David Thompson, CPCU In today's tough property insurance market it is becoming
more and more common for insurers to send out notices to agents and
policyholders announcing a "policy change" upon renewal. In the past few months FAIA staff has been
advised of situations such as: - The
insurer sends a notice on a commercial package policy advising the
policyholder, "Renewal policy will not include any property coverage."
- The
policyholder receives a notice from the insurer advising, "Please note
attached renewal policy no longer includes coverage for damage caused by
windstorm or hail."
- A memo
from the insurer to the agency states, "The renewal quote does not include
theft coverage."
Are these "notices" or "memos" legal, and do they comply
with the Florida Statutes that deal with cancellation of policies? While each situation is different and no
single answer will be correct for every coverage reduction at renewal, the
short answer is, "The notices and memos don't comply with Florida Statutes." A Florida
court case dealt with this very issue and is shown at the conclusion of this
article. The "short version" of the case
is as follows:The insurer provided a
standard CGL policy for the insured. At
the renewal the insurer removed coverage for personal injury liability. A personal injury claim was later presented
and the insurer denied coverage. The
insured filed suit and the court found in favor of the insured. The court stated that when the policy was
renewed with a "material change in terms and conditions" that
constituted a partial cancellation and the "notice" sent by the insurer did not
meet the cancellation provisions of the Florida Statutes. Both the Florida Department of Financial Services and the
Florida Surplus Lines Service Office have indicated that proper notice, as
outlined in Florida Statutes, is required when a policy is renewed with a
material change in terms or conditions. ----------------------------- 1998 Fla.
App. LEXIS 4223,*;710 So. 2d 130;
23 Fla. L.
Weekly D 996 UNITED STATES FIRE INSURANCE COMPANY, and HARTFORD INSURANCE COMPANY OF THE SOUTHEAST,
Appellants, v. SOUTHERN SECURITY LIFE INSURANCE COMPANY, et al., Appellees. Case Nos. 97-1446 & 97-1485 COURT OF APPEAL OF FLORIDA,
FIFTH DISTRICT 710 So. 2d 130;1998 Fla.
App. LEXIS 4223;23 Fla.
L. Weekly D 996 April 17, 1998, Opinion Filed SUBSEQUENT HISTORY: [*1]
Released for Publication May 6, 1998. PRIOR HISTORY: Appeal from the Circuit
Court for SeminoleCounty, Robert B.
McGregor, Senior Judge. DISPOSITION: AFFIRMED. COUNSEL: Robert E. Bonner of Meier,
Lengauer, Bonner, Muszynski & Doyle, Orlando, for Appellant United States
Fire Insurance Company.
Randall M. Bolinger and Robert J. Egan of Rissman, Weisberg, Barrett, Hurt,
Donahue & McLain, P.A., Orlando, for Appellant Hartford Insurance Company
of the Southeast.
Don B. Long, Jr., of Johnston, Barton, Proctor & Powell, LLP, Birmingham,
Alabama, and W. Scott Gabrielson of Mateer & Harbert, P.A., Orlando, for
Appellees. JUDGES: GOSHORN, J., PETERSON and
THOMPSON, JJ., concur. OPINIONBY: GOSHORN OPINION: GOSHORN, J.
This consolidated appeal requires the interpretation of the terms of several
liability insurance contracts and presents three issues for our review. We find
that only one issue merits discussion and affirm the summary judgments entered
against Hartford Insurance Company of the Southeast and United States Fire
Insurance Company in favor of their insured, Southern Security Life Insurance
Company.
Hartford was
the primary liability insurer for Southern from [*2] August 1, 1982
until August 1, 1991. The policies issued from August 1, 1982 to August 1, 1987
provided personal injury liability coverage to Southern. However, the 1987 and
later policies excluded personal injury coverage by means of an endorsement to
the policy.
