In Lloyds Underwriters v. Keystone Equipment Finance Corp., 25 So3d 89 (Fla. 4th DCA 2009), the insured obtained an insurance policy from Lloyds providing liability coverage on a commercial tractor-trailer.  The policy’s effective date was November 30, 2004.  The tractor-trailer was stolen December 18, 2004.  The policy provided coverage for loss due to theft, but Lloyds denied the claim, relying on a "Garaging or Secured Yard Warranty" contained in the policy.  This garaging warranty required the insured to "warrant" that the vehicle would be kept in a closed garage, in an enclosed 24-hour guarded lot, or parked adjacent to the insured’s residence.  A breach of this warranty "shall result in denial of claim or any rights of recovery hereunder." 

The insured sued Lloyds for breach of contract alleging that Lloyds was estopped from relying, or waived its right to rely, upon the garaging warranty because Lloyds had failed to comply with the notice and delivery requirements of Florida Statutes Section 627.421 and 626.922, and the insured had not otherwise been provided notice of the garaging warranty.  Section 627.421 requires delivery of the insurance policy not more than sixty days after effectuation of coverage.  Section 626.922 requires the surplus lines agent to "promptly issue and deliver to the insured" either the policy or, if the policy is not "then available, a certificate, cover note, or other confirmation of insurance" showing, amount other things, "coverage, conditions, and term of insurance."  Section 626.922(1).  Section 626.922(4) provides that "[a] copy of the policy or cover note or confirmation of insurance shall be delivered to the insured within 60 days after the effectuation of coverage." 

The insured provided an affidavit wherein he swore that the loss occurred on December 18, 2004, that he had not received a copy of the binder or policy prior to the loss, and that he had not otherwise received written or verbal notice of the garaging warranty.  The insured did file a copy of the binder issued by the insurance agent, bearing a date of January 2, 2005, and the Lloyds’ policy, listing February 9, 2005, as the date printed on the schedules of equipment and drivers. 

Lloyds did not dispute these facts, but merely argued that Florida law expressly provides that the doctrines of estoppel and waiver may not be applied to create coverage that does not otherwise exist. 

The trial court granted summary judgment in favor of the insured.  On appeal, the 4th DCA affirmed.

The 4th DCA acknowledged the general rule that coverage cannot be created by estoppel or waiver. But, the Court distinguished this case. In this case, the insured was not utilzing estoppel or waiver to "create" coverage. Losses due to theft of the insured vehicle were covered under the policy, and a premium had been charged for that coverage. Thus, there was no need to "create" coverage. On the contrary, Lloyds was attempting to take away coverage that existed by enforcing a "provision of forfeiture." The Court noted that insurers can waive or be estopped from enforcing a "provision of forfieture."

Once the Court determined that the garaging warranty was a forfeiture provision and thus one that Lloyds may be estopped from restoring to in order to deny a claim, the Court had "no trouble finding that," Lloyds was indeed estopped from asserting the forfeiture provision. According to the Court

logic and fairness dictate that while an insurer is free to require its insured to warrant or promis to behave in a particular manner, the insurer had a duty to inform the insured of such warranty or promise before the insurer can insist upon compliance with the same and impose the penalty of a forfeiture of all coverage for the insured’s noncompliance.