Insurance Law Hawaii: No Ambiguity Can Exist Between Standard ...

?? The First Circuit considered whether an alleged ambiguity on the scope of coverage between the Declarations Page and a Standard Flood Insurance Policy ("SFIP") would allow coverage to the insured. McGair v. Am. Bankers Ins. Co. of Florida, 2012 U.S. App. LEXIS?185911 (1st Cir. Sept. 4, 2012).

?? The insureds home was damaged by a flood. The flooding caused damage to furniture, furnishings, appliances and fixtures, much of which was located in the insureds' basement. After a claim was filed with American Bankers, an adjuster came to the house and recommended a payment of $4,307.91. The insureds rejected the payment from American Bankers, contending their loss was $40,614.52.

?? The disagreement was based on the scope of the policy's coverage?for the contents of the insureds' basement. The insureds argued that the Declarations Page indicated the entire contents of their basement was covered without limitation. There was an ambiguity because terms of the SFIP limited coverage for items located in the basement of a dwelling to such things as central air conditioners, furnaces, and insulation.

?? The insureds filed suit, but the district court awarded summary judgment to American Bankers.

?? The First Circuit affirmed. No ambiguity between the SFIP and the Declarations Page could exist because by regulation, the terms of the SFIP controlled. The regulations provided that "no provision of the [SFIP] shall be altered, varied, or waived other than by the express written consent of the Federal Insurance Administrator." Assuming there was an ambiguity, general insurance law principles applicable to the interpretation of ambiguities had to give way to federal regulations?dictating the terms of the SFIP.

?? The insureds also argued that any award in the case would not actually be paid from the federal treasury, but by American Bankers, because the company acted outside the scope of its agreement with the government in preparing the Declarations Page. The court disagreed. The governing regulations stated the Federal Insurance Administrator could choose not to reimburse an insurance company if the litigation was based upon agent negligence. The insureds here did not allege that American Bankers acted outside the scope of its obligations under the?National Flood Insurance Program.

Source: http://www.insurancelawhawaii.com/insurance_law_hawaii/2012/10/no-ambiguity-can-exist-between-flood-policy-and-its-declaration-page.html

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