United States Court of Appeals,
Eleventh Circuit.
No. 95-3210.
Esther KEY, Plaintiff-Appellant,
v.
ALLSTATE INSURANCE COMPANY, a foreign corporation, Defendant-
Appellee.
Aug. 1, 1996.
Appeal from the United States District Court for the Middle
District of Florida. (No. 94-1935-CIV-T-21B), Ralph W. Nimmons,
Jr., Judge.
Before COX and BARKETT, Circuit Judges, and BRIGHT*, Senior Circuit
Judge.
BARKETT, Circuit Judge:
Appellant-plaintiff Esther Key brought this suit against
Appellee-defendant Allstate Insurance Co. seeking insurance
coverage for a bodily injury claim resulting from an accident
involving one of her vehicles. The district court granted summary
judgment in favor of Allstate, and Key appeals. We reverse the
decision of the district court.
Background
In May 1990, Key owned two cars: a Hornet, which was insured
by Underwriters Guarantee Insurance Company ("Underwriters"), and
an Astro, which was insured by Allstate. In January 1991, Key sold
her Hornet, and purchased a Fiesta on January 19, 1991. The Fiesta
replaced the Hornet under her Underwriters' policy, which covered
personal injury and property damages; however, she did not
*
Honorable Myron H. Bright, Senior U.S. Circuit Judge for
the Eighth Circuit, sitting by designation.
purchase bodily injury coverage from Underwriters. On January 23,
1991, the Fiesta was involved in an accident in which Norma Rowe
was injured and the Fiesta was totaled. Norma Rowe sued Key and in
April 1994 the jury awarded Rowe $465,404.25. On March 6, 1991,
Key added the Fiesta to her Allstate policy effective March 5,
1991, and she subsequently incurred a premium increase of $20.10
for the period March 5, 1991 to April 16, 1991.
The Allstate policy on her Astro includes a "newly acquired
ownership" provision, which reads:
Additional four wheel private passenger or utility autos you
acquire ownership of during the premium period. This auto
will be covered if we insure all other private passenger or
utility autos you own. You must, however, notify us within 60
days of acquiring the auto and pay any additional premium.
Key sought coverage from Allstate for the bodily injury damages,
claiming that on the day of the accident her Fiesta was a "newly
acquired vehicle" pursuant to her Allstate policy. Allstate denied
coverage. Key subsequently sued Allstate seeking damages,
interest, costs and attorney's fees resulting from Allstate's
refusal to defend, negotiate, settle, and provide coverage on Norma
Rowe's claim against her.
On appeal, Key argues that according to the plain language of
Allstate's "newly acquired automobile" provision, an automobile is
covered under the policy if four criteria are met: (1) the
automobile at issue was acquired during the policy's premium
period; (2) Allstate insured all other autos owned by the insured
at the time of acquisition; (3) the insured notified Allstate
within 60 days of acquiring the new automobile; and (4) the
insured pays any additional premium. Key argues that these four
elements were met with respect to the Fiesta, and therefore, her
Allstate policy covered the Fiesta at the time of the accident.
Allstate argues that the Fiesta was not covered in light of
the purpose of the contract provision and the intent of the
parties. Allstate contends that the purpose of the "newly acquired
automobile" clause is to afford an insured a temporary, reasonable
opportunity to acquire specific coverage upon purchase of a new
vehicle. According to Allstate, as soon as Key obtained specific
insurance coverage for the Fiesta with Underwriters, the Fiesta
lost its status as a "newly acquired automobile" and became a
"described automobile," i.e., an automobile described in some
insurance policy. Thus, the Fiesta was not covered by Allstate at
the time of the accident. Moreover, Allstate contends that when
Key purchased insurance from Underwriter she manifested her intent
to forgo coverage under the Allstate policy. In the alternative,
Allstate argues that even if coverage is determined by the four
criteria discussed above, Key failed to meet conditions (2) and
(4).
Discussion
Under ordinary principals of contract interpretation, a court
must first examine the natural and plain meaning of a policy's
language. Dahl-Eimers v. Mutual of Omaha Life Ins. Co., 986 F.2d
1379, 1382 (11th Cir.1993). Under Florida law, if the terms of an
insurance contract are clear and unambiguous, a court must
interpret the contract in accordance with its plain meaning, and,
unless an ambiguity exists, a court should not resort to outside
evidence or the complex rules of construction to construe the
contract. Rigel v. National Casualty Co., 76 So.2d 285, 286
(Fla.1954); Old Dominion Ins. Co. v. Elysee, Inc., 601 So.2d 1243,
1245 (Fla. 1 DCA 1992); Southeastern Fire Ins. Co. v. Lehrman, 443
So.2d 408, 408-09 (Fla. 4 DCA 1984); see also Dahl-Eimers, 986
F.2d at 1382; United Nat'l Ins. Co. v. Waterfront New York Realty
Corp., 994 F.2d 105, 108-09 (2d Cir.1993); National Fidel. Life
Ins. Co. v. Karaganis, 811 F.2d 357, 361 (7th Cir.1987); Carey v.
