INSURANCE BROKER CAN BE LIABLE FOR OMISSION OF COVERAGE

Posted on August 2, 2025August 2, 2025 by David Adelstein

Claims against an insurance agent / broker can be actionable in negligence. Such a claim can arise with omitted insurance. “The party seeking to establish that improperly omitted insurance coverage was available must only show that ‘the requested coverage was generally available in the insurance industry when appellee obtained coverage for appellant.’” Leavitt Recreation & Hospitality Ins., Inc. v. Florida Caverns R.V. Resort, LLC, 50 Fla. L. Weekly D1641a (Fla. 1^st DCA 2025) (citation omitted).

In a recent case, a company purchased an RV park. The company contacted an insurance brokerage firm to secure commercial property insurance. The company utilized the brokerage firm for another RV park and obtained a policy that covered power stations (or hook-up towers which are important to the operation of RV parks). The company provided information to the agent with a site map that included the hook-ups. The commercial insurance policy procured by the broker did NOT cover power stations. Thus, when a hurricane hit, significant damage was not covered to the power stations, and the insurer denied coverage. The cost to replace or fix power stations was over $1 Million.

The company sued the insurance broker for the damages sustained to the power stations. The company “alleged it had requested comprehensive coverage that would have encompassed the power stations, and that it was customary in the industry to include such coverage because of the inherent necessity of the power stations to operating an RV park. The complaint further alleged that, if the policy excluded power-station coverage, [the insurance brokerage firm], as broker had negligently failed to include that coverage, and that [the company] would have received insurance proceed covering the damage to the power stations but for [the broker’s] failures.” Leavitt Recreation & Hospitality Ins., Inc., supra.

The company’s owner testified in deposition that “he requested whatever insurance coverage would be adequate to protect against damage and loss to the business premises” and denied he would have rejected additional coverage simply due to a higher premium. The owner testified that he was not told coverage for the power stations was excluded. Leavitt Recreation & Hospitality Ins., Inc., supra

The insurance agent testified in deposition that the brokerage firm specializes in RV parks and could and did offer coverage for power stations. He testified the company elected not to obtain the coverage with power stations, although the company’s owner disagreed with this. A disputed fact.

The brokerage firm moved for summary judgment arguing that the company was required prior to trial to produce an actual insurance policy issued before the hurricane hit that covered the power station damage to prove such coverage was even available. While the trial court agreed, the appellate court vehemently disagreed. The appellate court noted the broker’s agent testified the disputed coverage was available at the time, thus, the brokerage firm would be hard-pressed to argue such coverage was not available.

We find no authority that would have required [the company] to produce, at the summary judgment stage, an executed, pre-[hurricane] policy providing power-station coverage and establishing a base for calculation of damages. The deposition testimony before the court established that the coverage was available, that both [the company’s owner and the broker’s] agent knew it was available, that [the owner] claimed he wanted it, and that the agent claimed [the owner] said he did not want it. The parties’ contract — the policy — does not on its face include the coverage. Producing an actual policy covering power stations was unnecessary. Further, even an agent’s failure to tell [the owner] the coverage was missing is actionable, and no policy could be required to prove that negative.

Leavitt Recreation & Hospitality Ins., Inc., supra.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: LIABILITY INSURER’S DUTY TO DEFEND AND DUTY TO INDEMNIFY

Posted on July 14, 2025July 14, 2025 by David Adelstein

A liability insurer has two duties: a duty to defend and a duty to indemnify. A recent insurance coverage dispute summarizes these two duties, which are critical for parties to understand and appreciate in the context of insurance coverage claims:

An insurance company’s duty to defend is distinct from and broader than its duty to indemnify. “The allegations of the complaint govern the duty of the insurer to defend.” “The question of duty to defend is answered based upon a review of the underlying pleadings filed against the insured as well as the insurance policy itself.” If the allegations fairly bring the case within the terms of the policy, the duty to defend the underlying lawsuit arises. However, if the allegations do not fall within the insuring agreement or fall within an exclusion, the duty to defend never arises.

The duty to indemnify is determined by looking beyond the underlying complaint. It is governed by the facts of the case. Courts analyze the terms of the policy in light of those facts.

If the duty to defend does not exist, then the duty to indemnify likewise does not exist.

