Theft is one of the few insurance claims that is based on the actions of another individual. Most claims are predicated on events that are outside the control of the homeowner, such as hurricanes and windstorms. Due to the human component of theft, if and to what extent a policyholder must prove intent in a theft claim can change dramatically depending on the policy language.

In American Fire & Cas. Co. v. Sunny South Aircraft Service, Inc.,1 the Florida Supreme Court was faced with the question of whether the intent was a necessary element in a theft claim under an insurance contract. The Florida Supreme Court was presented with a situation in which the policyholder’s aircraft was hijacked by a passenger who forced the pilot to fly the plane to Cuba. After the hijacker exited the aircraft and permitted the pilot to return the aircraft, the plane was damaged by gunfire. The Florida Supreme Court affirmed that the hijacker did not intend to deprive the policyholder of the aircraft permanently; therefore, no theft occurred. The holding created the rule that proving intent to permanently deprive or intentionally dealing with the property of another, without consent, in a manner as to create an unreasonable risk of permanent loss is necessary for an insurance theft claim.

The standard created by the Florida Supreme Court is dependent on the definition of theft in an insurance policy. A”[p]olicy which stated theft meant any act of stealing or attempt thereat, or mysterious disappearance made loss from mysterious disappearance equivalent to theft and there was no need to show a reasonable probability that disappearance was due to theft to entitle insured to recover.”2 If the phrase “mysterious disappearance” appears as part of the definition of theft in a policy, the policyholder need not prove that a theft occurred, and by extension, the intent element outlined in Sunny South Aircraft Service.

It is critical to read the definition of “theft” to understand what a policyholder must prove in a theft claim. However, when the policy does not define “theft,” the definition applied will be “interpreted liberally in favor of the insured.”3 In St. Paul Fire and Marine Ins. Co. v. Pensacola Diagnostic Center, the First District Court of Appeal was faced with interpreting a policy that did not define “theft.”4 In this matter, the Pensacola Diagnostic Center was in the process of purchasing medical equipment from Accuray Design Group when a dispute arose. Pensacola Diagnostic Center withheld payment and the court found that Accuray Design Group wrongfully repossessed the equipment. Pensacola Diagnostic Center made a claim for the “stolen” medical equipment to their insurer, which resulted in litigation. The appellate court found that because theft was not defined in the policy, it must look outside the policy to find a reasonable interpretation of theft. In this matter, the court looked at the definition of “theft” under Florida criminal law and found that Accuray Design Group wrongfully repossessing the equipment constituted theft under the insurance policy, entitling the policyholder to recover.
____________________________
1 American Fire & Cas. Co. v. Sunny South Aircraft Service, Inc., 151 So. 2d 276 (Fla. 1963).
2 Michigan Millers Ins. Co. v. Geller, 168 So. 2d 204 (Fla. 3d DCA 1964)(emphasis added).
3 State Farm Mut. Auto. Ins. Co. v. Pridgen, 498 So. 2d 1245 (Fla. 1986) (citing Firemans Fund Insurance Co. v. Boyd, 45 So.2d 499 (Fla. 1950)).
4 St. Paul Fire and Marine Ins. Co. v. Pensacola Diagnostic Center and Breast Clinic, 505 So. 2d 513 (Fla. 1st DCA 1987).

  • One of the difficulties in reading the policy language to determine if there is theft coverage is illustrated by this theft peril in the ISO HO 00 03 form:

    9. Theft
    a. This peril includes attempted theft and loss of property from a known place when it is likely that the property has been stolen.

    Theft is covered when it is “likely” that property has been stolen. Rather subjective, huh?