Andy Rooney once said that “nothing in fine print is ever good news.” At times we are held accountable to what is stated within fine print, and we cannot claim that we did not read it as a defense. Citizens Property Insurance Corp. v. European Woodcraft & Mica Design, Inc., a recent Florida case involving a limitation on an insurance agent’s authority to bind coverage for the insurer, demonstrates this harsh reality.

European Woodcraft regularly used Global Insurance Services to obtain its insurance. Citizens appointed Global Insurance Services as its Florida licensed agent, giving Global the authority to submit insurance applications. Citizens supplied Global with the application forms and an agency number. European Woodcraft asked Global to obtain windstorm insurance for its new property. Global secured a quote from Citizens and faxed a letter with an insurance application to European Woodcraft. The letter said that to bind coverage, a premium check was required along with the application. A Global representative incorrectly completed a section of the application, and European Woodcraft’s principal signed the application, despite the incorrect information within it. The application stated the following right above the signature line:

I hereby certify that the information on this application is true and correct to the best of my knowledge. I further understand and agree to the terms as set forth on page 2.

The principal of European Woodcraft did not review page 2 of the application before signing it. On July 18, 2005, Citizens notified Global that the premium check was void for insufficient funds. A Global representative notified European Woodcraft of the problem. European Woodcraft sent a new check to Global, and thought that once the check was sent to Citizens the insurance would be in place. On July 28, 2005, after receiving the application and new check for the premium, Citizens determined a mistake was made on the application. The correct property designation on the application increased the premium amount. Citizens sent a notice of deficiency to Global and to European Woodcraft’s address listed on the application. The notice indicated that a policy would not be issued until the full premium was paid. European Woodcraft’s notice was returned as undeliverable. Global received the notice, but apparently never communicated with European Woodcraft on it. On October 5, 2005, Citizens returned the premium paid after receiving no additional funds, closed its file, and advised that no coverage existed. Hurricane Wilma damaged European Woodcraft’s property shortly thereafter.

European Woodcraft filed a claim with Citizens and was informed there was no coverage. European Woodcraft filed suit against Citizens seeking coverage, and after a bench trial, the trial court entered judgment in favor of European Woodcraft. Citizens appealed. The first issue on appeal was whether Global was Citizens’ general lines agent and had apparent authority to bind Citizens into coverage.

Providing company forms and materials to insurance agents has been held sufficient in Florida to designate a broker as an agent. This is known as apparent authority. An insurer may be liable for the action of those it cloaks with apparent authority. However, an insurer will not be bound by the agent’s actions if the insured knew or was put on “notice of inquiry” of limitations on the agent’s actual authority. The trial court found no evidence that European Woodcraft was ever put on notice of limitations on Global’s authority to bind coverage. The appellate court noted, however, that the application stated the following on page 2:

Effective date of coverage is upon approval of Citizens. No insurance agent has the power to bind coverage or make the policy effective. Receipt by agents of premiums is not receipt by Citizens and does not make the policy effective. Applicants must not rely on representations of any party other than Citizens in its Tallahassee or Jacksonville Offices.

That provision provides actual notice on the limitations of Global to bind Citizens to coverage. Since European Woodcraft never received page 2 of the application, the next issue was whether it was placed on notice of inquiry regarding those limitations. The Court noted that directly above the signature line on page 1 of the application, it stated, “I further understand and agree to the terms as set forth on page 2.” The Court applied the “reasonable person” standard, and held that:

A reasonable person under these circumstances would have actually read page 2 and discovered the agency disclaimer. A person has no right to shut his eyes or ears to avoid information, and then say he has no notice; that it will not suffice the law to remain willfully ignorant of a thing readily ascertainable by whatever party puts him on inquiry, when the means of knowledge is at hand.

The Court reversed the judgment and remanded the case for further proceedings.

Now that we are in the middle of hurricane season, it is important to double check your insurance policies to ensure coverage and that the premiums have been paid. It may even be a good practice to call your agent to have them verify coverage as well. Remember life’s experiences make us stronger, but in this situation, discovering after a loss that you do not have insurance coverage is likely an experience you would rather do without.