium building.

The court found that the claim at issue fell “squarely and unambiguously” within an exclusion in the insurance policy, and the insurer had no duty to defend where it demonstrated that the claim was entirely outside the coverage provisions of the policy. In particular, the complaint against South Wind alleged water damage occurred between the sixth and eleventh floors, and the insurance policy expressly excluded coverage for construction projects of more than three stories in height.

Other contractors should take note of this decision and review their insurance and risk management practices. Insurance policies can be complicated and often include a number of exclusions, which may create substantial gaps in a contractor’s coverage on different projects. Contractors should review these policies internally or with the help of their broker or an attorney to make sure they have adequate coverage.