State Farm Mutual Ins. Co., 367 F.2d 938, 941 (4th Cir.1966);
Imperial Casualty & Indemnity Co. v. Relder, 308 F.2d 761, 764-65
(8th Cir.1962). This is so because the terms of a contract provide
the best evidence of the parties' intent, see McGhee Interests,
Inc. v. Alexander Nat'l Bank, 102 Fla. 140, 135 So. 545, 547
(1931), and where the language is plain a court should not create
confusion by adding hidden meanings, terms, conditions, or
unexpressed intentions, see Dahl-Eimers, 986 F.2d at 1382; Carey,
367 F.2d at 941. Moreover, in determining whether a contract is
ambiguous, the words should be given their natural, ordinary
meaning, Emergency Assoc. of Tampa v. Sassano, 664 So.2d 1000, 1003
(Fla. 2 DCA 1995); Continental Casualty Co. v. Borthwick, 177
So.2d 687, 689 (Fla. 1 DCA 1965), and ambiguity does not exist
simply because a contract requires interpretation or fails to
define a term, Dahl-Eimers, 986 F.2d at 1382.
If, on the other hand, a court determines that the terms of
an insurance contract are ambiguous, or otherwise not susceptible
to a reasonable construction, a court may look beyond the
contractual language to discern the intent of the parties in making
the agreement. In general, ambiguities in contracts are construed
against their drafters. Hurt v. Leatherby Ins. Co., 380 So.2d 432,
434 (Fla.1980). With respect to insurance policies in particular,
which are often long, detailed, and difficult for most insureds to
decipher, insurers, as drafters of insurance policies, have an
obligation to state explicitly their intentions to limit coverage
upon the happening of certain events or under certain
circumstances. Fireman's Fund Ins. Co. v. Vordermeier, 415 So.2d
1347, 1350 (Fla. 4 DCA 1982); National Merchandise Co., Inc. v.
United Service Automobile Assoc., 400 So.2d 526, 530 (Fla. 1 DCA
1981); see also Carey, 367 F.2d at 941-42. Thus, ambiguities in
insurance contracts generally are construed in favor of providing
coverage. Rigel, 76 So.2d at 286; Old Dominion, 601 So.2d at
1245; Lehrman, 443 So.2d at 409; Relder, 308 F.2d at 764-65.
We find no ambiguity in the "newly acquired automobile"
provision, and therefore, find it unnecessary to analyze the
unstated intentions of the parties or the purposes of the
provision. Under the plain language and natural reading of the
provision, Allstate's insurance coverage automatically extends to
an automobile as long as four conditions are met: (1) ownership of
the car was acquired during the premium period; (2) Allstate
insured all other vehicles that the insured owned; (3) the insured
notified Allstate within 60 days of acquiring the car; and (4) the
insured pays any additional premium. If Allstate intended to
insure such automobiles only so long as no other specific insurance
was taken out on them, or only until some other event occurs, then
Allstate should have stated so expressly. See Carey, 367 F.2d at
941-42.
We recognize, however, that a court is required to give
effect to the terms of a contract only if doing so is reasonable
and does not contravene public policy. National Merchandise Co.,
400 So.2d at 530; United States Fire Insurance Co. v. Morejon, 338
So.2d 223, 225 (Fla. 3 DCA 1976). To that end, Allstate's newly
acquired automobile clause does not provide coverage under
circumstances that would lead to a double recovery. See
Pennsylvania National Mutual Casualty Insurance Co. v. Ritz, 284
So.2d 474, 478 (Fla. 3 DCA 1973).
Allstate is liable for the bodily injury damages at issue in
this case because all four conditions were met, and the Fiesta is
not otherwise insured for bodily injury damage so as to afford Key
a double recovery. With respect to the four criteria, compliance
with conditions (1) and (3) is uncontested, and therefore need not
be analyzed. We find that Key satisfied condition (2) because shw
owned only one other car, the Astro, at the time she acquired the
Fiesta, and the Astro was insured through Allstate. We also find
that Key complied with her obligation to pay additional premium
pursuant to condition (4).
Allstate first argues that requirement (2) was not satisfied
because Key insured her Hornet through Underwriters prior to
acquiring the Fiesta. An ordinary reading of the "newly acquired
automobile" provision makes clear, however, that the four
conditions of that provision are not triggered until an automobile
is actually acquired. Thus, it is irrelevant whether Key insured
vehicles with other insurance companies prior to acquiring the
automobile at issue. The relevant sentence in the "newly acquired
automobile" provision reads: "This [newly acquired] auto will be
covered if we insure all other private passenger or utility autos
you own." "Insure" and "own" are in the present tense, indicating
that coverage of the new automobile depends upon whether Allstate
currently insures all other cars currently owned. Because the
provision is irrelevant unless and until a car has been newly
acquired, the earliest possible point at which anyone would assess
whether other cars are "currently" insured elsewhere is at the
point of acquisition. To read the provision retroactively, as
Allstate urges us to do, is both unnatural and unreasonable. In
this case, at the time Key acquired her Fiesta, the only other auto
she currently owned was insured by Allstate, and therefore, she
satisfied condition (2).
