Builders in Florida scored a court victory against their insurers in terms of when the insurer must provide a legal defense against claims. A recent decision clarified Florida law regarding insurance contracts for builder.
The dispute revolved around claims against a general contractor of a condominium project. There were several claims for defects in the building. The contractor forwarded these notices of claims to its insurance carrier. However, the carrier refused to become involved because the claims were not a lawsuit as specified in the insurance policy.
After several courts sided with the insurance carrier, the contractor took the matter to federal court. The court narrowed the issue to whether the notices of claims received by the contractor constituted a suit in the policy. To determine the issue, the federal court sent the issue to the Florida Supreme Court to answer the issue.
The Florida court discussed applicable statutes and determined that yes, a notice of claim qualifies as a "suit" under these circumstances. As such, the federal court then determined the insurance carrier must provide a legal defense for the contractor.
Insurance contracts are a contract between the policyholder and the insurance carrier. For the most part, insurers are free to define the terms of the policy. However, insurance is also a regulated industry. The legislature has the ability to define terms and required provisions in policies. In this case, the law provided a definition of what a "suit" or notice of claim is.
As construction attorneys are aware, the contractual relationship between a building contractor and carrier can be complicated. At times, one word or phrase can have a large effect on the duties of the parties. Those who require assistance in a commercial insurance dispute could consult with an experienced lawyer.