Catalina West Homeowners Association, Inc. v. First Community Ins. Co., 50 Fla.L.Weekly D1318a (Fla. 3d DCA 2025) (internal citations omitted).

RIGHTFULLY RECOVERING UNDER A COBLENTZ AGREEMENT

Posted on June 14, 2025June 14, 2025 by David Adelstein

A recent case out of the Middle District of Florida, The Peninsula at St. John’s Center Condominium Association, Inc. v. Amerisure Ins. Co., 2025 WL 1547631 (M.D.Fla. 2025) discusses what a party must do to RIGHTFULLY recover under a Coblentz agreement under Florida law:

“In Florida, a party seeking to recover under a Coblentz agreement must prove: (1) coverage; (2) a wrongful refusal to defend; and (3) that the settlement was objectively reasonable and made in good faith. “Florida law clearly states that liability of an insurer depends upon whether the insured’s claim is within the coverage of the policy. This remains true even when the insurer has unjustifiably failed to defend its insured in the underlying action.” “A determination of coverage, therefore, is a condition precedent to any recovery against an insurer.”

The party seeking recovery has the burden “to allocate the settlement amount between covered and uncovered claims.” “[A]n insurer faced with a Coblentz action has the right to litigate its contractual duty to indemnify on the actual facts of the underlying litigation just as it would in an action against its insured.” Once the party seeking to recover under a Coblentz agreement has established coverage and allocated damages amounts between covered and uncovered claims, the burden shifts to the defendant who must then prove that either the Coblentz agreement was unreasonable or was negotiated in bad faith.

Id. At *5 (internal citations omitted).

In this case, an insurer for a contractor denied coverage, and thus, the duty to defend, in a large, complex construction defect coverage lawsuit with multiple parties. The association-claimant entered into a Coblentz agreement with the contractor and then the association, through an assignment of the general contractor’s rights under the contractor’s commercial general liability policy, sued the contractor’s insurer. The Middle District held that the insurer was not liable to the association under the Coblentz framework. This means the association was collecting nothing from the contractor’s insurer.

First, it was undisputed that the operative complaint in the construction defect lawsuit was a third amendment complaint. Yet, this amended complaint was never presented to the insurer for a coverage position. It should have, regardless of whether the insurer denied its obligations under a previous version of the complaint. Thus, there was never a wrongful denial to defend to trigger the Coblentz framework because the insurer was not given the operative complaint to determine whether it had a duty to defend.

Next, the Middle District found that the insurer was not liable under the Coblentz framework (even if the insurer had been given the operative complaint) because the association-claimant “has not satisfied its burden to allocate between covered and uncovered claims.” The Peninsula at St. John’s Condominium Ass’n, supra, at *11. The claimant has the burden to allocate damages between covered and uncovered claims and the inability to allocate would destroy the Coblentz framework. Id. at *9. (“[T]he Coblentz Agreement is unenforceable because it does not properly allocate between covered and uncovered claims.”).

Moreover, as if the other two bases were not enough, the Middle District further maintained the Coblentz Agreement was not reasonable. In other words, it included unreasonable amounts. “What Coblentz does not do is authorize the insured to indiscriminately load the carrier’s wagon with bricks of damage that no reasonable person would expect as consequences of the underlying claim.” The Peninsula at St. John’s Condominium Ass’n, supra, at *11. The Middle District found the damages amount subject to the Coblentz agreement was not reasonable as it loaded up damages and did not account for other party’s liability or amounts in which it settled with other parties.

There are times considering a Coblentz agreement is 100% worth it. If considering a Coblentz agreement, make sure to draft it correctly to maximize the best arguments you can in pursuing coverage. Do it right!

QUICK NOTE: BURDEN OF PROVING AND DEFENDING ALL RISK PROPERTY INSURANCE CLAIMS

Posted on May 12, 2025May 12, 2025 by David Adelstein

If you are pursuing an all-risk first-party property insurance claim on behalf of an insured, or defending such a claim on behalf of an insurer, a recent case includes a short snippet explaining the corresponding burdens of proof:

To make a claim under an all-risk policy, the insured must establish that her home suffered a covered loss while the policy was in effect. Once established, “the burden shifts to the insurer to prove that the cause of the loss was excluded from coverage under the policy’s terms.” And if an insurer relies on an exclusion to deny coverage, the insurer “has the burden of demonstrating that the allegations of the complaint are cast solely and entirely within the policy exclusion and are subject to no other reasonable interpretation.”The burden then shifts once more to the insured to prove an exception to the exclusion contained in the insurance policy.

