Unlike a deductible, a self-insured retention (referred to an “SIR”) is, as the name suggests, a self-insured obligation of the insured before its insurer picks up coverage.  The SIR needs to be exhausted by the insured (as the primary self-insurance component) before the carrier’s excess defense and indemnification obligations kick-in under the terms of the policy.  However, an insured can generally exhaust an SIR by paying legal fees and costs associated with a claim.

Oftentimes, the language in the policy requires the SIR to be paid for by the named insured or an insured under the policy.    This was an issue addressed by the Florida Supreme Court in Intervest Const. of Jax, Inc. v. General Fidelity Ins. Co., 133 So.3d 494 (Fla. 2014).

In this matter, a personal injury claimant asserted a claim against the contractor dealing with a residential home.  The contractor hired a subcontractor to install attic stairs and the subcontract required the contractor to indemnify it.  The owner of the house injured herself on the attic stairs and sued the contractor.  The contractor, in turn, sought indemnification against the subcontractor that installed the attic stairs.

The contractor’s general liability policy had a $1 Million SIR (meaning it was self-insured for the first million that needed to be exhausted before its general liability policy applied).

The matter was mediated and a $1.6 Million settlement was reached.  The subcontractor’s carrier was paying the contractor $1 Million to resolve the indemnification claim.   This left a remaining $600,000 to fund the settlement.  A dispute arose between the contractor and its carrier as to this money because the contractor claimed its SIR was paid for by virtue of the $1M it received through its indemnification action so the $600,000 should come from the carrier.  The insurer claimed it was not as the SIR had to be paid by the insured.  As a result, both the contractor and its insurer each paid $300,000 to settle the personal injury action and reserved rights to seek reimbursement from the other in a separate lawsuit.

In this separate lawsuit, and during the appellate process, the question was posed to Florida’s Supreme Court whether indemnification payments received from the insured can be used to satisfy the contractor’s $1M SIR.  The policy provided that the SIR “will only be reduced by payments made by the insured” and that payment of the SIR “is a condition precedent for our [insurer’s] obligation to pay any sums either in defense or indemnity and shall not pay any such sums until and unless the insured has satisfied” its SIR.

The Florida Supreme Court held that the indemnification payment received by the subcontractor could be used to satisfy the contractor’s $1M SIR.

First, the policy did not contain a provision expressly stating “that regardless of other insurance the insured would continue to be responsible for the full SIR before the limits of the policy applied.Intervest Const. of Jax, 133 So.3d at 502.   Likewise, the policy did not contain a provision  that stated “[p]ayment by others, including but not limited to additional insureds or insurers, do not serve to satisfy the self-insured retention.”  Id.

Second, there was nothing in the policy that required the insured “to pay all amounts within the retained amount [SIR] ‘from its own account.’”  Id.   Other policies have included this language with specific language that states that the SIR “‘is the responsibility of the Insured and is to be paid from the Insured’s own account.’” Id.   Based on this, the Florida Supreme Court found that while the payment must come from the insured, it does not specify where the funds to pay the SIR must originate. Id.

If you are working with a policy with a SIR, it is important to work with counsel to understand your obligations when it comes to a SIR and, importantly, how the SIR operates.

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



In an insurance coverage dispute, it is common for the insured or the insurer to file a lawsuit that includes a claim for declaratory relief — asking the court to render a ruling as to the coverage issue.  This claim is proper if an insurer denied coverage or a part of coverage relating to an exclusion or endorsement in the policy, or even if there is the argument that the loss or occurrence did not take place within the policy period.    An insurer or insured pursuing an action for declaratory relief must allege:

[1] there is a bona fide dispute between the parties, [2] that the moving party has a justiciable question as to the existence or non-existence of some right, status, immunity, power or privilege, or as to some fact upon which the existence of such right, status, immunity, power or privilege does or may de[p]end, [3] that plaintiff is in doubt as to the right, status, immunity, power or privilege, and [4] that there is a bona fide, actual, present need for the declaration.

Security First Ins. Co. v. Phillips, 45 Fla. L. Weekly D1426b (Fla. 5th DCA 2020) (citation omitted).

An action for declaratory relief is appropriate in an insurance coverage dispute even if it requires a determination of certain facts under which the obligations under the insurance policy at-issue depends.   Id.

If you are involved in an insurance coverage dispute with your insurer, consult with counsel.  Please contact me if I can be of assistance.  Do NOT try to navigate these waters by yourself.  There will be complicated factual and legal issues at stake that will be specifically tied to a coverage determination.  You want to make sure the facts are best positioned under the law to maximize an argument for insurance coverage.

