Varro v. Federated Mut. Ins. Co., 2D02-5573.

• Decision Date: 22 August 2003
• Docket Number: No. 2D02-5573.,2D02-5573.
• Citation: 854 So.2d 726
• Parties: Gabriel VARRO, Appellant, v. FEDERATED MUTUAL INSURANCE COMPANY, Appellee.
• Court: Florida District Court of Appeals

854 So.2d 726

Gabriel VARRO, Appellant, v. FEDERATED MUTUAL INSURANCE COMPANY, Appellee.

No. 2D02-5573.

District Court of Appeal of Florida, Second District.

August 22, 2003.

Ted Starr of Starr Law Offices, Pinellas Park, for Appellant.

Robert Santa Lucia of Santa Lucia & Thomas, P.A., Clearwater, for Appellee.

COVINGTON, Judge.

Gabriel Varro appeals the order granting summary judgment in favor of Federated Mutual Insurance Company (Federated). The issue before the trial court was whether Varro was entitled to receive uninsured motorist (UM) coverage as a passenger in an automobile insured under a business automobile insurance policy. The policy attempts to provide UM coverage to the named insured and its corporate officers while excluding coverage for other insureds. We conclude that section 627.727, Florida Statutes (1999), does not authorize this type of limitation on UM coverage. Because the trial court erred in finding that Varro had been validly excluded from the policy, we reverse and remand.

Federated issued a commercial package policy to K W Electric, Inc., in effect from December 20, 1999, to December 20, 2000. The policy provided business automobile coverage for four scheduled vehicles including a 1996 Mercedes 320SL. Apparently, the Mercedes was actually owned by Julian Weiss, the president and sole shareholder of K W Electric, Inc. There is no dispute that this personal auto was properly insured under the business auto policy, even though the Mercedes was not extensively used in the electrical business. There is also no dispute that this policy provided UM coverage for Mr. Weiss.

On April 12, 2000, Varro was a passenger in the Mercedes when an underinsured motorist's vehicle collided with it. Varro sought UM coverage from Federated, which took the position that it provided no UM coverage for passengers in the vehicle who were not family members of Mr. Weiss. Varro filed an action to determine this issue, and Federated moved for summary judgment. Federated's argument centered on its claim that Varro was excluded by the UM portion of the policy.

The insurance policy contained an endorsement entitled "Florida Uninsured Motorists Coverage—Non-Stacked," which defined an "insured" as follows:

1. You.

2. If you are an individual, any "family member."

3. Anyone else "occupying" a covered "auto" or a temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, "loss" or destruction.

4. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured."

Another special endorsement entitled "Uninsured and Underinsured Motorists Limit of Insurance" allowed UM coverage for "any director, officer, partner or owner of the named insured and his or her `family member' who qualify as an `insured.'"¹ However, this endorsement excluded coverage for "any other person qualifying as an `insured.'"

A distinction has long been recognized in the law of UM coverage between class I and class II insureds. See Travelers Ins. Co. v. Warren, 678 So.2d 324, 326 n. 2 (Fla.1996)

. In a family auto policy, class I includes the named insured and family members, who receive UM coverage both as occupants of an insured vehicle and in other circumstances. Class II insureds include all other passengers in the vehicle, who are covered only by virtue of the fact that they occupy the covered vehicle. In a business auto policy, the people included within class I are not so easily determined. When the named insured is a corporation, it obviously can never have a bodily injury or a UM claim as well as claims for coverage for family members. The entire risk in such a situation arises from class II insureds.

It is common for small incorporated businesses to insure autos that are also used partially as family autos. As a result, there is a need to provide UM coverage to the owners of such businesses and their families. This effectively provides the sole stockholder the same type of UM coverage that he or she would receive from a family auto policy. There is little question that an insurer issuing a family auto policy could not include an exclusion for class II claimants. Thus, the question in this case is whether a business auto policy can be written to include the sole stockholder and his family within the UM coverage while excluding all other class II insureds. We conclude that Florida law does not permit such limitations on coverage.

Section 627.727(1), Florida Statutes (1999), requires UM coverage unless "an insured named in the policy makes a written rejection of the coverage on behalf of all insureds under the...