Spartan Services Corp. v. People’s Trust Ins. Co., 50 Fla.L.Weekly D1038a (Fla. 3d DCA 2025).

Remember, if you are an insured, you need to prove the loss occurred while the policy was in force. This shifts the burden to the insurer to prove the loss was excluded under the policy. Then, the burden shifts back to the insured to prove an exception to the exclusion, or that the exclusion doesn’t apply.

KEEP AN EYE OUT ON WHAT YOUR INSURANCE POLICY AND CONTRACT SAYS

Posted on January 25, 2025January 25, 2025 by David Adelstein

There is a very good reason the contract requires the party providing a service (e.g., subcontractor) to name the paying party (e.g., general contractor) as an additional insured under its liability policies (e.g., CGL policy) on a primary and non-contributory basis.

There is also a very good reason why you, as an insured, should read the contracts you sign with the party providing a service for you.

In other words, keep an eye out on what your insurance policy says and what your contract says! This is an ABSOLUTE!!

If you want to know the good reasons, look no further to the recent case of Colony Insurance Co. v. Titan Restoration Construction, Inc., 2025 WL 45160 (Fla. 4^th DCA 2025). In this case, a general contractor’s CGL policy contained an endorsement that stated there would be no coverage UNLESS the general and subcontractor executed an agreement containing, “A requirement for the [subcontractor] to name the insured [general contractor] as an additional insured under their Commercial General Liability policy on a primary and non-contributory basis in favor of the insured [general contractor].” Colony Insurance, supra. The general contractor hired a roofing subcontractor. There was no requirement for the roofing subcontractor to name the general contractor as an additional insured on a primary and noncontributory basis. Also, the proposal the general contractor signed contained a disclaimer from the roofing subcontractor that the subcontractor “will not be held responsible for water damage to the exterior or the interior of the premises.”

Naturally, the roof installed by the roofing subcontractor leaked causing water damage. The general contractor submitted a claim to its CGL insurer. Its CGL insurer denied coverage because the subcontractor had NOT added the general contractor as an additional insured on a primary and noncontributory basis to its CGL policy. In other words, per the endorsement, there was no coverage because the general contractor did not comply by requiring its subcontractor to name it as an additional insured on a primary and noncontributory basis.

A coverage dispute between the general contractor and its CGL insurer ensued. On appeal, there are key points decided by the appellate court:

If an endorsement is in conflict with the body of an insurance policy, the endorsement will control. Colony Insurance, supra(citation omitted). This is important because the general contractor argued the endorsement conflicted with the body of the policy and, thus, the conflict should be construed against the insurer. However, this was shot down because the endorsement controls.

The general contractor’s CGL policy required the general contractor to have been added as an additional insured under its roofing subcontractor’s policy on a primary and noncontributory basis. The general contractor failed to comply with this endorsement and, thus, there was no coverage.

Separately, the proposal which was part of the contract between the general contractor and roofing subcontractor included a disclaimer such that the roofing subcontractor was disclaimed from liability for water damage. Regardless, the general contractor contractually agreed that the subcontractor was not responsible for water damage. Ouch!

KNOW YOUR BURDEN OF PROOF IN AN INSURANCE COVERAGE DISPUTE DEALING WITH AN ALL RISK POLICY

Posted on January 12, 2025January 12, 2025 by David Adelstein

Understanding your burden of proof is vital. The burden of proof goes to what a party NEEDS to prove to satisfy or prove the claims or defenses asserted. It’s need-to-know when litigating and trying a case (whether in court or arbitration).

The insurance coverage dispute of Valer v. Citizens Property Insurance Corp., 50 Fla.L.Weekly D126a (Fla. 3d DCA 2025), discusses an insured and insurer’s burden of proof in an insurance coverage dispute with an all risk property insurance policy, which is a property insurance policy that covers all losses except those losses that are excluded in the policy.

The insured’s initial burden of proof is to prove that the property suffered a loss while the property insurance policy was in effect. See Valer, supra. Once the insured satisfies this burden, the burden of proof then shifts to the insurer to prove that the claimed loss falls under a policy exclusion in the property insurance policy. Id.

