Cannot Create Coverage by Claiming Ambiguity

No Cover for Diver Who Drowned

Liability insurance policies are created with a broad grant of coverage that is then chipped away with limitations and exclusions to cover on the risks of loss that the insured intended to cover. No insurance policy, regardless of the desires of those insured, covers every possible risk of loss faced by the insured.

In Travelers Property Casualty Company of America v. Salt ‘N Blue LLC, Robert Wranovics, Douglas Barkley, Glenn Grosso, et al., No. 17-14235, United States Court Of Appeals For The Eleventh Circuit (May 7, 2018) the difference between actuality and desire became clear when Joseph Grasso drowned while diving for a lobster.

Douglas Barkley appeals the district court’s order granting summary judgment in favor of Travelers Property Casualty Company of America (Travelers) in this action regarding the scope of Travelers’ duty to defend and indemnify Barkley and his assignee, certain underwriters at Lloyd’s of London, Syndicate 4020, Ark Underwriting, Inc. (Lloyds). The district court concluded Travelers had no duty to defend or indemnify.


On July 30, 2014, Joseph Grosso and his brother Nicholas Grosso boarded the M/V Scubatyme III (the Vessel) for a lobster dive off the coast of Pompano Beach, Florida. Salt ‘N Blue LLC owned the Vessel, which was operated by Robert Wranovics, its captain, and Douglas Barkley, a mate and divemaster.

The Vessel proceeded to the intended dive site. After completing their dives, Joseph and Nicholas returned to the Vessel. Nicholas had exhausted his air supply, but Joseph wanted to re-enter the water to retrieve a lobster he had marked with a buoy. Although no one had checked the amount of air remaining in his tank, Joseph was allowed to re-enter the water without a dive buddy.

During Joseph’s second dive, Wranovics steered the Vessel away to pick up other divers. When Wranovics returned to Joseph’s location, Wranovics found Joseph unresponsive in approximately fifteen feet of water. Joseph’s body was tangled in a line with a buoy attached to it—a line given to him by a crewmember on the Vessel. He had drowned.


This appeal concerns the duty to defend and the duty to indemnify. The duty to defend is distinct from, and broader than, the duty to indemnify. Under Florida law, an insurer’s duty to defend depends solely on the allegations in the complaint filed against the insured. Therefore, for purposes of the analysis, the court looks to the complaint filed in the Underlying Litigation (Underlying Complaint) and assume all facts contained therein are accurate.

There is no duty to defend only if there is no doubt that the allegations of the complaint do not fall within the policy’s coverage.

The general coverage grant obligates Travelers to “pay sums . . . a covered person under this policy become[s] legally obligated to pay as a result of the ownership, operation or maintenance of the insured vessel because of . . . bodily injury or loss of life.” But the district court did not decide whether Joseph’s death occurred “as a result of” the operation of the Vessel. Instead, the district court granted summary judgment for Travelers because, even assuming Jospeh’s death occurred as a result of the operation of the Vessel, the facts alleged in the Underlying Complaint fall within the Diveboat Limitation Endorsement.

As Florida courts have repeated time and again, insurance contracts must be construed in accordance with the plain language of the policy. If the relevant policy language is susceptible to more than one reasonable interpretation, one providing coverage and the [other] limiting coverage, the insurance policy is considered ambiguous.

Courts should not strain to find ambiguity. If there is no genuine ambiguity, there is no reason to bypass the policy’s plain meaning.

The Diveboat Limitation Endorsement excludes “[b]odily injury, loss of life, or illness of any person while in the water or arising as a consequence of being in the water” from coverage. The facts alleged in the Underlying Complaint show that Joseph drowned after re-entering the water to retrieve a lobster. His drowning death is a “loss of life” that occurred “while in the water.” Even if Barkley’s argument were not waived, the standalone text of the Diveboat Limitation Endorsement is unambiguous: loss of life while in the water is not covered.

Simply because one provision gives a general grant of coverage and another provision limits this coverage does not mean there is an ambiguity. On the contrary, this is the very nature of an insurance contract; exclusions in coverage are expressly intended to modify coverage clauses and to limit their scope.

The Divemaster Limitation Endorsement provides that the Diveboat Limitation Endorsement is disregarded where “liability to a Certified Divemaster and/or Dive Instructor” is concerned. Liability to a certified divemaster or dive instructor is simply not at issue. However, Barkley nonetheless emphasizes that “Travelers relied upon this endorsement to try to bolster its position that no coverage exists.” The fact that Travelers quoted the Divemaster Limitation Endorsement in a letter recounting “many of the pertinent sections of the [Travelers’] Policy” does not demonstrate a conflict between the Divemaster Limitation Endorsement and the Diveboat Limitation Endorsement, particularly where the letter simultaneously “urge[d] [Barkley] to review the full Policy for a complete listing of all applicable terms, conditions, exclusions and endorsements.”

Barkley argued that the coverage was illusory. However, insurance coverage becomes illusory when limitations or exclusions completely contradict the insuring provisions. The Diveboat Limitation Endorsement excludes “[b]odily injury, loss of life, or illness of any person while in the water or arising as a consequence of being in the water.”

The Diveboat Limitation Endorsement would not apply to bodily injury, loss of life, or illness occurring onboard the Vessel as a result of negligence in the Vessel’s operation. Therefore, the Travelers’ Policy does not grant a right in one paragraph and then retract the very same right in a later one. Instead, the Diveboat Limitation Endorsement excludes coverage for a subset of claims that would ordinarily fall within the policy’s insuring provisions. The district court did not err.


Insurance contracts are interpreted according to the plain language of the policy except when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction. When an exclusion is clear and unambiguous the court has no choice but to apply the language as written.

© 2018 – Barry Zalma

This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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