Insured May Not Expand Coverage by Adding a Business Without the Agreement of the Insurer
To the surprise or chagrin of many an insurance policy is nothing more than a contract. If the terms and conditions of that contract are clear and unambiguous courts will enforce the contract as written.
When a party seeks coverage for a business operation not specifically insured, in Larry Musselwhite v. Florida Farm General Insurance Company and Florida Farm Bureau Casualty Insurance Company, Joseph Hart, an individual, JODH3, INC., d/b/a Bell Feed & Farm, Well & Pump, No. 1D18-780, First District Court of Appeal State of Florida (May 28, 2019) it needed to prove that the injury alleged was due to an operation of the insured that the insurer agreed to insure.
Appellant claims that (1) the declaration page’s reference to the fictitious name of the insureds’ feed store business did not limit coverage because a fictitious name is not a legal and insurable entity separate and apart from the named insured; and (2) the well drilling activity arose out of operations necessary or incidental to business conducted on the feed store premises.
Appellant filed a negligence action against JODH3, Inc. d/b/a Bell Feed & Farm, Well & Pump and its principal, Joseph Hart, for injuries he sustained after he had been hired to assist in a water well drilling project in Trenton, Florida. Appellees, Florida Farm General Insurance Company and Florida Farm Bureau Casualty Insurance Company, filed a complaint for declaratory relief seeking a determination that they had no duty under two commercial general liability policies to defend or indemnify JODH3 and Hart as to Appellant’s claims against them.
The policies declarations page identified “JODH3, Inc. d/b/a Bell Feed & Farm” as the named insured and described the business as a “feed store.” The declarations page of the second policy identified Joseph Hart and his wife as named insureds and also described the business as a “feed store.” Both polices contained a specific endorsement limiting coverage to “‘bodily injury,’ ‘property damage,’ ‘personal injury,’ ‘advertising injury’ and medical expenses arising out of . . . [t]he ownership, maintenance or use of the premises shown in the Schedule and operations necessary or incidental to those premises[.] at 1159 S PARIS ST BELL, FL 32619-2396, FEED/GRAIN/HAY DEALER, NON-COMBUSTIBLE.”
During the 2014-2015 policy period, Hart began a new business that offered well drilling services under the fictitious name “JODH3, Inc. d/b/a Bell Feed & Farm, Well & Pump.” Most of the well drilling — 65 to 75 percent — was for residential customers. Hart continued to maintain the fictitious name “JODH3, Inc. d/b/a Bell Feed & Farm” for his feed store business. While both businesses were owned by JODH3, each business had separate banks accounts, email addresses, business cards, invoices, and phone numbers.
In 2015 the underwriter informed Colson, the broker for Appellees that it did not insure well drilling operations. Colson then told Hart that he could not obtain the requested coverage from Appellees. Eventually Colson communicated a quote for coverage for well drilling to Hart only to have Hart respond that he did not have the cash on hand to pay the premium and chose not to obtain coverage at that time.
Appellant sustained injuries while drilling a well on a residential customer’s property. The next day, Hart contacted Colson to obtain the liability policy that Colson previously quoted for his well drilling business. On February 2, 2016, Colson received an updated quote from Atlantic Casualty Insurance Company. Hart applied for the insurance in the name of “Bell Feed & Farm, Well & Pump” and obtained liability coverage for the well drilling business on June 3, 2016 that was only effective after the injury.
The trial court concluded that the insurance policies in effect at the time of the injury did not provide coverage for claims arising out of the insureds’ drilling operations, but only covered claims arising out of their business premises, which was described by the declaration’s page as a “feed store.” The court further found that well drilling operations were neither necessary nor incidental to the feed store business or its premises.
The Florida court noted that a number of courts in other jurisdictions have held that when a liability policy identifies a named insured as doing business under a fictitious name, coverage is limited only to business done under the fictitious name and does not extend to any other business operated by the insured.
The Florida appellate court concluded that the greater weight of authority supported the trial court’s conclusion that the “d/b/a” designation limited liability to JODH3’s feed store business operated under the fictitious name. To hold otherwise would frustrate the intent clearly expressed in the policy declarations, subject Appellees to open-ended exposure to liability for any new business operations that JODH3 might unilaterally decide to undertake, and force Appellees to insure risks that they never contracted to cover. JODH3 cannot be allowed to effectively rewrite the policy by requiring Appellees to insure risks arising from a well drilling business that did not exist when the policy terms were agreed upon.
Even assuming the designated premises endorsement created an ambiguity and that the term “premises” includes the business operated on the premises, the trial court correctly found that the polices did not provide coverage for well drilling operations that were not necessary or incidental to the feed store business conducted on the premises.
The plain or ordinary meaning of the feed or grain dealer description is that the business operated on the premises involved the sale of animal feed, particularly that for farm animals. An operation necessary or incidental to such a business might include the delivery of feed products to customers because well drilling is not necessary or incidental to the business of selling animal feed. Therefore, the trial court properly concluded that Appellant’s off-premises injury was not covered by the policies issued to JODH3 and Hart.
The trial court properly entered summary judgment for Appellees because Appellant’s off-premises injury was not covered under the policies issued to JODH3 and Hart where (1) the “d/b/a” designation limited liability to JODH3’s feed store business operated under the fictitious name; and (2) well drilling was not necessary or incidental to business conducted on the feed store premises.
JODH3 had the opportunity to obtain coverage for its well drilling business. It did not buy it because funds were not available. It knew it needed separate coverage and elected to operate uninsured until it was sued by an injured contract worker and then tried to convince the court to rewrite the policy to provide the coverage it needed rather than the coverage it bought. The court did not fall for the attempt and made it clear that the insured only had the coverage it paid for and had no right to change the coverage to what it needed.
© 2019 – 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 http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
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