In Valer, the trial court applied the wrong burden of proof incorrectly believing the insured needed to disprove an exclusion. The trial court was wrong. An insured does not have an initial burden of proof to disprove an exclusion. That burden falls on the insurer.

FINGER POINTING BETWEEN LIABILITY INSURERS AND “OTHER INSURANCE” PROVISION

Posted on November 10, 2024November 10, 2024 by David Adelstein

It’s not uncommon when liability insurers point the finger at each other relating to which insurer should be deemed primary, which insurer should be excess, or whether a pro rata contribution between insurers applies. Typically, this needs to be decided by the “other insurance” provision in the insurance policy that deals with overlapping insurance as well as case law in the governing jurisdiction.

This was the case in Gemini Insurance Co. v. Zurich American Insurance Co., 30 Fla. L. Weekly Fed. (11^th Cir. 2024). Both insurers provided liability coverage to a trucking company that got into an accident that resulted in the death of a person. Both carriers–Gemini and Zurich–disputed the amount each carrier owed to a settlement that Gemini funded.

In Florida, “where more than one insurer’s policy provides coverage for a loss,” as the parties agree is the case here, “it is appropriate to review the insurance contracts to see if the documents address the ‘ranking’ or contribution of other insurers.” That sort of “ranking” is usually accomplished through an “other insurance” clause. Florida law recognizes “three principal kinds” of “other insurance” clauses: (1) pro rata; (2) excess; and (3) escape or no liability. A pro rata clause limits an insurance company’s contribution to a proportion of the total loss based on the policy’s limit. An excess clause provides coverage only after other insurance limits are exhausted. And an escape or no liability clause provides that there is no coverage if there is another policy that covers.

***

“In Florida, where two insurance policies contain excess insurance clauses the clauses are deemed mutually repugnant and both insurers become primary and share the loss on a pro rata basis in accordance with their policy limits.”

Gemini Ins. Co., supra (internal citations omitted).

However, whether two policies are purely “excess” policies is not clear cut.

Zurich argued that the policies should contribute pro rata because its policy and the Gemini policy were both excess and, thus, deemed repugnant. However, the 11^th Circuit found this unconvincing based on language in Zurich’s “other insurance” provision because the Gemini policy’s “other insurance” provision provided it was a “pure excess” policy and Zurich’s “other insurance” provision contained pro rata language:

And in such a scenario, “courts give effect to the pure excess provision.” Id. (emphasis added). Helpfully for our purposes, State Farm’s “other insurance” clause in Ferris described itself — much like Zurich’s here — as applying “excess coverage.” Notwithstanding the label, Ferris deemed it a pro rata clause because of its “we will pay the proportion” language. That is language that Zurich’s policy also contains.

***

In sum, we have one Florida case, Ferris, that tells us that an “other insurance” clause containing the phrase “we will pay the proportion of damages payable as excess” means that the clause was pro rata, even though it also characterized itself as an excess clause. And we have Beane, which, in comparing two excess “other insurance” clauses, teaches that the phrase “[we] shall not contribute with such other insurance” carries with it special significance.

Turning back to the “other insurance” clauses at issue here, Zurich’s contains the “we will pay the proportion” phrase from Ferris and Gemini’s contains the “we shall not contribute” phrase from Beane. Considered together, we believe that Ferris and Beane counsel that Gemini’s policy is excess to Zurich’s.

Gemini Ins. Co., supra (internal citations omitted).

FLORIDA CLAIMS ADMINISTRATION STATUTE AND DIFFERENCE BETWEEN POLICY DEFENSE AND COVERAGE DEFENSE

Posted on September 1, 2024September 1, 2024 by David Adelstein

A recent insurance coverage dispute involving an automobile liability insurance policy contains a worthy discussion, particularly on the difference between a policy defense and a coverage defense. In this case, the carrier did not provide a defense to the defendant and the plaintiff and defendant entered into a Coblentz agreement. The plaintiff, as assignee of the insured, filed a lawsuit against the automobile liability policy for coverage. Summary judgment was granted in favor of the insurer finding there was no coverage under the terms of the policy. This was affirmed.

