Coverage Cannot Be Created by Estoppel

Endorsement Changes Basic Policy Wording

Insurance policies are contracts that bind the parties to the agreements stated in the policy wording. Basic insurance contracts start with a standard form providing the coverages sought that can then be modified or limited by endorsements attached to the policy so that the insurer can limit coverage to those it is willing to take. Courts must interpret the contract of insurance by reading the entire contract before applying its terms and conditions to the facts of a law suit.

In Gotham Insurance Company v. West Coast Fire Protection Corp., Giovanni Blanco, Maria Foreste, Raymond Foreste, each individually, and as parents and natural guardians of E.F., No. 17-14092, United States Court Of Appeals For The Eleventh Circuit (October 10, 2018) the Eleventh Circuit was asked to expand the coverages provided by an umbrella liability policy. The District Court found no coverage and West Coast Fire Protection Corp., Giovanni Blanco, Maria Foreste, and Raymond Foreste appealed the district court’s order granting summary judgment in favor of Gotham Insurance Company.regarding the scope of coverage under West Coast’s umbrella insurance policy.


A vehicle Blanco was driving struck the Forestes’ child, causing her serious and permanent injuries. At the time of the accident, Blanco was working for West Coast and driving a vehicle owned by the company. West Coast had an automobile insurance policy with Allstate, as well as commercial general liability and umbrella policies with Gotham.

After the accident, the Forestes sued West Coast and Blanco in state court. Allstate defended. Gotham confirmed to Allstate that Gotham had “excess coverage of $2,000,000 for this loss” under the umbrella policy. In a separate letter Gotham told the Forestes’ counsel that it was West Coast’s excess coverage provider.

The Forestes then made a time-limited settlement demand, seeking the combined policy limits of West Coast’s automobile policy with Allstate ($1 million) and its umbrella policy with Gotham ($2 million). A few days before the expiration of the settlement demand, Gotham informed West Coast that under the terms of the umbrella policy there was no coverage for the Forestes’ claim.

Gotham then filed this declaratory judgment action in federal district court against West Coast, Blanco, and the Forestes seeking a declaration that there was no coverage under the umbrella policy.


The record includes a certified copy of the policy, which consists of a declarations page, a coverage form, and various endorsements.

The umbrella policy’s declarations page identifies West Coast as the insured, lists the policy number, and indicates the policy period. It also states that the policy has a $2 million limit of liability. The declarations page includes a space for the identification of “Form(s) and Endorsements(s) [sic] made a part of the policy at the time of issue.”

The certified copy of the policy includes a “Commercial Liability Umbrella Coverage Form,” Form CU 00010900. This form sets forth the coverages and exclusions under the umbrella policy. It provides that Gotham will pay on behalf of West Coast for certain losses because of bodily injury or property damage.

An endorsement attached to the policy is the Auto Exclusion Endorsement, Form UM 00780911. This endorsement lists West Coast as the insured, indicates the policy number for the umbrella policy, and identifies the endorsement’s effective date. The endorsement states that it “modifies” West Coast’s umbrella policy by adding an exclusion. The exclusion provides that “[t]his insurance does not apply[] [t]o any liability arising out of the ownership, maintenance, operation, use, loading or unloading of any ‘auto.'”


The Policy Unambiguously Bars Coverage Under the Auto Exclusion Endorsement.

The appellants contended that the policy is ambiguous and reasonably can be interpreted not to include the Auto Exclusion Endorsement, which is not listed as a form or endorsement on the policy’s declarations page. The Eleventh Circuit disagreed and found that the only reasonable interpretation of the insurance policy as a whole is that the Auto Exclusion Endorsement is a part of the policy.

If the allegations asserted in the complaint fall outside the policy’s coverage, there is no duty to defend. When there exists no duty to defend, an insurer has no duty to indemnify.

In interpreting the plain language of the policy the court must read the policy as a whole, endeavoring to give every provision its full meaning and operative effect. In interpreting the policy as a whole, the court must consider not only the printed policy form but also the policy’s declarations page and any endorsements to the policy.

The rule of construction and interpretation of the policy in favor of the insured and against the insurer applies only when a genuine inconsistency, uncertainty, or ambiguity in meaning remains after resort to the ordinary rules of construction.

The Auto Exclusion Endorsement is clearly part of the umbrella policy because the endorsement on its face indicates that it is made a part of the policy. To interpret the policy otherwise will run afoul of the requirement that an appellate court must endeavor to give every provision its full meaning and operative effect.

The policy, viewed as a whole, reflects that the parties contemplated that an endorsement could modify the policy without being listed on the declarations page. Not only does the Auto Exclusion Endorsement itself say that it is a part of the policy, but the Schedule of Forms and Endorsements, which itself is an endorsement, identifies the Auto Exclusion Endorsement and other endorsements included in the certified copy of the policy.

Because the endorsement plainly bars coverage for the Forestes’ state court claims, which arose out of an auto accident, the district court properly concluded that Gotham had no duty to defend or indemnify West Coast or Blanco.

Gotham’s Conduct Does Not Give Rise to Coverage by Estoppel.

The appellants also make the independent argument that Gotham had a duty to defend and indemnify West Coast and Blanco in the Forestes’ state court action based on a theory of coverage by estoppel. They contend that because Gotham represented to West Coast and Blanco that there was coverage, it was estopped from later denying coverage. Coverage by estoppel does not apply here because there is no evidence that West Coast or Blanco experienced a detrimental change in position as a result of relying on Gotham’s representation that there was coverage.

Under Florida law, the doctrine of estoppel generally may not be used to create or extend coverage where none originally existed. The Florida Supreme Court has recognized a “very narrow exception” to this rule under which “the doctrine of promissory estoppel may be utilized to create insurance coverage where to refuse to do so would sanction fraud or other injustice.”

The essential elements of estoppel are

  1. a representation as to a material fact that is contrary to a later-asserted position,
  2. reliance on that representation, and
  3. a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon. [Tome v. State Farm Fire & Cas. Co., 125 So. 3d 864, 867 (Fla. Dist. Ct. App. 2013)]

Promissory estoppel will apply only if the insured can show prejudice because it is the fact that the insured has been prejudiced which estops the insurer from denying the indemnity obligation of the insurance policy. Since Gotham denied coverage before the settlement offer expired the appellants have failed to show detrimental reliance on Gotham’s representation of coverage, promissory estoppel does not apply.


Florida should reconsider its “narrow” application of coverage by estoppel. Insurance contracts should be read as written and courts should not provide coverages not negotiated or acquired before a loss. Coverage by estoppel is another way of saying an insurer who defrauds its insured by claiming coverage that does not exist should pay the damages incurred by the insured. Coverage by estoppel should be impossible. Damages for fraud can always be available if proved.

© 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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