Third District Reverses Trial Court Ruling That Policy’s Fire Endorsement Incorporated Physical Damage Provision

This suit involved the interpretation of a commercial automobile insurance policy and the interplay between its fire endorsement and physical damage provision. 

The lower court had denied the plaintiff’s cross motion for summary judgment, ruling that the policy’s fire endorsement entitled the defendant to recover $200,000 for damage that occurred to its vehicle during transportation to a dealership. The plaintiff had previously offered $50,000, maintaining this was the maximum coverage for a fire-damaged vehicle under the policy. On cross summary judgments, both parties argued competing interpretations of the subject policy. The lower court granted summary judgment in favor of the defendant, interpreting that the policy provided $200,000 in coverage “whether for a single auto or a single event” and found that the policy was not ambiguous.

On appeal, the Third District construed the policy by giving effect to the policy’s plain language, finding that the last sentence of the fire endorsement expressly adopted the policy’s physical damage coverage provision, which provided that the plaintiff’s liability for physical damage to the vehicle was its actual cash value at the time of loss. However, the policy also contained a separate endorsement which further limited this liability to the vehicle’s actual cash value, up to a limit of $50,000 per “auto” or the amount necessary to repair or replace the property with like kind and quality. 

The Third District’s analysis found that neither of these endorsements were in conflict and did not render the policy ambiguous, noting that, even though the vehicle in question (a McLaren) was valued above $50,000, the plaintiff’s liability was limited to $50,000. 

This case is yet another example of Florida court’s analyzing the plain language of a policy to determine coverage issues. Insurers should take note that, when drafting endorsements to limit liability, they must do so in a way where the intention to limit liability is clear and unambiguous.  

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