Disagreeing with the excess carrier's interpretation of the primary policy, the court determined the commercial property policy was a blanket policy, thereby invoking additional excess coverage. Landmark Am. Ins. Co. v. Pin-Pon Corp., 2015 Fla. App. LEXIS 189 (Fla. Ct. App. Jan. 7, 2015).
The insured purchased a hotel. Renovations were planned to improve the hotel while it remained open. In September 2004, however, Hurricane Frances and Hurricane Jeanne caused damage to the hotel before any renovations had commenced.
The insured had a primary commercial property policy with Lexington. The policy had a $2,500,000 per-occurrence "Limit of Insurance." No aggregate limit was listed on the declaration page. Endorsement No. 2 of the policy, however, stated amounts of insurance as:
Building:$8,000,000
Contents:$2,000,000
Business Income: $1,382,368
The insured also had a following form excess policy with Landmark. The Landmark policy established limits of liability for each scheduled item of property as follows:$8,800,000 for the building; $2,200,000 for personal property; $1,520,604.80 for business income; and $2,500,000 for code upgrade coverage.
The insured submitted claims to both carriers for damages arising from Frances and Jeanne. (The decision does not state the amount of the claims.) Lexington paid the full $2.5 million policy limits for the Frances claim and $553,924.12 for the Jeanne claim. Landmark paid $2 million on the Frances claim, but paid nothing on the Jeanne claim because Lexington had not paid its policy limits for this claim.
The insured sued both carriers regarding the Jeanne claim. After trial,the jury returned a verdict finding that the insured was entitled to $902,933.40 in additional building damages and $1,499,949.30 in additional code upgrade damages from Hurricane Frances. The total business interruption claim from Frances totaled over $3.6 million. The trial court's interpretation of the primary policy allowed the insured to allocate the entire $2.5 million per occurrence limits of the Lexington policy to the business interruption award for Frances. An amended final judgment was awarded to the insured in the amount of $5.8 million.
On appeal, Landmark argued the Lexington policy set a business income coverage limit of $1,382,368, and did not allow policy limits of $2.5 million to be entirely allocated to business income coverage. The insured, on the other hand, argued the policy was a blanket policy and the values in Endorsement No. 2 did not limit the coverages provided.
The appellate court noted that a blanket policy covered to up to policy limits every item of property described in the policy. By contrast, in a scheduled policy, each separately treated item of property was in effect covered by a separate contract of insurance. The amount recoverable with respect to a loss affecting such property was determined independently of the other limits of property.
When the Lexington policy was considered as a whole, it was a blanket policy with a total limit of $2.5 million per occurrence and no sublimit for business income damages. The "Amount of Insurance" figures in Endorsement No. 2 referred to the values declared to Lexington at the inception of the policy and were not specific caps on the amount of coverage for the three categories.
Paragraph 36 of the policy stated that the values and schedule of property were for premium purposes only and did not limit the coverage under the policy. Otherwise, the absurd result of increasing the building insurance to $8 million per occurrence would result.
Therefore, the Lexington policy provided a blanket limit of $2.5 million per occurrence with no sublimit for business income damages. Consequently, the Landmark excess policy could be tapped for amounts above Lexington's policy limit.