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



There are cases where you feel for the plaintiff, but understand why they did not prevail, despite the creative efforts of their counsel.  The case of Robinson v. Liberty Mutual Ins. Co., 958 F.3d 1137 (11th Cir. 2020) is one of these cases.

In Robinson, the plaintiff moved into a home that turned out to be infested with a highly venomous spider.  Efforts to eradicate the spider proved unsuccessful and the spider apparently infested the entire home.  The plaintiff made a claim under their homeowner’s property insurance policy arguing that their home suffered a physical loss caused by the spider infestation as the spider presented an irreparable condition that rendered the home unsafe for occupancy.  (It probably did!). The property insurer denied coverage because the policy had an insurance exclusion for loss caused by birds, vermin, rodents, or insects.

The insurer claimed the spider is an insect or vermin and, therefore, there is no coverage based on the exclusion.  The insured creatively argued that “scientifically speaking” a spider is an arachnid and not an insect.  Neither the trial court nor the Eleventh Circuit found this argument persuasive.

Under the ordinary dictionary meaning of the term “insect,” a spider fits into this meaning any many dictionaries even list a spider as an example of an insect.  Moreover, vermin include “small common harmful or objectionable animals (as lice or fleas) that are difficult to control.”  A highly venomous spider that cannot be eradicated fits within this meaning based on the allegations of the plaintiff’s claims.

Sure, you feel for the homeowner that moved into a home that cannot be occupied based on the infestation of a highly venomous spider.  And the homeowner’s lawyers made a creative argument by stepping away from ordinary uses of terms by focusing on the technical scientific definition of a spider.  But, the ordinary meanings and uses of terms in an insurance policy prevailed. And, they probably should prevail.   This does not mean the creative arguments should not have been pursued.  They probably should have in this scenario where efforts to eradicate the spider were not successful and the home could not be occupied.  However, ordinary dictionary meanings and uses should not be ignored when interpreting a contract, which is what an insurance policy is.

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



Paying the lowest premium for property insurance is oftentimes not a great thing because, as with everything else, “you get what you pay for.”   If you are paying a lower premium, it is for a reason.  You likely have a restrictive policy that excludes more coverage (and, perhaps, all coverage) than you’d actually like in the event your property sustains a loss.   Think about the coverage you are looking for before deciding to get the policy with the lowest premium.

For instance, there are policies with an exclusion that precludes coverage for water penetration “through the roof system or exterior walls or windows.”  Think about this exclusion.  Water penetration will undoubtedly come from one or a combination of these places, meaning this exclusion totally restricts coverage for water intrusion claims.  Moreover, property insurance policies are also including anti-concurrent cause language in the policy, which is language that says, “Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”  “‘An anti-concurrent cause provision is a provision in a first-party insurance policy that provides that when a covered cause and non-covered cause combine to cause a loss, all losses directly and indirectly caused by those events are excluded from coverage.” Security First Ins. Co. v.   Czelusniak, 45 Fla. L. Weekly D1151b, n.1 (Fla. 3d DCA 2020).

In Czelusniak, an insured had an all-risk property insurance policy with this water penetration exclusion and an anti-concurrent cause provision. The insured sustained water penetration through windows, the walls, and doors, resulting in water damage.   The exclusion bars water penetration through windows and walls but mentions nothing about doors.  But, it did not matter because of the anti-concurrent cause provision:

While there is no provision in the policy expressly excluding damage from water penetrating through the doors of the dwelling, the policy expressly excluded damage from water penetrating through the “roof system or exterior walls or windows . . . .” Because evidence of water entering through the exterior walls and windows was undisputed and is expressly excluded by the policy, the entire loss is excluded from coverage due to the anti-concurrent cause provision regardless of any other cause or event contributing concurrently or in any sequence to the loss.


Accordingly, the anti-concurrent cause provision, coupled with the undisputed evidence that the loss was caused by a combination of both excluded and covered perils, foreclosed the analysis of whether the jury could legally or factually separate the damage caused by water coming through the door from water coming through the walls and windows. Therefore, we hold that the trial court erred in directing the verdict in favor of the insured and reverse and remand for the trial court to direct the verdict in favor of Security First.

Czelusniak, supra.