1. Scope and Extent of Insurance Coverage

The scope and extent of insurance coverage is determined by the language of the insurance policy. Thus, the policy’s text is paramount and must be the starting point of our analysis. Parrish v. State Farm Florida Ins. Co., 356 So. 3d 771, 774 (Fla. 2023); see also State Farm Mut. Auto. Ins. Co. v. Menendez, 70 So. 3d 566, 569 (Fla. 2011) (“In interpreting an insurance contract, we are bound by the plain meaning of the contract’s text.”); § 627.419(1), Fla. Stat.

***

The policy must be enforced as written. Courts are without power to rewrite insurance contracts or create insurance coverage where none exists. Excelsior Ins. Co. v. Pomona Park Bar & Package Store, 369 So. 2d 938, 942 (Fla. 1979); U.S. Fire Ins. Co. v. Morejon, 338 So. 2d 223, 225 (Fla. 3d DCA 1976) (“Florida courts adhere to the principle that a court should not rewrite a contract of insurance extending the coverage afforded beyond that plainly set forth in the insurance contract.”).

Fojon v. Ascendant Commercial Ins. Co., 49 Fla.L.Weekly D1799b (Fla. 3d DCA 2024)

2. Florida’s Claims Administration Statute and Difference between Coverage Defenses and Policy Defenses

An argument that was raised by the plaintiff (as assignee of the insured) was that the liability insurer waived its right to deny coverage because the insurer failed to comply with Florida’s Claims Administration Statute.

Florida’s Claims Administration Statute is embodied in Florida Statute s. 627.427, which provides in material part in subsection (2):

(2) A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:

(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery; and

(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before trial, the insurer:

1. 1. 1. Gives written notice to the named insured by registered or certified mail of its refusal to defend the insured;
    2. Obtains from the insured a nonwaiver agreement following full disclosure of the specific facts and policy provisions upon which thecoverage defenseis asserted and the duties, obligations, and liabilities of the insurer during and following the pendency of the subject litigation; or
    3. Retains independent counsel which is mutually agreeable to the parties. Reasonable fees for the counsel may be agreed upon between the parties or, if no agreement is reached, shall be set by the court.

Importantly, as reflected in the statute, it pertains to coverage defenses. Not policy defenses.

A policy defense is an assertion that the terms of the insurance contract do not provide for coverage. AIU Ins. Co. v. Block Marina Inv., Inc., 544 So. 2d 998, 1000 (Fla. 1989). For example, a policy defense exists where the insuring agreement is not triggered, such as when a person does not qualify as an insured or when a vehicle does not qualify as a covered auto. Other examples include where an exclusion applies, or when a loss occurs outside of the policy period.

On the other hand, a coverage defense involves forfeiture of insurance coverage that otherwise exists. Coverage defenses arise where the insured fails to comply with a condition or duty required by the policy, such as failing to cooperate, committing fraud, or failing to provide prompt notice. It is based on some action or inaction of the insured after the loss. Grigsby, supra, at 8 (“It focuses on the insured’s behavior, post-loss in particular.”).

Fojon, supra.

When it comes to a coverage defense, an insurer must comply with Florida’s Claims Administration Statute. “If it does not, it is estopped from asserting the coverage defense – a breach of a policy condition that would forfeiture coverage. It can still, however, assert a policy defense – a defense of no coverage.” Fojon, supra (internal citation omitted).

However, in this coverage dispute, the insurer relied on a policy defense in denying coverage and its defense of the insured, not a coverage defense . “Therefore, the Claims Administration Statute does not apply, and it does not bar [insurer] from denying coverage.” Fojon, supra.

BENEFIT OF THE COBLENTZ AGREEMENT AND CONSENT JUDGMENT

Posted on August 24, 2024August 24, 2024 by David Adelstein

If you are not familiar with the concept of what is commonly known as a Coblentz agreement relative to an insurance coverage dispute, review these prior postings (here and here and here). This is a good-to-know agreement if you are a claimant and need to consider an avenue of collection if the insured’s carrier denies coverage out of the gate (meaning the carrier has denied both the duty to defend and the duty to indemnify).

