The insured is a charitable organization. Times were tough; fundraising was stagnant. The insured was looking to save money, so they asked if they could lower their premiums by canceling their hurricane coverage. The underwriters agreed, and drafted a 1-page endorsement with an exclusion for named storms. Sure enough, the insured got hit with a hurricane the very next month. They submitted a claim anyways, now stating they don't see any named storm exclusion in the policy. The adjuster looks but can't find it either.
Notable Timestamps
[ 00:15 ] - It turns out the insurer forgot to include the endorsement in the policy bundle. But still, there are documented conversations that the insured wanted to cancel their hurricane coverage, and they got lower premiums, and the insured doesn't even deny that. Who wins?
[ 01:56 ] - Ambiguities are construed against the insurer, because they drafted the policy. But in this case, there's no ambiguities within the four corners of the policy.
[ 03:30 ] - The contract says what the contract says, period. The Parole Evidence rule says evidence can't be presented that something else was meant to be different compared to what was in the written contract.
[ 06:08 ] - ...But this situation is so unfair! Courts "sit in both law and equity", meaning that if there was a mutual mistake, many courts will reform the contract.
[ 07:46 ] - See Shiloh Christian v. Aspen, a Florida case with similar facts which held in favor of the insured.
[ 11:30 ] - The adjuster's mistake can't create coverage, but if the insured relied on the insurer's mistake, the doctrine of detrimental reliance would protect the insured.
[ 13:55 ] - When does a hurricane get its name? What happens when your name gets co-opted as the name of a bad hurricane?
[ 15:33 ] - Tim provides a recap of the scenario and the points above.
Your PLRB Resources
Shiloh Christian Ctr. v. Aspen Specialty Ins. Co. (2023), No. 22-11776, 2023 WL 2920573, — F4th — (11th Cir. (Fla.) 4/13/2023) - https://www.plrb.org/documents/shiloh-christian-ctr-v-aspen-specialty-ins-co-2023/
Estoppel: Detrimental Reliance By Insured – PCQ.1993.04.16b - https://www.plrb.org/documents/estoppel-detrimental-reliance-by-insured-pcq-1993-04-16b/
Employees of member companies also have access to a searchable legal database, hundreds of hours of video trainings, building code materials, weather data, and even the ability to have your coverage questions answered by our team of attorneys (https://www.plrb.org/container.cfm?conlink=sec/cq/default.cfm) at no additional charge to you or your company.
Subscribe to this Podcast
Your Podcast App - Please subscribe and rate us on your favorite podcast app
YouTube - Please like and subscribe at @plrb
LinkedIN - Please follow at "Property and Liability Resource Bureau"
Send us your Scenario!
Please reach out to us with your scenario! This could be your "adjuster story" sharing a situation from your claims experience, or a burning question you would like the team to answer. In any case, please omit any personal information as we will anonymize your story before we share. Just reach out to scenario@plrb.org.
Legal Information
The views and opinions expressed in this resource are those of the individual speaker and not necessarily those of the Property & Liability Resource Bureau (PLRB), its membership, or any organization with which the presenter is employed or affiliated. The information, ideas, and opinions are presented as information only and not as legal advice or offers of representation. Individual policy language and state laws vary, and listeners should rely on guidance from their companies and counsel as appropriate.
Music: "Piece of Future" by Keyframe_Audio. Pixabay. Pixabay License.
Font: Metropolis by Chris Simpson. SIL OFL 1.1.
Icons: FontAwesome (SIL OFL 1.1) and Noun Project (royalty-free licenses purchased via subscription).
Sound Effects: Pixabay (Pixabay License) and Freesound.org (CC0).
Ink Bleed 4: https://vfx.productioncrate.com/video-effects/footagecrate-inkbleed-4