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



If you are involved in construction, insurance is vital.  There are too many risks and you want to make sure you have insurance to cover many of those risks.   Commercial general liability insurance (CGL) is an insurance product most contractors maintain and need to maintain.  However, not all policies are the same by virtue of the endorsements issued with the policies that restrict coverage.   It is important that you know what coverage you have and that you are not working on projects where you have no coverage.  That would be a mistake for both you and the party that hired you.

You may think you have coverage only to find out that you do not, which seems to be the case in South Winds Construction Corp. v., Preferred Contractors Ins. Co. Risk Retention Group, 2020 WL 2463778 (Fla. 3d DCA 2020).  In this case, a contractor was sued for water damage on the 6th through 11th floors caused to a condominium project.  The contractor’s insurer denied coverage and, thus, its duty to defend the insured in the lawsuit, because the policy had an exclusion that precluded coverage for buildings and structures exceeding three stories.  Essentially, this is a type of condominium exclusion where the policy does not apply to high-rise projects.

While an insurer’s duty to defend its insured in an underlying lawsuit is broader than its duty to indemnify its insured, here, the claim fell clearly and squarely within a policy exclusion.  It was an easy coverage denial from the get-go. Southwinds Construction Corp., supra, at *1. (“This placed the claim squarely and unambiguously within the exclusion from coverage applicable to work in buildings above three stories in height.”)

It is possible the contractor was performing and had performed many condominium projects or projects exceeding three stories in height.  All the while the contractor had no coverage as long as it was performing work with a policy that had this exclusion.  Not only does this harm the contractor, but it also harms the owner that was relying on insurance coverage in the event of property damage caused by the contractor.  This does not mean the contractor is not liable.  It just means it has no insurance coverage!


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




Recently, I participated in a webinar involving the horizontal and vertical exhaustion of insurance coverage.  Say what?

This pertains to the PRIORITY of liability insurance coverage and the interface between a general contractor’s (or upstream party’s) primary insurance and the subcontractor’s (or downstream party’s) excess insurance, particularly when the general contractor is required to be indemnified by the subcontractor and named as an additional insured under the subcontractor’s liability policies.

For instance, let’s assume the general contractor has a $2M primary policy and a $5M excess policy.  Its subcontractor has a $1M primary and a $5M excess policy. The general contractor is an additional insured under the subcontractor’s policies and the subcontractor is required to contractually indemnify the general contractor.  An issue occurs caused by the subcontractor’s negligence resulting in a $5M judgment against the general contractor and the subcontractor.

A. Horizontal Exhaustion

Under the horizontal exhaustion approach, the court will look primarily to the “other insurance” provision in the policies–specifically, the subcontractor’s excess policy–which will take precedence over the contractual indemnification language. Since the “other insurance” provision in excess policies typically state it is excess over the exhaustion of primary policies, under the horizontal exhaustion approach, the policies would be exhausted as follows relative to the $5M judgment:

1) $1M from subcontractor’s primary policy;
2) $2M from general contractor’s primary policy; and
3) $1M from the general contractor’s excess policy and $1M from the subcontractor’s excess policy, as the excess policies share in coverage after the primary coverage is exhausted.

The general contractor and its insurers do not perceive this to be equitable as it dilutes the indemnification and additional insured requirement. Further, it results in the general contractor’s carriers subrogating to the rights of the general contractor to pursue a separate action against the subcontractor, which gets sent right back to the subcontractor’s excess insurer (as its primary insurance was exhausted) for reimbursement.  Under the above example, the subcontractor’s excess insurer still had a remaining $4M in coverage to reimburse the general contractor’s primary and excess insurer.  This is known as a circular chain of events because the priority of coverage under horizontal exhaustion invariably results in a separate subrogation claim for reimbursement.

B. Vertical Exhaustion

Under the vertical exhaustion approach, the court will look primarily to the contractual indemnification and additional insured language, irrespective of the “other insurance” provision in the excess policy, to avoid the circular chain of events with the general contractor’s carriers pursuing a separate subrogation claim. Under the vertical exhaustion approach, the policies would be exhausted as follows relative to the $5M judgment:

1) $1M from the subcontractor’s primary policy; and
2) $4M form the subcontractor’s excess policy.

The subcontractor’s primary and excess policies would be exhausted BEFORE the general contractor’s primary policy comes into play.  This is designed to avoid the the separate subrogation claim since the subcontractor’s insurance coverage is being exhausted first.

