In Essex Insurance Company v. Zota, 2008 WL 2520879 ( Fla. , 2008) , Mercedes Zota was injured when she fell from scaffolding while painting a mural on the second story ceiling of a home under construction. Zota was performing work as a salaried employee of Perla Lichi Designs and the President of Trompe L'Oeils 'R' Us when she was injured. Trompe L'Oeils and Perla Lichi Designs had contracted with Lighthouse Intracoastal, Inc., the owner of the premises where Zota was injured, to paint the ceiling of that residence.
After the incident, Zota and her husband brought a negligence action against: Lighthouse; Broward Executive Builders, Inc., the general contractor for the project; and Jack Farji, a 50 percent shareholder of Lighthouse and the owner of Broward. Lighthouse's insurer, Essex, then filed a federal diversity action seeking declaratory relief against Lighthouse, Broward, Farji, and the Zotas. It sought a determination and declaration of its rights and obligations with respect to the defendants in the negligence action filed in state court.
The district court granted summary judgment for Lighthouse and Zota, finding that Essex was precluded from denying coverage. Essex appealed. The court of appeals certified questions for the Florida Supreme Court.
The primary question considered was whether Florida statutes §626.922 and §627.421 place an affirmative duty upon a surplus lines insurer or its direct surplus lines agent to deliver a copy of a surplus lines insurance policy directly to the insured, notwithstanding the successful delivery of the relevant policy to the representative of the insured, i.e., the producing agent. Consideration of this question necessitated an analysis of whether Chapter 627 applied to insurance placed under Florida 's surplus lines laws. Specifically at issue was the meaning of the terms “Chapter” and “Part” as used in §627.021.
After conducting an analysis of the statute and the relevant legislative history, the court ruled that §627.021 did not exempt surplus lines insurance from all of Chapter 627. Rather, §627.021 only exempted surplus lines insurance from the ratings laws in “Part I” of Chapter 627, and the remainder of Chapter 627 governed policies issued pursuant to Florida 's surplus lines laws. The court stated that the correct interpretation was that the exclusionary provisions of §627.021(2) applied only to the ratings laws found in part I of Chapter 627.
Further, in consideration of the first certified question, the court found that the traditional common law presumption that an independent insurance broker is the agent of the insured “emerges unscathed” from an analysis of §626.922 and §627.421. Thus, the court confirmed that delivery of evidence of insurance to the insured's independent broker was sufficient to comply with §626.922 and §627.421. The court found no language present precluding a surplus lines insurer or its direct surplus lines agent from delivering a copy of the coverage documents to the insured's independent representative-broker instead of directly to the insured.
The court next held that the terms “insurance broker” and “insurance agent” were not synonymous. An “insurance broker” represents the insured by acting as a middleman between the insured and the insurer, soliciting insurance from the public under no employment from any special company, and, upon securing an order, places it with a company selected by the insured, or, if the insured has no preference, with a company selected by the broker. An “insurance agent,” on the other hand, represents an insurer under an exclusive employment agreement by the insurance company.
The court explained that this distinction between an insurance agent and an insurance broker was important because acts of an agent are imputable to the insurer, and acts of a broker are imputable to the insured. And, an insured seeking to estop an insurer from denying coverage based on a broker's actions has the burden of proving that the broker was the agent of the insurer.
Thus, for purposes of determining whether delivery of the surplus lines CGL policy to the company's general lines agent constituted delivery of the policy on Lighthouse (where the company's agent did not have a contract or agreement with the Essex to market or sell Essex's policies and the agent did not have any type of exclusive relationship with any one surplus lines insurer), the general lines insurance agent for Lighthouse was acting as the company's insurance broker when it went to the surplus lines market on the company's behalf when Lighthouse could not obtain a GGL policy through the general lines market.