Insurance coverage is available for purchase in many varieties. Two options for large, commercial, or other properties with multiple insurable assets are blanket and specific coverage. Last week, the type of coverage purchased was an important factor in determining benefits available for the Sunrise Condominium Association. Florida Ins. Guaranty Ass’n v. Sunrise Condo. Ass’n, Inc., No. 4D09-5300, 35 Fla. L. Weekly D2124b (Fla. 4th DCA Sept. 22, 2010).

Hurricane Wilma damaged all seven of Sunrise Condominium’s buildings in 2005. Sunrise made an insurance claim with its insurer, Southern Family Insurance Company. Southern Family issued a single claim number with a suffix for each damaged building, issued seven separate checks totaling almost $269,000, and divided the almost $3 million policy limit between the seven buildings. Southern Family became insolvent, and the Florida Insurance Guaranty Association (FIGA) took over the claim. Sunrise was unsatisfied with the amount Southern Family had paid and requested additional benefits from FIGA. FIGA paid an additional $299,900, the statutory maximum for a single claim.

All of these events and payments may have been completely acceptable, had Sunrise purchased blanket insurance coverage. Fortunately for Sunrise, the courts hearing the case held the insurance coverage at issue was specific. While affirming the trial court’s finding of specific coverage,  Florida’s Fourth District Court of Appeals looked to an Indiana case that cited 15 Couch on Insurance 2d § 54:83, to explain the distinction:

A distinction must be made between a policy which speaks in terms of a lump-sum obligation or value of the property and one which separately schedules different items of property. In the latter case, each separately treated item of property is in effect covered by a separate contract of insurance and the amount recoverable with respect to a loss affecting such property is determined independently of other items of property.

Sunrise’s policy listed each of its seven buildings separately, with separate coverage amounts and separate premiums for each of the buildings. Both the trial and appeals courts held that the separately scheduled buildings, with separate coverage and premiums, rendered the coverage specific. Since FIGA took over for the insolvent insurer, this meant that FIGA’s $300,000 statutory maximum applied to each of the seven buildings, not the entire claim. Thus, Sunrise had coverage up to $2,100,000, not $300,000.

The claims handling and subsequent litigation in this case could have been the same, even if FIGA had not taken over. Remember, Southern Family issued only one claim number and divided the policy limit between the seven buildings. While we will never know for sure, it appears that Southern Family intended to treat Sunrise’s insurance as blanket coverage, just like FIGA did. This case is just one more example of why it is crucial to know what type of insurance you purchase and to make sure the correct claims handling procedures are followed for the type of insurance purchased. Sunrise almost had its claim reduced to one-seventh, or less than 15%, of the coverage it purchased. This was a situation in which the policyholder seems to have benefited substantially from a competent advocate.