C. Priority of Insurance Coverage

The priority of insurance coverage can become a very significant consideration in sizable claims.  There is a reason parties contractually negotiate insurance coverage in the contract.  For this reason, during the contract negotiation, it is important to appreciate this consideration on the frontend. Consult with counsel and an insurance broker as to the following:

 The contractual indemnification language – make sure it is enforceable in your jurisdiction;
 The additional insured language and applicable insurance endorsements – make sure you get the right endorsement for ongoing and completed operations that covers issues wholly or partially caused by the subcontractor’s (or downstream party’s) negligence;
 The primary and noncontributory language and applicable endorsements in the primary and excess policy-this modifies the “other insurance” provision from a priority of coverage standpoint and you want this in both the primary policy and excess policy; and
 The “other insurance” language in the general contractor’s (or upstream party’s) policy — the objective is to maximize vertical exhaustion of coverage to avoid the circular chain of events discussed above so this may result in manuscript language to the general contractor’s “other insurance” language to reflects its priority.

Claims that involve or rely on construction insurance claim can become complex.  But, insurance is crucial in order to properly assess risk, flow down risk, and manage risk.   In order to evaluate associated risk, it requires consultation with lawyers and insurance brokers and understanding the type of claim exposure relative to the project, and maximizing value of insurance–primary and excess insurance–for which you are an additional insured.

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



Property insurance policies contain an examination under oath (“EUO”) provision that requires the insured and the insured’s agents and representatives to submit to an EUO.   An EUO is a sworn statement – – a pre-lawsuit deposition, so to speak.  It is a post-loss condition in the property insurance policy that, absent certain circumstances, the insured must comply with.

In a recent decision, Avatar Property & Casualty Insurance Company v. Castillo, 45 Fla. L. Weekly D966a (Fla. 4th DCA 2020), the issue was whether the insured was required to produce his handyman and restoration company for an EUO.   The EUO provision in the policy stated:

In the County where the “residence premises” is located you, your agents, your representatives, including any public adjuster engaged on your behalf, and any and all “insureds” must submit to [EUOs] and sign same when requested by us.

The handyman and restoration company were involved in furnishing estimates or mitigation work and the insurer claimed they should be deemed an agent or representative of the insured.  The appellate court, affirming the trial court, disagreed:

[T]he handyman and the water restoration employees were not the insureds’ “agents” or “representatives” under the dictionary definitions of those terms. Further, to the extent the policy here is considered uncertain, we are compelled to construe the interpretation against the insurer.  The insurer, as the policy’s drafter, easily could have added language including “any persons who inspected or repaired the covered property.” For us to do so now would re-write the policy.

Avatar Property & Casualty Insurance Co., supra.


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



Under a named perils property insurance policy, the insured bears the burden of proof to prove that the peril, a covered loss, caused the asserted damageSee Citizens Property Ins. Corp. v. Kings Creek South Condo, Inc., 45 Fla. L. Weekly D597a (Fla. 3d DCA 2020).   If an insurer is relying on a policy exclusion to deny coverage, the exclusion must be plead as an affirmative defenseSee id.

This is not an uncommon occurrence: the insured claims a peril caused the loss (damage) and the insurer disputes causation, denying coverage.   Sometimes the insurer relies on a policy exclusion to deny coverage.  Sometimes it disputes causation.  Most times it does both.

In Kings Creek South Condo, a condominium association had a named perils property insurance policy to cover the perils of wind and hail.   The policy was in effect between September 2005 through September 2006.   The association included fifteen buildings and nine separate roofs.

Hurricane Wilma hit Florida in October 2005, during the policy period.  Three-plus years later, the association claimed that one of the building’s roofs had been damaged by Hurricane Wilma.  The association later claimed all nine roofs were damaged by Hurricane Wilma with a replacement cost value in excess of $3.9 Million.  The property insurer denied coverage for numerous reasons including the argument that the roofs were not damaged by Hurricane Wilma but due to improper installation and maintenance.  The insurer challenged causation.

During trial, the trial court prevented the insurer from putting on evidence from an expert establishing that the roofs were damaged due to improper installation.  Based on the argument from the association (insured), the trial court maintained that because the roofs were installed prior to the policy period, the insurer was arguing under the Existing Damage exclusion in the property insurance policy.  However, the insurer never raised the Existing Damage exclusion as an affirmative defense. Hence, the insurer could not rely on this exclusion at trial.  As a result, the trial court granted a directed verdict as to liability against the insurer and the jury returned a sizeable damages verdict in favor of the insured.  The insurer moved for a new trial which was denied.