A recent Eleventh Circuit Court of Appeals opinion demonstrates the Coblentz agreement concept. In Barrs v. Auto-Owners Ins. Co., 2024 WL 3673089 (11^th Cir. 2024), an owner asserted a construction defect claim against its contractor. The owner hired the contractor to deconstruct a building and the contractor hired a demolition subcontractor. The owner noticed work was not being performed and materials (e.g., lumber) were missing; the demolition subcontractor had stolen materials. The subcontractor was terminated, and the owner claimed the contractor’s negligence allowed the theft and delayed his project. The contractor’s commercial general liability (CGL) insurer notified the insured-contractor that coverage did not exist and refused to defend the contractor. The owner sued the contractor under various theories of liability. The owner and contractor entered into a settlement agreement (i.e., the Coblentz agreement) where the contractor “admitted liability in the amount of $557,500.00….A consent judgment was entered against [the contractor] that closely tracked the settlement agreement but did not indicate which portion of the damages award was attributed to which claims. The agreement also assigned [owner] and all of [the contractor’s] rights to claim coverage and to recover available funds under [the contractor’s CGL policy].”

The owner then sued the contractor’s insurer under the CGL policy based on the owner being assigned contractor’s rights under the policy. While the federal district court found Georgia law applied, it further found that the contractor’s CGL policy provided coverage for some of owner’s claims against contractor – it provided coverage for owner’s “claims of negligent hiring, retention, and supervision to the extent that he sought damages for stolen lumber and materials.” Barrs, supra, at *2. The CGL policy did not cover any faulty workmanship or improper deconstruction. The district court subsequently entered judgment in favor of the owner against the insurer for $557,500. The CGL insurer appealed arguing, mainly: (1) the damages are not covered by its policy, and (2) it had no duty to indemnify the owner because the consent judgment did not allocate between covered and uncovered claims.

As for the CGL insurer’s first point of contention (damages are not covered), he Eleventh Circuit held no exclusion barred coverage for the negligent hiring, retention, and supervision claims for damages associated with stolen lumber and materials.

As for the CGL insurer’s second point of contention (no duty to indemnity because of lack of allocation in consent judgment), the Eleventh Circuit held that nothing under Georgia law precludes enforcement of an unallocated consent judgment:

“The district court held that “[w]hen an insurance company refuses to defend its insured, without any reservation of rights, and its insured secures ajudgment (without fraud or collusion), an insurance company must pay the entire judgment.” It determined that the consent judgment here wasenforceable because (1) it complied with the procedures established in Coblentz v. American Surety Company of New York, 416 F.2d 1059 (5th Cir.1969); (2) Georgia common law didn’t appear to allow an insurer a second bite at the apple when it chose not to participate in the underlying lawsuit; and (3) [owner’s] declaration attested that the $557,500 settlement was less than the value of the stolen lumber, so even if the consent judgment wasn’t properly allocated, the recovery was reasonable.

We agree that the consent judgment was crafted and executed in compliance with Coblentz. To be sure, although Georgia law estops an insurer from contesting its insured’s liability when it refuses to participate in the underlying lawsuit, it doesn’t necessarily prevent an insurer from later contesting coverage. Even so, we affirm because we’ve been pointed to nothing in Georgia law that clearly prevents the enforcement of unallocated consent judgments. To hold that unallocated consent judgments are unenforceable would be to shift the burden to the insured and would require meddling in Georgia law to a degree that we think would be imprudent.

Barrs, supra at *5 (internal citations omitted).

When dealing with the Coblentz agreement and corresponding consent judgment, it is better practice to allocate damages between covered and uncovered damages. Regardless, this case demonstrates the benefit of a Coblentz agreement when the liability carrier denies coverage out of the gate and the carrier becomes the best avenue of collection.

SPECIFIED OR DESIGNATED OPERATIONS ENDORSEMENT – LIMITATION OF INSURANCE COVERAGE

Posted on June 16, 2024June 16, 2024 by David Adelstein

Your commercial general liability (CGL) policy may contain a specified or designated operations endorsement. This does not operate as an exclusion but as a LIMITATION of coverage. The endorsement may provide that bodily injury or property damage ONLY applies to the operations or business described therein. Similarly, there may be a limitation of coverage for designated classifications or codes which has the same effect—limiting coverage to the classifications/codes listed therein. This is an important consideration, and you need to understand and watch out for such limitations of coverage. (These aren’t the only ones, but it’s important to appreciate that limitations of coverage operate to limit the coverage to which the CGL policy applies.)

