Florida Clarifies That Extrinsic Evidence May Not Be Used to Resolve Policy Ambiguities
Columbus, Ohio, September 5, 2013: The “Burke’s Law” column featured on www.claimsjournal.com recently reviewed a decision from the Florida Supreme Court addressing the use of extrinsic evidence to clarify ambiguous policy language. In Wash. Nat’l Ins. Co. v. Ruderman, No. SC12-323 (Fla. Jul. 3, 2013), the Court held that ambiguities in an insurance policy must be strictly construed against the insurer and in favor of coverage, without resort to extrinsic evidence. Contract law generally prohibits the use of outside information to alter the terms of an agreement, but will often allow extrinsic evidence to resolve ambiguous terms. However, some courts impose a strict rule on insurers, automatically construing ambiguities against the insurer.
In this case, the court affirmed that Florida insurance law supports a strict rule against insurers and precludes the use of extrinsic evidence. The court was split 4-3 on the issue and a strong dissent argued that standard principles of contract law should apply to allow the use of extrinsic evidence to clarify ambiguous terms.
The decision is favorable for policyholders in Florida and establishes a strict rule for insurers. While insurers may limit their liability under the policy and define the terms of coverage, they must do so clearly and unambiguously within the policy.
The article can be read at https://www.claimsjournal.com/news/southeast/2013/09/04/236215.htm.