The appellate court reversed the directed verdict on liability and remanded the case for a new trial. The appellate court held the insurer did not need to rely on the Existing Damage exclusion to argue (or dispute causation) that the improper installation of the roof caused the association’s loss.  The insurer was simply presenting evidence as to a non-wind related loss (non-covered loss) as a basis to challenge the insured’s evidence that the roof loss was caused by Hurricane Wilma.  The evidence goes directly to causation:

[T]he trial court incorrectly found that evidence of the faulty roof installation, occurring prior to the policy, was subsumed by the Existing Damage Exclusion. Whether the faulty installations occurred prior to or during the policy period is irrelevant for purposes of challenging causation in a wind-only policy. Technically, the Exclusion would bar coverage of any prior damage from causes pre-dating the policy like the roof installation, but this is secondary to the fact that a faulty roof installation is a non-wind related cause that does not fall under the named peril of wind.

Kings Creek South Condo, Inc., supra.

If you are involved in a property insurance coverage dispute, it is important to work with counsel that understands the coverage issues and the insured’s burden of proof.

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



Many homeowners’ property insurance policies are replacement cost value policies for the dwelling, oftentimes referred to as Coverage A.  A replacement cost policy is defined as follows:

Replacement cost insurance is designed to cover the difference between what property is actually worth and what it would cost to rebuild or repair that property.”  A “replacement cost policy” is a policy where the insurer agrees to compensate for a loss without taking into account depreciation. Such a policy does not prohibit repairing the damaged property.  In fact, both the governing statute as well as the parties’ insurance policy expressly provide that an insurer may limit its liability to the “reasonable and necessary cost to repair the damaged, destroyed, or stolen covered property.”  Thus, we conclude that a replacement cost policy does not mandate that the insurer replace the damaged property.

Prepared Ins. Co. v. Cal, 209 So.3d 14, 17 (Fla. 4th DCA 2020) (internal citations omitted).

Florida Statute s. 627.7011 governs an insurer’s post-loss obligations under a homeowner’s property insurance policy and provides in applicable part:

(3) In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs:

(a) For a dwelling, the insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible. The insurer shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred. If a total loss of a dwelling occurs, the insurer shall pay the replacement cost coverage without reservation or holdback of any depreciation in value….

Per this statutory language, under a replacement cost policy “the insurer is required initially to pay to its insured at least the actual cash value of the covered loss, less the deductible. After it meets this statutory obligation, the insurer is required to pay its insured for repairs as the insured incurs repair costs, also known as the replacement cost value.”  Citizens Property Ins. Corp v. Tio, 45 Fla. L. Weekly D641d (Fla. 3d DCA 2020) (finding that when insurer denies coverage and forces the insured to sue, the insurer cannot try to cure the breach of denial by subsequently tendering only the actual cost value).

If you have a property insurance dispute with your carrier, it is important to work with counsel to ensure your rights are being preserved under your policy.

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



Recently, I negotiated a contract that included Owners and Contractors Protective Liability insurance, otherwise known as “OCP” coverage, which is a project-specific policy.   Thus, the policy limits are project-specific.  Obtaining this OCP coverage includes discussion with a sophisticated insurance broker because the objective is always to ensure that there is insurance to cover a foreseeable or contractually assumed risk.

Many times, OCP coverage is procured by the contractor (listed as the designated contractor in the policy) for the owner, meaning the owner is the only insured on the policy.  The contractor purchases this insurance for the owner, as an insured, to cover the contractor’s indemnification obligation to the owner.  In a number of instances that I have dealt with OCP coverage it was largely because there was a concern with the additional insured endorsement of the contractor and/or its per occurrence limits.

OCP coverage applies to insure the owner from bodily injury and property damage claims (1) that arise out of the contractor’s operations performed for the owner at the project (e.g., vicarious liability) and (2) the owner’s actions or omissions in connection with its general supervision of the contractor’s operations.  (See ISO CG 00 09 10 01)  It applies to ongoing operations of the contractor as there is an exclusion in the policy for completed work.  (See id.).   It is not for completed operations.

The “Other Insurance” provision, different than in a CGL policy, provides that the OCP coverage is primary and “it will not seek contribution from any other insurance available to [the insured] unless the other insurance is provided by a contractor other than the designated contractor [contractor procuring policy or listed in the declaration]….” (See ISO CG 00 09 10 01).

It is always good practice, whether you are a contractor or an owner, to consult with your construction lawyer and insurance broker if you are considering OCP coverage as an extra layer of coverage.  For more information on OCP coverage, this article is insightful.   When it comes to insurance, the objective is to cover risks, whether foreseeable and/or assumed, so that there is the appropriate protection with respect to the project.

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