In addressing a certified question from the Eleventh Circuit, the Florida Supreme Court found that an insurer may not rely upon extrinsic evidence to salvage ambiguities in a policy. Wash. Nat'l Ins. Corp. v. Ruderman, 2013 Fla. LEXIS 1388 (Fla. July 3, 2013).
The case arose as a class suit against Washington National Insurance Corporation concerning policies that provided for reimbursement of certain home health care expenses. The policies provided coverage through a maximum daily benefit. Coverage was limited by a "per Occurrence Maximum Benefit" for each illness and a "Lifetime Maximum Benefit" for all injuries and sicknesses during the life of the policy.
An annual increase in benefits was provided by the policy. The issue boiled down to how broadly the increase reached. The policy read:
HOME HEALTH CARE DAILY BENEFIT $180 / Day
LIFETIME MAXIMUM BENEFIT AMOUNT $250,000
PER OCCURRENCE MAXIMUM BENEFIT $150,000 / Illness
INCREASE PERCENTAGE Benefits increase by 8% each year
The parties disagreed on whether the automatic increase applied only to the daily benefit or whether it also applied to the lifetime maximum benefit amount and the per occurrence maximum benefit amount. The Eleventh Circuit found the policy ambiguous. Washington National, however, offered extrinsic evidence in the District Court to show that the insureds knew when the policy was purchased that only the daily benefit increased annually. The extrinsic evidence would resolve any ambiguity and would support Washington National's position that only the daily benefit increased annually.
The Florida Supreme Court held, however, that extrinsic evidence could not be considered in determining whether an ambiguity existed. Because the policy was ambiguous, it had to be construed against the insurer and in favor of coverage without resort to consideration of extrinsic evidence.