Allstate also argues that because Key insured the Fiesta
through Underwriters, she did not insure all other vehicles with
Allstate as required by condition (2). This argument is just as
untenable. The "newly acquired automobile" provision clearly
states that coverage of the newly acquired automobile depends on
whether Allstate insures "all other private passenger or utility
autos you own."1 "Other" in this context means "different from
1
Allstate cites a number of cases to support its argument
that under the "newly acquired automobile" provision, all cars,
including the newly acquired car, must be insured solely through
Allstate. Those cases are clearly distinguishable, however,
because the relevant insurance provisions in the cited cases do
not contain the word "other." The policy language in those cases
state that coverage attaches if the company insures "all private
passenger ... automobiles." See Pennsylvania National Mutual
Casualty Insurance Co. v. Ritz, 284 So.2d 474, 477 (Fla. 3d DCA
1973); see also Michel v. Aetna Casualty & Surety Co., 252 F.2d
40, 41 (10th Cir.1958); See Cook v. Suburban Casualty Co., 54
Ill.App.2d 190, 203 N.E.2d 748, 750-51 (1964); Beck v. Aetna
Casualty and Surety Co., 38 Colo.App. 77, 553 P.2d 397, 398
that or those implied or specified." The American Heritage
Dictionary 931 (1981). Because the newly acquired automobile is
the only auto specified, it necessarily is not an "other" auto.
Therefore, the requirement that Key insure her other autos with
Allstate applies only to autos other than the newly acquired one,
and the fact that Key partially insured the Fiesta through
Underwriters is irrelevant to whether she satisfied the plain
language of condition (2).
With respect to condition (4), Allstate argues that Key never
paid any additional premium for insuring the Fiesta from January
19, 1991, the date of acquisition, until March 5, 1991, the date
Allstate first requested and Key agreed to pay additional premium
for insuring the Fiesta with Allstate.2 This argument misconstrues
how newly acquired automobile coverage works. As long as the other
conditions are met, coverage on newly acquired automobiles
automatically attaches at the time of acquisition and extends for
the earlier of 60 days or until the insured notifies Allstate of
acquisition but refuses to pay any additional premium which is
requested. Moreover, under Florida law, an insurer may cancel
existing coverage for non-payment of premium only after giving the
insured "notice sufficiently in advance of the due date to afford
the insured a reasonable opportunity to make payment without lapse
(1976).
2
The costs of covering the additional liability for newly
acquired automobiles from the time of acquisition until
additional premium is paid is actuarially accounted for in
pricing the underlying policies. Thus, any argument that
suggests that the insurance companies are "giving away" insurance
during this period of time is disingenuous.
or interruption of continuous coverage." Hepler v. Atlas Mutual
Ins. Co., 501 So.2d 681, 686 (Fla. 1 DCA 1987); see also Allstate
Insurance Co. v. Crawford, 365 So.2d 408, 409 (Fla. 3 DCA 1979).
In this case, Key's coverage under the newly acquired
automobile provision began on the date of acquisition, January 19,
1991. She reported her acquisition within 60 days, and began
paying additional premium for the additional coverage on March 5,
1991. She was never notified that an additional premium was due
earlier, or that Allstate was canceling her coverage. Therefore,
Key complied with condition (4) and the Fiesta was covered as a
newly acquired automobile under the Allstate policy on January 23,
1991, the day of the accident.
In sum, we hold that the "newly acquired automobile" provision
in Key's Allstate policy is clear and unambiguous, and that Key
satisfied the four conditions necessary for coverage to attach.
Because neither the language used in the policy nor independent
notification from Allstate notified Key that the insurance coverage
had been canceled, Allstate is liable for the bodily injury damages
arising from the accident on January 23, 1991. Accordingly, the
order of the district court is reversed, and this case is remanded
for a calculation of damages consistent with this opinion and
attorney's fees.
REVERSED and REMANDED.
COX, Circuit Judge, dissenting:
The district court concluded that Key had demonstrated an
intention not to insure her Ford Fiesta with Allstate, but rather
to insure it with Underwriters. The court found that Key had
stated that she chose to have insurance with one company for one
car and with another company for another car because she thought it
would be cheaper.
The district court understood Florida law to hold that the
intent of the insured is controlling under circumstances such as
these, citing Pennsylvania Nat'l Mutual Casualty Ins. Co. v. Ritz,
284 So.2d 474 (Fla. 3d DCA 1973). My understanding of Florida law
is the same as that of the district court. I would affirm for the
reasons stated in the district court's well-reasoned memorandum
opinion.