Zurich American Insurance Co. v. Cernogorsky, 211 So. 3d 1119

Background

On Feb. 18, 2011, Cernogorsky was struck by an underinsured motorist while walking to his employer The Green Companies’ office; he recovered the tortfeasor’s $100,000 limit and sought underinsured motorist (UM) benefits under The Green Companies’ policy with Zurich.
Zurich’s policy was a Business Auto package insuring “covered autos,” defined to include “hired autos” and “nonowned autos” (the latter includes employee-owned vehicles only while used in company business); The Green Companies owned no vehicles.
The policy’s Who Is An Insured provisions identify the named insured as The Green Companies and expressly exclude employees when the covered auto is owned by the employee; the policy also contains an Other Insurance clause making coverage for nonowned autos excess.
Cernogorsky argued he was covered because the policy covered employee-owned vehicles and because Zurich failed to obtain a written UM rejection under section 627.727(1), so UM coverage should be available; he also asserted he was in the course and scope of employment when injured.
Zurich argued (1) Cernogorsky was not an insured under the policy; (2) the policy provided only excess (not primary) automobile liability and thus section 627.727(1) did not apply (section 627.727(2) governs excess policies); and (3) Cernogorsky was a pedestrian (not occupying an insured vehicle), so he could not qualify as a class II insured for UM benefits.
The trial court denied cross-motions for summary judgment, a jury found coverage for Cernogorsky, and Zurich appealed; the appellate court reviews coverage de novo and reverses.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Was Cernogorsky an insured under the Business Auto policy?	He was covered because policy includes nonowned autos (employee-owned vehicles) and thus he falls within insureds.	Policy names only The Green Companies as insured; Who Is An Insured provision and endorsement exclude employees when using their own vehicles.	Not an insured; only The Green Companies is the insured.
Is the policy subject to the UM-waiver requirement of §627.727(1) (i.e., primary coverage requirement)?	Failure to execute a written UM waiver means UM coverage should be supplied as a matter of law.	The policy provides only excess coverage for nonowned autos, so §627.727(1) does not apply; §627.727(2) controls and does not require a written rejection.	Policy is excess for nonowned autos; §627.727(1) does not apply; no mandatory UM by waiver.
Could Cernogorsky recover as a class II insured (occupant/driver of an insured vehicle)?	He was in the course and scope of employment and thus entitled to UM under the policy.	He was a pedestrian, not occupying any insured vehicle at the time; class II coverage applies only to occupants/drivers of insured vehicles.	He was not occupying an insured vehicle; cannot recover as a class II insured.
Was coverage a jury question or a legal question for the court?	Factual dispute warranted jury resolution on coverage.	Policy interpretation and undisputed facts make coverage a legal question for the court; judgment as a matter of law was appropriate.	Coverage is a question of law here (no disputed facts or ambiguous policy language); court should decide.

Key Cases Cited

Penzer v. Transp. Ins. Co., 29 So. 3d 1000 (Fla. 2010) (insurance policy interpretation is reviewed de novo and is a question of law)
Mullis v. State Farm Mut. Auto. Ins. Co., 252 So. 2d 229 (Fla. 1971) (class II UM insureds limited to lawful occupants of the insured automobile)
Fla. Farm Bureau Cas. Co. v. Hurtado, 587 So. 2d 1314 (Fla. 1991) (describing class I and class II UM insureds)
Travelers Ins. Co. v. Warren, 678 So. 2d 324 (Fla. 1996) (class II insureds are occupants of the insured vehicle)
Tobin v. Mich. Mut. Ins. Co., 948 So. 2d 692 (Fla. 2006) (discussing §627.727 statutory waiver consequences)
Hampton v. Fla. Mun. Ins. Tr., 152 So. 3d 855 (Fla. 4th DCA 2014) (excess automobile policies need not include UM under §627.727(2))
Nieves v. N. River Ins. Co., 49 So. 3d 810 (Fla. 4th DCA 2010) (statutory amendment exempts non-primary policies from §627.727(1) requirements)
Varro v. Federated Mut. Ins. Co., 854 So. 2d 726 (Fla. 2d DCA 2003) (when named insured is a corporation, UM claims typically arise only for class II insureds)
State Farm Mut. Auto. Ins. Co. v. Bailey, 203 So. 3d 995 (Fla. 2016) (employee not entitled to UM where not occupying employer’s vehicle)