Insurance

by Michael J. Gelfand, Esq. / Published February 2015

What happens if someone is attacked on the association’s premises? The victim is likely to bring a claim against the association seeking money for damages sustained. 

Will the association’s insurer defend the association? What about defending an officer, director, or manager? Whether the insurer rises to the occasion depends in large part on what the insurance policy includes and excludes from claims. Frequently ignored, critically important “fine print” must be read to help avoid expensive gaps in insurance coverage. Illustrating the danger of gaps in insurance coverage created by endorsements is a recent Florida appellate court decision in which the court ruled that a liability insurer was not required to defend a claim by a patron who was stabbed on the owner’s property. Wilshire Insurance Co. v. Poinciana Grocer, Inc., 39 Fla. L. Weekly D 2338 (Fla. 5th DCA, November 7, 2014), addressed a situation that started when a patron was stabbed after he left Poinciana Grocer’s convenience store. The patron sued Poinciana Grocer alleging that the store negligently failed to prevent an attack with adequate security or safety. The trial court ruled that Wilshire, Poinciana Grocer’s insurer, had a duty to defend Poinciana Grocer in the negligence action.

The Florida appellate court disagreed and ordered the trial court to enter judgment for insurer Wilshire. The court’s legal analysis began with a quote from Poinciana Grocer’s insurance policy. This first step reminds all of us that the exact wording of an insurance policy is a critical starting point when considering the extent of insurance coverage.

As the court recited, Wilshire’s insurance policy issued to Poinciana Grocer excluded claims arising from an assault and battery. The policy specifically excluded:

• Any claims arising out of assault and/or battery or;
• Any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation or direction of you, your employees or volunteers, patrons or any other persons, or;
• Claims, accusations, or charges of negligent hiring, placement, training, or supervision arising from any of the foregoing are not covered.
• We shall have no obligation to defend you, or any other insured, for any such loss, claim, or suit.

The Florida appellate court noted that insurance contracts are construed in accordance with the plain language of the policy. Thus, if insurer Wilshire can show that an exclusion applies, then the insurer will have no duty to defend the action. Because the insurance policy expressly provided that assault and battery claims are not covered, the court concluded the insurer did not have a duty to defend in this case.

This decision emphasizes the importance of reading your insurance policies, not stopping with the policy’s declaration page or glossing over the fine print, but reading the details, including the endorsements that delete coverage. Readers may recall their surprise exactly a year ago in the December 2013 Memorandum to Clients (January 2014 FLCAJ), when we reported the Alfa Mutual v. Thornton decision addressing an insurance exclusion for claims involving pets and other animals.

Thus, would you be surprised to read that there are many other endorsements limiting coverage? Have you checked to see if coverage has been deleted for incidents within your community, but outside of the association’s office? For athletic and exercise activities, even if you have parks and exercise rooms? For injuries resulting from repair work because you did not have a certificate of insurance from the contractor? There are even more endorsements that may delete claims, which would surprise many associations.

If you have any questions regarding what your insurance policy covers, contact either your insurance broker or your association’s counsel—before a loss occurs.

CONSTRUCTION: EXTENSION AND WAIVER OF PERMITS

Near water? Sensitive lands? It seems that most Florida communities are in the neighborhood of one or the other creating construction permitting issues.

The permitting issues may impact whether you can undertake repairs and other work foregoing the seemingly long and expensive permit processes. Two recent, significant developments impact Florida community associations considering repairs and other work near sensitive or protected areas, one by legislative enactment, and the second by an appellate court decision.

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The first development implements a new law extending many permits issued by the Florida Department of Environmental Protection (DEP), and Florida’s water management districts such as the South Florida Water Management District. Based upon an “economic development” law, Chapter 2014-218, §46, Florida Statutes (2014), building permits issued by the DEP or by a water management district may be extended.

There are qualifications. Permits must be for projects involving management and storage of surface waters under Part IV of Florida Statutes Chapter 373. Permits now scheduled to expire between January 1, 2014 and January 1, 2016, and which otherwise qualify may be extended for two years, in addition to any previous extension, so long as the total extension does not exceed four years.

Last, but not least, those qualified to take advantage of this extension had to notify the authorizing agency by December 31, 2014. Failure to timely provide notice appears fatal to this extension.

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Florida with the second longest state coastline (after Alaska), has hundreds of community associations along the beaches, and each of them seemingly has coastal construction permitting issues, which provides the backdrop for the second permitting threshold, which arose from a neighborhood dispute.

A recent Florida appellate court decision addressed coastal construction, specifically whether Florida’s Department of Environmental Protection may exempt construction projects from legislatively mandated coastal construction permitting. In Pope v. Grace, Fla. L. Weekly D 2327 (Fla. 1st DCA, November 6, 2014), the court outlined a dispute over a beach dune walkover located between two lots within a six-foot easement that allowed property owners in a small neighborhood access to the beach. A road maintenance agreement provided that all ten owners would maintain the walkway.

All of the neighboring owners, except for the two beachfront owners, agreed that the walkway needed to be repaired and applied for a permit. The DEP concluded that a permit was not needed because the repair “activities” did not “cause a measurable interference with the natural functioning of the coastal system.” The repairs involved “sistering” the walkover’s posts, excavating around existing posts, installing new posts, and bolting them together.

Agreeing with the decision of the DEP, the Florida appellate court held that a permit for repairs to the foundation of a dune walkover structure did not require a permit. Referring to §161.053(11)(a) and (b) Fla. Stat., the court found the statute’s two parts allowed for two alternatives to avoid permitting for small work.

So now, before embarking on a construction project involving beachfront property, the first question to answer may be whether a permit is even necessary. Exemptions do exist, depending on what is actually being repaired. As a practical matter, consult with your neighbor before starting the process.