Southern was sued by a former employee for libel and slander for statements
made by Southern in 1990 and 1991. It is not disputed that libel and slander
are classified as personal injury under the subject policies. Southern sought
defense of the claims from Hartford, and Hartford declined to
defend based on the 1987 policy change which removed personal injury coverage
from the policy. After settling with its employee, Southern filed suit against
Hartford to recoup its defense costs, alleging that the Hartford policy covered
personal injury in 1990 and 1991 because Hartford had not notified Southern of
the 1987 coverage exclusion as required by sub section 627.4133(1), Florida
Statutes (1997), which provides in part:
(a) An insurer issuing a policy providing coverage for workers' compensation
and employer's liability insurance, property, casualty, except mortgage
guaranty, surety, or marine insurance . . . shall give the [*3]
named insured at least 45 days' advance written notice of nonrenewal or of the
renewal premium. If the policy is not to be renewed, the written notice shall
state the reason or reasons as to why the policy is not to be renewed. . * * *
(b) An insurer issuing a policy providing coverage for property, casualty,
except mortgage guaranty, surety, or marine insurance . . . shall give the
named insured written notice of cancellation or termination other than
nonrenewal at least 45 days prior to the effective date of the cancellation or
termination, including in the written notice the reason or reasons for the
cancellation or termination . . . .
* * *
(c) If an insurer fails to provide the 45-day . . . written notice required
under this section, the coverage provided to the named insured shall remain in
effect until 45 days after the notice is given or until the effective date of
replacement coverage obtained by the named insured, whichever occurs first.
Hartford
contends that section 627.4133 only requires notice to the insured when an
entire policy is not renewed and not where, as here, only a portion of numerous
coverages is deleted. The lower court rejected this argument [*4]
and concluded that because Hartford did not notify Southern of the 1987
deletion of personal injury coverage, the coverage under Hartford's pre-1987
form policy continued until August 1, 1991, when Southern procured primary
liability insurance from a different carrier. Accordingly, the lower court
entered summary judgment against Hartford
on the issue of its duty to defend, noting:
The purpose of the statute's notice requirement is to enable an insured to
obtain coverage elsewhere before the insured is subjected to risk without
protection. The 1987 Hartford policy, which
deleted this coverage, was a non-renewal of the 1986 Hartford policy within the meaning of §
627.4133. Thus Hartford
was required to give Southern Security written notice of non-renewal by the
statute.
In the Court's opinion, notice is required when, as here, coverage such as the
libel and slander coverage provided by the 1986 Hartford Policy is eliminated
by the insurer in the reissued policy.
We agree with the trial court that the 1987 policy was a "nonrenewal"
of the 1986 policy which triggered the notice requirement of section 627.4133.
A "nonrenewal" is a policy with material changes in terms and
conditions [*5] from the prior policy. See Hartford Accident & Indem. Co. v. Sheffield, 375 So. 2d 598 (Fla. 3d DCA 1979) (noting
"the widely accepted definition of a 'renewal' insurance policy as one
which 'is based upon and subject to the same terms and conditions as were
contained in the original policy'") (quoting 13A Appleman, Insurance
Law and Practice § 7648 (1976)); see also Marchesano v. Nationwide Prop.
& Cas. Ins. Co., 506 So. 2d 410, 413 (Fla. 1987) ("upon
each renewal of an insurance policy an entirely new and independent contract of
insurance is created"). Moreover, even though the 1987 and later policies
which Hartford sent to Southern contained an endorsement which excluded
personal injury coverage, this purported "notice" within the policy
itself is insufficient to inform an insured of, as evidenced by this case,
significant policy changes. See Marchesano, 506 So. 2d at 413 ("Absent a
notice to the contrary, the insured is entitled to assume that the terms of the
renewed policy are the same as those of the original contract."). We
reject Hartford's
argument that the legislature intended only to require notice of cancellation
of an entire policy of insurance as [*6] opposed to a change
in coverage. The statute requires notice of nonrenewal, and the 1987 and
later policies were clearly not renewals of the pre-1987 policy form which
included personal injury coverage.
AFFIRMED.
PETERSON and THOMPSON, JJ., concur ----------- Copyright FAIA 6/1/06 David
Thompson
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