I begin this with the following caveat for all my grammar gurus out there: I understand that the word “any” is not “technically” an article, but bear with me for the purpose of this discussion.
Four little words—a, an, any, and they—can mean a world of a difference with respect to coverage for an innocent co-insured. A federal judge (applying Florida law) recently ruled that “that the phrase ‘any insured’ unambiguously expresses a contractual intent to create joint obligations.” Stettin v. National Union Fire Insurance Company of Pittsburg, PA, 2017 WL 2858768 (11th Cir., July 5, 2017) (emphasis added). The Settin Court solidified a prior U.S District Court for the Southern District of Florida case, which held that an intentional loss provision precluded coverage for even innocent co-insureds when the intentional loss provision contained language prohibiting coverage for intentional acts by any insured.
So what does this mean? Say, for example, you own a property with your brother. Your brother has gotten himself into a sticky situation and owes some sharks a decent amount of money that he gambled away. He comes up with the clever (and very illegal) solution to burn down the property to recover insurance proceeds. You, being an upstanding citizen, do not know of your brother’s activities, and file an insurance claim. Throughout the course of the investigation, your insurer determines that your brother intentionally set the fire to your jointly owned property, and denies your claim relying on the following policy language:
This entire policy shall be void if any insured has intentionally concealed or misrepresented any material fact or circumstance relating to this insurance.
Looks like you’re out of luck buddy, as both Florida and Federal Courts applying Florida law agree with your insurer.
While the recent decision in Stettin did not specifically refer to the provisions for concealment or fraud or intentional loss, the theory remains the same; including the term “any” before the word “insured” unambiguously creates joint obligations, such that one insured’s acts may be imputed to the other. This results in no coverage for the innocent co-insured.
Policies vary greatly as to how they qualify multiple insureds, using the terms “a,” “an,” “any,” and “the” as articles prior to the term “insured,” and these little words vary the result for the poor respectable brother.
For example, in the Florida Second DCA case Auto-Owners Ins. Co. v. Eddinger, the court held that the fraud of a co-insured may not void the coverage of the innocent co-insured. In that case, a husband and wife were co-insureds under a property policy and the husband intentionally and fraudulently committed arson. The husband and wife jointly filed a claim, and the insurer denied coverage as to both the husband and wife on the basis that the husband’s fraudulent conduct voided the policy. The court found that the following concealment and fraud provision implied that the policy provided for several rather than joint coverage:
(The) the entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstances concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.
Several years later, the U.S. Court of Appeals for the Eleventh Circuit, in Michigan Millers Mut. Ins. Corp. v. Benfield, (again interpreting Florida law) held that “an insured” language in the intentional loss provision is ambiguous, and, therefore, found that coverage was not precluded for the innocent co-insured.
Following these decisions, insurers have revised their policy language in order to avoid any ambiguity as to whether the policy provides joint or several liabilities. Most recently, in Moustafa v. Omega Ins. Co., the Court of Appeals for the Fourth Circuit held that the following policy language is sufficient to impute material misrepresentations or concealments to the innocent co-insured: “we provide no coverage for a loss . . . if one or more ‘insureds’ have intentionally concealed or misrepresented any material facts or circumstance . . . relating to this insurance.” It is common to see this or some close variation of this policy language to qualify both the intentional loss and concealment or fraud provisions.
So when you are skimming the policy pages and skipping over those four little words, make sure to consider the huge implications it may have on your analysis of the claim.