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(Article from Insurance Law Alert, July/August 2020)

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The Eleventh Circuit ruled that an excess insurer had no duty to provide coverage, finding that a sublimit provision in an excess policy unambiguously limited the applicable coverage.  Starstone National Ins. Co. v. Polynesian Inn, LLC, 2020 WL 3121299 (11th Cir. June 12, 2020).

The coverage dispute arose out of a physical assault at a hotel.  The hotel’s primary insurance policy provided $1 million in liability coverage per-occurrence.  It also included a “Limited Assault or Battery Liability Coverage” endorsement that made available separate coverage for bodily injury caused by assault or battery, subject to a $25,000 per-occurrence limit.  The excess policy followed form to the primary policy and provided coverage in excess of the primary policy’s “Total Limits” – a list that included the $1 million per-occurrence limit.  However, the excess policy explicitly excluded coverage for any “[s]ublimit of liability, unless coverage for such sublimit is specifically endorsed to the Policy.”  The parties disputed whether the $25,000 per-occurrence limit for assault and battery injuries was a “sublimit” under the excess policy.

The court ruled that the assault and battery endorsement established a “sublimit” such that excess coverage was not implicated.  Although “sublimit” was not defined in the policy, the court reasoned that the $25,000 per-occurrence limit for assault and battery injuries constituted a sublimit because it “caps the insurer’s exposure at an amount below the ordinary policy limit for a subcategory of loss.”  The court rejected the hotel’s assertion that the endorsement created a “standalone limit” (rather than a sublimit) because it existed “apart from” and “not under or subordinate to the $1 million per-occurrence limit.”