AIU INSURANCE COMPANY, Petitioner,
v.
BLOCK MARINA INVESTMENT, INC., et al., Respondents.
Supreme Court of Florida.
Richard A. Sherman of the Law Offices of Richard A. Sherman, P.A., Fort Lauderdale, for petitioner.
Terry L. Redford of Thornton, David & Murray, P.A., Miami, for respondent Block Marina.
Richard S. Rachlin and Kenneth J. Carusello of Payton and Rachlin, P.A., Miami, for respondent Norfolk Marine Co.
EHRLICH, Chief Justice.
We have for review AIU Insurance Co. v. Block Marina Investment, Inc.,
The issue before us is whether petitioner AIU Insurance Company (AIU) is prohibited from denying coverage in connection with a loss, coverage for which is excluded under a comprehensive liability policy, due to its noncompliance with the notice requirements of section 627.426(2), Florida Statutes (1985). Section 627.426(2) provides in pertinent part:
(2) A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:
(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by registered or certified mail sent to the last known address of the insured or by hand delivery; and
(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before trial, the insurer:
1. Gives written notice to the named insured by registered or certified mail of its refusal to defend the insured... .
Block Marina obtained a comprehensive general liability policy from AIU which contained an exclusion of coverage for damage *999 to property in the care, custody, or control of the insured. A marina operator's legal liability endorsement to the policy was written which the parties agree would have provided coverage for the claim in question. However, prior to the alleged act of negligence giving rise to a claim against Block Marina by Norfolk Marine, the marina operator's legal liability endorsement was eliminated from the policy. AIU informed Block Marina that although the claim was not one generally covered under the policy, it would provide a defense subject to a reservation of its right to assert a coverage defense under section 627.426(2)(a). Two weeks prior to trial, AIU refused further defense, notifying Block Marina that the claim was not covered under the policy. Thereafter, Block Marina entered into a consent judgment with Norfolk Marine, who agreed not to seek to enforce the judgment against Block Marina. Block Marina and Norfolk Marine were granted a summary judgment prohibiting AIU from denying coverage, because AIU had failed to notify the insured of its refusal to defend within sixty days after its reservation letter and within thirty days before trial, as required by section 627.426(2)(b).
On appeal, AIU relied on the Fifth District Court of Appeal's decision in United States Fidelity and Guarantee Co. v. American Fire and Indemnity Co.,
The legislature did not intend, by section 627.426(2), to create coverage under a liability insurance policy that never provided that coverage, or to resurrect a policy that has expired by its own terms and no longer legally exists, to cover an accident or event occurring after its termination.
In USF & G, the policy under which coverage was sought had expired over ten years before the claim was made. The district court below distinguished USF & G by reasoning that in USF & G there was no coverage issue because there was no policy in effect; whereas, in this case, the issue was whether the policy which was in effect covers a specific loss.
We perceive conflict between the two decisions. It matters not that in USF & G there was a complete lack of coverage because the policy term had expired and in the case before us the lack of coverage was due to an express policy exclusion. Analytically, there is no distinction between the two situations. The comprehensive general liability insurance policy in force in this case explicitly excluded bailment losses from coverage. As noted by Judge Nesbett in his dissenting opinion, it was knowledge of this exclusion which apparently prompted the insured to obtain a marina operator's legal liability endorsement specifically covering bailed goods. Id. at 1120. This endorsement lapsed, thus leaving Block Marina unprotected for the loss later sustained. In both the instant case and in USF & G, coverage which was once available had been allowed to lapse. The Fifth District in USF & G held that under such circumstances section 627.426(2) was not intended to create or resurrect coverage.
The effect of the decision below is to give insurance coverage to Block Marina for bailment losses at a time when the marina operator's legal liability endorsement had been eliminated from the policy and the contract of insurance expressly excluded such losses from coverage. We do not believe that the legislature intended, by the enactment of section 627.426(2), to give an insured coverage which is expressly excluded from the policy or to resurrect coverage under a policy or an endorsement which is no longer in effect, simply because an insurer fails to comply with the terms of the aforementioned statute. The Fourth District Court of Appeal recently reached the same conclusion, holding that section 627.426(2) was not intended to create coverage where a claim is made outside the effective date of the policy or where a *1000 particular loss is expressly excluded from coverage. Country Manors Ass'n v. Master Antenna Systems, Inc.,
Section 627.426(2), by its express terms, applies only to a denial of coverage "based on a particular coverage defense," and in effect works an estoppel. This Court recently reiterated the general rule that, while the doctrine of estoppel may be used to prevent a forfeiture of insurance coverage, the doctrine may not be used to create or extend coverage. Crown Life Ins. Co. v. McBride,
Accordingly, we quash the decision of the district court, remand for proceedings consistent with this opinion and approve the decisions of the Fifth District in USF & G and the Fourth District in Country Manors to the extent that they are consistent with this opinion.
It is so ordered.
OVERTON, McDONALD, SHAW, BARKETT, GRIMES and KOGAN, JJ., concur.
NOTES
Notes
[1] A very narrow exception to this rule was recently recognized by this Court in Crown Life Ins. Co. v. McBride,
[2] U.S. Const., art. I, § 10; Art. I, § 10, Fla. Const.