Citizens Property Insurance Corp. v. Hamilton
2010 Fla. App. LEXIS 9885, 2010 WL 2671808, 43 So. 3d 746 (2010)
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Rule of Law:
Under the common law collateral source rule, an insurer is prohibited from introducing evidence of the dollar amount an insured received from a separate, independent insurance policy to reduce its own liability when a covered peril causes a total loss.
Facts:
- William and Cynthia Hamilton owned a mobile home in a Florida flood zone.
- The Hamiltons maintained two separate insurance policies: one for flood loss from the National Flood Insurance Program (NFIP) and another for windstorm loss from Citizens Property Insurance Corp. (Citizens).
- The Citizens policy contained an anti-concurrent cause (ACC) clause, excluding coverage for water damage regardless of any other contributing cause.
- On September 16, 2004, Hurricane Ivan's storm surge and wave action destroyed the Hamiltons' home.
- The Hamiltons submitted a claim to NFIP, attributing the destruction to flooding, and received full policy limits of $63,700 for the dwelling and $31,000 for contents.
- Subsequently, the Hamiltons filed a claim with Citizens, alleging that wind had caused a total loss of their home before the flood surge washed it away.
- A Citizens adjuster concluded that only minor wind damage occurred, and Citizens paid the Hamiltons only $6,370.
- The Santa Rosa County Building Inspection Department issued a notice determining the home sustained "substantial damage" as a result of flooding.
Procedural Posture:
- The Hamiltons filed a lawsuit against Citizens in a Florida trial court to recover their full windstorm policy limits.
- The Hamiltons filed a motion in limine to exclude evidence of the dollar amount of their flood insurance recovery, which the trial court granted.
- Citizens filed a motion for partial summary judgment to limit recovery, which the trial court denied or deferred.
- The case proceeded to a jury trial.
- The jury found that wind caused a total loss of the Hamiltons' home and awarded damages equal to the Citizens policy limits.
- The trial court entered a final judgment consistent with the jury's verdict.
- Citizens, the appellant, appealed the trial court's judgment to the Florida First District Court of Appeal.
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Issue:
Does the common law collateral source rule prohibit an insurer from introducing evidence of the dollar amount an insured received from a separate flood insurance policy to challenge the insured's claim for a total loss under a windstorm policy?
Opinions:
Majority - Kahn, J.
Yes, the common law collateral source rule prohibits an insurer from introducing evidence of the dollar amount an insured received from a separate flood insurance policy. The collateral source rule, which applies to contract actions, bars evidence of benefits received from a source wholly independent of the defendant. Here, the NFIP flood policy was a distinct contractual obligation, paid for by the Hamiltons, and NFIP is an entity independent of Citizens. Admitting the specific dollar amount of the flood payment would mislead the jury on the central issue of causation (whether wind caused a total loss) and would create unfair prejudice, subverting the jury process. The trial court properly balanced this by allowing Citizens to mention the existence of the flood policy and claim, but not the amount of the payout. Furthermore, under Florida's Valued Policy Law (VPL) as it existed in 2004, when a covered peril causes a total loss, the insurer is liable for the face value of the policy, and premiums are set based on this maximum exposure, making a set-off for collateral payments inequitable.
Analysis:
This decision reaffirms the application of the common law collateral source rule to first-party property insurance contract disputes in Florida, preventing an insurer from benefiting from its insured's foresight in obtaining separate coverage. It highlights the distinction between the pre- and post-2005 versions of Florida’s Valued Policy Law (VPL), clarifying that under the former statute, an insured could recover full policy limits from multiple insurers for different perils, even if the total recovery exceeded the property's value. The ruling establishes a clear precedent that an insurer's contractual obligation is independent of other coverage and cannot be reduced by payments from a collateral source, thereby strengthening policyholder protections in concurrent causation scenarios.
