Florida Insurer Waives Two-Year Requirement by Waiting That Long to First Raise It

by Cozen O'Connor

In Axis Surplus Ins. Co. v. Caribbean Beach Club Assn., 2014 WL 2900930 (Fla.Dist.Ct.App., June 27, 2014), a Florida court recently held that the insurer could not rely on a policy requirement that conditioned recovery of the cost of complying with current building codes during reconstruction on having completed the work within two years of the loss.  The insurer waived the two-year requirement by failing to raise it until the entire two years had elapsed and choosing to spend that time cooperating with the policyholder’s efforts to determine the necessary scope of repair instead.

shutterstock_44054The insured, Caribbean Beach Club Association, owned a time-share condominium building in Fort Myers that was heavily damaged by fire in April 2003.  It had property insurance coverage with Axis Surplus Insurance Company, and it had paid an additional premium for an Ordinance or Law Coverage Endorsement that provided up to $2.5 million for any increased cost of reconstruction incurred as a result of the enforcement of local ordinances or laws.  The endorsement recited that the insured could not recover, however, until after the property was actually repaired or replaced and that reconstruction had to take place within two years’ time.

The county building authorities had a “50% rule” mandating that if a building was more than 50% damaged, any reconstruction or repair had to comply with all current building codes.  In this case, the parties stipulated that that would add $1.8 million to the repair bill because it would require that the entire building be demolished and rebuilt at a higher elevation from the ground.

As a result, Caribbean and Axis cooperated with the common goal of convincing the county authorities not to enforce the 50% rule.  In November of 2004, however, some 19 months after the blaze, the county informed the policyholder that demolition would indeed be required.  As of that point in time, Axis estimated that the replacement would take until the end of 2005, but it continued to cooperate with Caribbean, hiring a contractor who estimated the full replacement cost to be $2.8 million.  According to the court, “[a]s late as early June 2005, Axis remained prepared to pay the full replacement cost and continued to adjust the claim.”

Then, for some reason, the insurer did an about face; it tendered the actual cash value to Caribbean but announced that it had decided to deny the increased cost of reconstruction claim because more than two years had elapsed.  The policyholder sued, and the Circuit Court awarded it summary judgment.  On appeal, a unanimous panel of the state’s intermediate level appellate court affirmed.  Judge Edward C. LaRose’s opinion noted:

  • that Axis waited over two years to raise the two-year requirement, save in “a general, non-specific, reservation of rights letter;” and
  • that the delay in rebuilding was occasioned by a one-and-one-half year effort by both the policyholder and the carrier to convince the authorities to allow an “as was” reconstruction.

The court then held that the endorsement’s two-year provision was a forfeiture clause that could be waived and that Axis had done just that.

Axis’s failure to bring the provision to Caribbean’s attention despite knowing that Caribbean expected the entire claim to be paid and Axis’s continued adjustment of the entire claim after the two-year period expired were unequivocal acts wholly inconsistent with invoking the forfeiture.  Axis waived the two-year limitation.

*    *    *

When an insurer acquiesces to an insured’s failure to strictly adhere to a timetable of payment or performance, the courts are inhospitable to the insurer’s sudden invocation of strict enforcement of forfeiture provisions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cozen O'Connor | Attorney Advertising

Written by:

Cozen O'Connor

Cozen O'Connor on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.