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In a ruling that hinged on the definition of “sublimit,” a federal appeals court affirmed Friday that excess insurer StarStone National Insurance Co. is not obligated to provide coverage in connection with an attempted murder at a Florida hotel.
In April 2017, Zachary Ryan Ganoe and Andrew Beckford were guests at the Days Inn of Kissimmee when they were attacked by a woman who killed Mr. Ganoe and attempted to murder Mr. Bickford, according to court papers in StarStone National Insurance Co. v. Polynesian Inn LLC.et al.
Mr. Beckford made a claim for damages against Polynesian, alleging it had failed to provide adequate security. The issue in the litigation was whether the $25,000 limit for assault claims in the primary policy capped the liability or Polynesian’s excess policy with StarStone dropped down and provided coverage for any assault exceeding the $25,000 limit.
The August 2019 ruling in the insurer’s favor in the case by the U.S. District Court in Orlando was unanimously affirmed by the 11th U.S. Circuit court of appeals in Atlanta in Friday’s ruling.
“We conclude that the district court correctly granted summary judgment to StarStone.” The definition of sublimit by the Dallas-based International Risk Management Institute Inc. “adopted by the district court is consistent with the ordinary meaning of that term as reflected in legal and non-legal dictionaries,” the ruling said.
“The term ‘sublimit’ has been defined generally as a ‘limit on a subcategory’ … and more specifically as ‘a liability limit in an insurance policy for a particular risk (as loss of jewelry by theft) that is below the aggregate liability limit of the policy,” the ruling said.
“Therefore, under the ordinary meaning of that term” the policy’s assault endorsement “qualifies as a sublimit because it caps the insurer’s exposure at an amount below the ordinary policy limit for a subcategory of loss,” the court said in affirming the district court’s decision.
StarStone attorney Rory Eric Jurman, a partner with Hinshaw & Culbertson LLP in Fort Lauderdale, Florida, said the ruling was beneficial for insurers because it provides further clarity on a national issue.
“This is really the only leading case, surprisingly, in this area of the law dealing with a sublimit and what that actually means,” said Mr. Jurman, who added no other federal circuit court has ruled on this issue. He said he has been contacted about the case by insurer attorneys from around the country.
Defense attorneys in the case did not respond to requests for comment.