In Spaid v. Integon Indemnity Corp., Case No. 1D13-2343 (Fla. 1st DCA June 18, 2014), the court imposed unlimited exposure on an insurer to pay personal injury protection (PIP) benefits. After an auto accident, Spaid claimed PIP benefits under her auto insurance policy. The policy provided coverage for Personal Injury Protection Basic with a limit of $10,000 each person. The policy also had an Extended PIP addendum which allowed for payment of medical bills at 100% rather than the typical 80%. Integon paid her medical bills at 100% up to the $10,000 limit, but Spaid filed suit seeking an order requiring that Integon “pay all of her reasonable medical expenses related to the accident without a limit of liability.” The trial court applied the $10,000 limit, but the appellate court reversed declaring that 100% of her medical expenses are recoverable without any limit.

In reaching its decision, the appellate court found the policy ambiguous and construed it against Integon as the drafter. Although it is a well-established rule of Florida law that ambiguities are construed against the drafter, the court’s analysis ignores a basic element of that rule: an ambiguity exists only when there are two reasonable constructions of the policy with one favoring the insurer and one the insured. In my view, it is not reasonable to construe the policy as providing unlimited PIP benefits. 

As the opinion reflects, Integon’s declarations pages have information in three columns titled Coverage, Limits of Liability, and Premiums. As relevant to this dispute, three rows of the declarations pages listed the following:

Personal Injury Protection Basic:      $10,000 each Person   305.00
Deductible:                                                $0 Insured/Relative    INCL
Extended PIP:                                           (100% Medical, 80% Wage Loss) INCL

The court concluded that there was no Limit of Liability stated for Extended PIP but that conclusion ignores the structure of the declarations pages. Extended PIP is a subcategory of Personal Injury Protection Basic, just like the Deductible is a subcategory. Thus, there is no need for the Limit of Liability to be repeated.

Moreover, there is no additional premium charged for the Extended PIP; it is included. That is understandable since the same limit applies to cap the insurer’s overall exposure. The extension is intended to limit the insured’s out-of-pocket exposure for the initial bills incurred since the 20% co-payment on medical bills is effectively deleted. It is not reasonable to think that an insurer would charge $305 for PIP coverage with a $10,000 limit but charge no additional premium whatsoever for unlimited PIP coverage that might pay hundreds of thousands of dollars in benefits.

Finally, the court failed to give proper effect to all policy language. The basic PIP endorsement provides in the “Insuring Agreement” that the insurer pays 80% of medical expenses. The endorsement also provides that the “limits of liability shown in the Declaration for Personal Injury Protection coverage are the most we will pay to or for each insured injured ….” There was no claim that this language was ambiguous in any way. The extended PIP addendum provides that it is modifying only the “Insuring Agreement” by increasing the payment rate to 100%. Since the addendum modified only the percentage in the “Insuring Agreement,” it is not reasonable to read the addendum as making other changes, such as changing the limits of liability language in the PIP endorsement.  Such a reading would also conflict with Florida law holding that an addendum will not be extended to affect other provisions of the policy not expressly mentioned in the addendum.  Since the court acknowledged that the addendum intended only one specific modification, the court should have given full effect to all other policy language.  Thus, the unambiguous limits of liability language in the PIP endorsement remains in force, and it should be given effect to preclude Spaid’s claim for unlimited coverage.