In Danny’s Backhoe Service, LLC v. Auto Owners Ins. Co. and Ring Power Corp., 2013 WL 2350166, No. 1D12-5142 (Fla. 1st DCA May 30, 2013), the First District Court of Appeal affirmed a trial court’s decision holding Auto Owners had no duty to defend its insured in a tort suit brought against the insured for damage to an excavator rented by the insured and used by one of its employees.  The First District agreed that the policy, which provided commercial general liability (“CGL”) and commercial inland marine (“CIM”) coverage for equipment did not apply.  As to the CIM coverage, the court agreed that coverage only applied if the excavator was specifically listed on the policy, which it was not.  As to the CGL coverage, the court agreed that an exclusion for property damage to damage to property owned, rented, occupied or used by the named insured, unambiguously applied to bar coverage.

The First District also held that Auto-Owners did not waive its right to deny coverage.  The court rejected an argument that Auto-Owners failed to provide written notice to its insured reserving its right to assert a coverage defense pursuant to section 627.426(2), Florida’s Claims Administration Statute.  In rejecting that argument, the First District re-iterated the principle pronounced in AIU Ins. Co. v. Block Marina Inv. Inc., 544 So. 2d 998 (Fla. 1989), in which the Florida Supreme Court held that the term “coverage defense” as used in section 627.426(2), means a defense to coverage that otherwise exists.

Danny’s Backhoe Service, LLC, thus reinforces that section 627.426 does not apply to a policy exclusion and an insurer does not waive its right to rely upon an exclusion for failing to comply with the statute.