In Mercury Insurance Company of Florida v. Markham, ____ So.3d ____ (Fla. 3rd DCA April 20, 2010), the application for insurance asked if the subject vehicle had been "rebuilt, salvaged, modified, altered, or specially built/customized?"  Markham – the applicant – stated "no" to this question.   

Prior to the application Markham had put large tires and a lift-kit on his truck.  After an accident, Mercury Insurance denied the claim, alleging that Markham has made a material misrepresentation on the application for insurance.  According to Mercury Insurance, the large tires and lift-kit constituted a "modification" of the vehicle, and if it had known about the modification it would not have issued the policy. 

The trial court found that the term "modified" as used in the application was ambiguous, and granted summary judgment in favor of the insured.  Mercury appealed and the 1st DCA held that even though the term "modify" could be ambiguous in the abstract, under the facts of this case: 

… there is no objectively reasonable interpretation of ‘modify’ that would justify Roberts’ negative answer to this question.  Where, as here, neither the application form, nor the policy incorporated by reference therein, defines ‘modify,’ we interpret the word in accordance with its plain and ordinary meaning as reflected in the dictionary.

However, the dissent points out that the policy itself provides coverage (with a sublimit of $1,000) for after-market/modified parts.  The dissent made the point that this policy language granting coverage for "modified" parts created an ambiguity. 

The insured also argued that the insurance agent knew of the changes to his vehicle and that the insurance company was charged with that knowledge because the agent was actually the agent of the insurer.  For a discussion of "When is an Insurance Agent and ‘Agent’ for the Insured vs. the Insurer," see my blog at

The 1st DCA remanded the agency issue back to the trial court for a trial on disputed issues of fact.