INSURANCE: COMMERCIAL INLAND MARINE INSURANCE: EQUIPMENT NOT DESCRIBED IN DECLARATIONS: COMMERCIAL GENERAL LIABILITY INSURANCE: EXCLUSIONS: DAMAGE TO PROPERTY YOU OWN OR RENT: CLAIMS ADMINISTRATION STATUTE: FAILURE TO COMPLY WITH NOTICE PROVISION OF SECTION 627.426(2), FLORIDA STATUTES, DOES NOT WAIVE EXCLUSION FROM COVERAGE

Danny’s Backhoe Service, LLC v. Auto Owners Insurance Company, ___ So. 3d ___, 38 Fla. L. Weekly D1185 (Fla. 1st DCA May 30, 2013)

This case involved a commercial general liability insurance policy with commercial inland marine insurance coverage.  When an employee of the insured damaged a leased backhoe, the lessor (who was an additional insured under the policy), sued the insured for negligence.  The insurance company denied coverage and filed an action for declaratory judgment.  The trial court entered summary judgment for the insurer, and the appellate court affirmed. (1) The commercial inland marine portion of the policy provided coverage for equipment “described in the Declarations under Contractors Equipment,” but the damaged backhoe was not listed in the declarations.  (2) The commercial general liability portion of the policy excluded coverage for “property you own, rent, . . . or use, including any cost or expense . . . for repair . . . of such property for any reason . . . .”  Because the exclusion applied to property owned or rented, it excluded coverage for both the lessor and the lessee.  (3) The insurer did not waive its right to deny coverage, based upon Section 627.426(2)(a), Florida Statutes, by failing reserve its rights within thirty days, because “[the insurer] claimed a ‘complete lack of coverage’ based on express policy exclusions.”  The court rejected the insured’s contention that the policy was ambiguous because the comprehensive general liability portion of the policy, which had a companion exclusion for property owned, rented, occupied, or used by an employee, contained an exception for “your liability for damage to such property.”  According to the court, this exclusion and its companion exclusion for property owned, rented, or used by the insured were “independent of each other, [were] entirely consistent with each other, and [were] not ambiguous.” 

[Editor’s Note:  This reader finds confusing the court’s discussion of the companion exclusions in the comprehensive general liability portion of the policy.  Perhaps, the court is saying that if one doesn’t get you, the other will.  In other words, if the exclusion for property used by an employee does not apply because of the exception for liability for damage to the rented property, the exclusion for damage to property owned or rented by the insured nevertheless applies to exclude coverage for the loss.]