INSURANCE POLICY MEANS WHAT IT SAYS
The Eleventh Circuit Court of Appeal was asked to resolve what a court
is to do when all the surest proof of contracting parties' subjective
intentions and expectations flatly contradict the clear words of the
issued policies of insurance. In Shiloh Christian Center v. Aspen
Specialty Insurance Company, No. 22-11776, United States Court of
Appeals, Eleventh Circuit (April 13, 2023) the Eleventh Circuit followed
the generally accepted rules of insurance contract interpretation.
SUBJECTIVE INTENT v. POLICY WORDING
Aspen Specialty Insurance Company, a billion-dollar insurance
conglomerate, had essentially all of the subjective-intent evidence on
its side. The policyholder-Shiloh Christian Center, a small Florida
church-had the policy text.
The district court found the evidence of the parties' subjective intent
overwhelming and granted summary judgment to Aspen.
FACTS
In 2016 and 2017, respectively, Hurricanes Matthew and Irma tore through
Melbourne, Florida, pummeling Shiloh Christian Center. On both
occasions, the storms peeled back the church's roof, allowing rain to
soak the exposed structure.
In 2015, the year before Matthew hit, Shiloh's property-insurance policy
with Aspen Specialty Insurance Company covered losses resulting from
hurricanes. In the middle of that year, though, Shiloh specifically
asked Aspen to stop covering named-windstorm-related losses. Aspen
agreed and issued an endorsement implementing the requested change:
"THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.... It is
understood and agreed effective 7/16/2015, the following change is made
to this policy: Named Windstorm coverage is removed from this policy."
Reflecting the amendment, Aspen reduced Shiloh's premium and even
refunded its past payments for named-windstorm coverage.
Aspen then issued the 2016 policy. The cover page described the 2016
policy as a "renewal of" its 2015 predecessor. But the two policies'
terms differed in material respects. For one thing, the 2016 policy was
about $10,000 cheaper per year than the amended 2015 policy. Far more
significantly the 2016 policy contained no exclusion for losses caused
by named windstorms. A "Named Windstorms" exclusion was conspicuously
absent from the policy as issued.
In October 2016, a named windstorm-Hurricane Matthew-blew through
Melbourne, ripping the roof off Shiloh's building. Aspen denied the
claim because Shiloh's policy excluded coverage for losses caused by
named windstorms.
The district court granted summary judgment to Aspen.
ANALYSIS
The general rules governing the interpretation of insurance policies
under Florida law are clear that the cardinal principle is that a
policy's text is paramount.
INTERPRETATION OF THE POLICIES
First, the Irma Policy unambiguously covers named windstorms. The
expressio unius canon applies with particular force because the Irma
Policy's catalogue of exclusions is so detailed. On its face the Irma
Policy clearly doesn't exclude- and thus covers-losses resulting from
named windstorms.
The court concluded: "Whatever the evidence of the contracting parties'
subjective intentions and expectations, the Irma Policy's plain language
unambiguously covers losses caused by named windstorms."
ZALMA OPINION
Aspen failed to properly underwrite and issue the two relevant policies
to Shiloh by not incorporating the named windstorm exclusion it had
originally. There was no question that the parties intended to exclude
windstorms, the premium was reduced as a result of the intent, but Aspen
left the exclusion out of the two policies in effect at the time of the
two hurricanes. For reasons not described in the opinion Aspen failed
to move to reform the two policies to provide the coverages the parties
agreed to issue and was compelled to pay the claims neither party
expected to cover Shiloh's property.
(c) 2023 Barry Zalma & ClaimSchool, Inc.