The Eleventh Circuit Court of Appeal dealt with this exact issue under Alabama law (although the same analysis would apply in numerous jurisdictions). In this case, a landscaper (the insured) had a CGL policy with a specified operations endorsement that limited coverage to landscaping operations. The landscaper was hired to install an in-ground trampoline in addition to site and landscaping operations at a house. A person got hurt using the trampoline and the landscaper was sued. The CGL insurer denied coverage outright (and, thus, any duty to defend) because the complaint asserted that the injury occurred from the landscaper’s assembly and installation of the trampoline, which was not a landscaping operation. Furthermore, the Eleventh Circuit noted that the landscaper’s insurance application specified that the landscaper did not perform any recreational or playground equipment erection or construction, and the installation and assembly of a trampoline would constitute recreational or playground equipment.

Here’s the Eleventh Circuit’s noteworthy discussion on this limitation of coverage:

While the distinction between limits to coverage and exclusions from coverage may be murky in some cases, the policy here makes clear that the Specified Operations provision is a limit — not an exclusion.

To begin with, the Policy’s “Schedule of Forms and Endorsements” describes 27 different “exclusions” — and “Specified Operations” is not one of them. “Specified Operations” is instead described as a “Limitation of Coverage.”

But we need not rest on the policy’s description of the Specified Operations provision, because the operation of the policy confirms its status. Commercial general liability policies generally “give[ ] coverage through the general coverage provision, and ‘take[ ] away‘ coverage through the various exclusions.” Recall, the general coverage provision provides that

[United] will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. [United] will have the right and duty to defend the insured against any “suit” seeking those damages. However, [United] will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply.

By those terms, the policy sets out an (albeit not-totally-fleshed-out) limit to coverage. However, this initial explanation does not provide the full scope of coverage because it very broadly tells us only that the insurer will pay damages “to which this insurance applies” but not for any suit “to which this insurance does not apply.” From there, the Specified Operations provision fills in the details by adding, to that same section, the following:

1. 1. 1. This insurance applies to “bodily injury” and “property damage” only if:

(4) The “bodily injury” or “property damage” arises from one or more of the operations shown above; and [i]f also scheduled above[.]”

What “operations are shown” and “scheduled above”? The policy states simply that “[the] Insured performs landscaping.” In short, the Specified Operations provision (fitting into the gap left by the general coverage provision) describes the contours or boundaries of coverage — it does not purport to take away coverage already granted.

Thus, the Specified Operations provision is a limitation of coverage — not an exclusion….

***

The parties expend significant energy parsing the words of the policy, including whether the site work necessary to install the trampoline was “landscaping” and whether the trampoline injury “arises from” that work. We conclude we need not resolve those issues here. Even taking the term “landscaping” as ambiguous, construing it in [landscaper’s] favor, and applying Alabama law’s broad understanding of the causal term “arises out of,” Snell’s claim still fails. As the district court explained, under Alabama law, “[e]very insurance contract shall be construed . . . as . . . modified by any . . . application which is a part of the policy.” And the district court’s analysis of [landscaper’s] application under that statute was correct:

[Landscaper] was asked in the application whether his work included “any recreational or playground equipment construction or erection” and Snell answered “No.” It is undisputed that the trampoline is “recreational equipment.” If [landscaper] had answered “Yes” to that question or if he had informed United Specialty at some time later that his operations were going to include structural work for recreational equipment and the installation of recreational equipment, then United Specialty could have added that coverage and made any appropriate adjustments to [landscaper’s] rate.

Accordingly, the information [landscaper] provided in his insurance application conclusively shows he is not entitled to coverage.

***

Taking the application as part of the policy itself, we agree with the district court that [landscaper] expressly disclaimed doing any of the sort of work he did here — including the site work necessary to install the trampoline that he now claims is “landscaping” out of which the underlying injury “arises.”

In sum, the district court correctly held that [landscaper’s] insurance application — which Alabama law requires us to consider part of the policy — expressly disclaims the work he did here. Accordingly, we affirm the grant of summary judgment on [landscaper’s] duty-to-defend claim against United.

Snell v. United Specialty Ins. Co., 30 Fla.L.Weekly C1008a (11^th Cir. 2024) (internal citations omitted).