Fla. Farm Bureau Cas. Ins. Co. v. State of Fla., Office of Ins. Regulation (1st DCA 2013)
At issue in this case is the proper interpretation of Florida Statute § 627.706(1), which provides that:
Every insurer authorized to transact property insurance in this state must provide coverage for a catastrophic ground cover collapse. The insurer shall make available, for an appropriate additional premium, coverage for sinkhole losses on any structure … to the extent provided in the form to which the coverage attaches…. A policy for residential property insurance may include a deductible amount applicable to sinkhole losses equal to 1 percent, 2 percent, 5 percent, or 10 percent of the policy dwelling limits, with appropriate premium discounts offered with each deductible amount.
Relying on this statute, the Office disapproved of a property insurer’s proposed amendment to its endorsement form limiting sinkhole coverage to 25% of the overall coverage amount for the insured dwelling. The Office’s reasoning was that the statutory phrase “to the extent provided in the form to which the coverage attaches” refers to the base property insurance property and, consequently, requires insurers to offer sinkhole loss coverage in an amount equal to the dwelling coverage limit.
The property insurer appealed, arguing that this interpretation was clearly erroneous and that the form to which sinkhole loss coverage attaches is really the policy endorsement setting out the extent (limit) of such coverage, which lies solely with the discretion of the insurer. The first district affirmed, concluding that the defining the term “form” to mean the base policy is within the permissible range of interpretations and thus not clearly erroneous: “Because the deductibles are tied to casualty coverage limits in the base policy, it is reasonable to conclude that the amount of sinkhole loss coverage is intended to be the same as the amount of casualty coverage provided for in the base policy.”
Florida Insurance Coverage Law 