Chloe E. Bonds

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Imagine that a small business in sunny, central Florida is evaluating its insurance policy. The business notices that the policy includes seemingly unnecessary coverage for losses caused by landslides. Before the end of the current year, the business contacts its insurance agency and successfully negotiates to remove the existing landslide coverage from next year’s policy. Following the negotiations, the agent issues an updated insurance binder reflecting the change. Although the insurance agency is aware that the business no longer wants landslide coverage, the principal policy issued after negotiations conspicuously does not include any language regarding the coverage or exclusion of landslide damages. When an unexpected storm strikes, a landslide destroys a large portion of the business’s property. The business files a claim with the insurance agency and is promptly denied coverage because the agency says its policy does not cover landslide damages. If the business sues the insurance agency for coverage, which party will prevail? The answer serves as a cautionary tale for insurance agencies.

In Shiloh Christian Center v. Aspen Specialty Insurance Company, the United States Court of Appeals for the Eleventh Circuit was faced with this question.