Eleventh Circuit Court Finally Ends Essex v. Zota Surplus Lines Policy Delivery Litigation

Bringing finality to a case that established certain significant precedents for surplus lines insurers doing business in the State of Florida, the Eleventh Circuit Court of Appeals on January 18, 2011 affirmed a final declaratory judgment in Essex Insurance Co. v. Zota.  The Essex case initially concerned the issue of whether surplus lines insurers were required to directly deliver surplus lines policies to insureds.  Following a jury trial and subsequent appeals that included the certification of questions to the Florida Supreme Court, it was held that delivery of a surplus lines policy to the insured’s independent broker-representative constitutes delivery to the insured. 

The Eleventh Circuit’s decision affirming the decision rendered by the United States District Court for the Southern District of Florida thus resolves issues for surplus lines insurers in Florida regarding policy form filing, policy delivery, and the applicability of Chapter 627, Florida Statutes, to surplus lines carriers. 

According to analysis of the January 18, 2011 Eleventh Circuit Court of Appeals ruling provided by the American Association of Managing General Agents:

• For lawsuits filed before May 15, 2009, it can be argued that the Appellate Court adopted the district court’s reasoning (i.e., § 627.410 applies to surplus lines insurers but contains no penalty for a violation). It is not clear, however, whether the Court adopted Essex’s position on appeal (i.e., § 627.410 does not apply to surplus lines carriers). Nevertheless, Florida law provides clear guidance that the form filing requirement does not apply to lawsuits filed after May 15, 2009. See § 626.913, Fla. Stat. (2010) (enacted by Ch. 2009-166, § 7, Laws of Fla.), and

• Based on the significant ruling handed down by the Florida Supreme Courtin Essex Insurance Co.v. Zota (reported at 985 So. 2d 1036)-based on five questions certified to it by the Eleventh Circuit (Essex Insurance Co. v. Zota, 466 F.3d 981)-relating to whether surplus lines insurers were required to directly deliver a surplus lines policy to their insured, the question is now answered with finality. The Florida Supreme Court answered this question in the negative, finding that neither § 626.922 nor § 627.421, Florida Statutes required such a result. The Court found that these two statutes did not alter the well-established common law presumption that delivery of a policy to an insured’s agent constitutes delivery to the insured. The Court therefore held that delivery of a surplus lines policy to the insured’s independent broker-representative constitutes delivery to the insured.

Should you have any questions or comments, please contact Colodny Fass.

To unsubscribe from this newsletter, please send an email to bellis@cftlaw.com.