Supreme Court issues long-awaited decision on whether an insured may recover consequential damages, over and above damages covered under the policy, in a breach of contract claim against an insurer

Posted in Legal Alerts on January 21, 2021

Today the Florida Supreme Court issued its opinion in Citizens Property Ins. Corp. v. Manor House, Case No. SC19-1394 (Fla., Jan. 21, 2021) in which the Court answered a certified question from the Fifth District Court of Appeal. In Manor House, the Fifth District asked the Supreme Court: In a first-party breach of insurance contract action brought by an insured against its insurer, not involving suit under section 624.155, Florida Statutes, does Florida law allow the insured to recover extra-contractual, consequential damages? The Supreme Court answered that question in the negative.
The Court reasoned that extra-contractual damages are not available in a first-party breach of contract action between an insured and its insured because the insurer only owes its insured policy benefits pursuant to the express terms and conditions of the policy, while extra-contractual damages are available in a separate first-party bad faith action pursuant to Florida Statute 624.155. In Manor House, the insureds sought damages from Citizens for lost rents, allegedly suffered as a result of Citizens alleged delay in paying the insured’s claim, for which there was no coverage under the policy. Because Manor House’s claim for lost rental income was not covered under the policy and Citizens was statutorily immune from an action in bad faith, the Supreme Court quashed the Fifth District’s opinion permitting Manor House to recover breach of contract damages not covered under Citizens’ policy.