A Florida appellate court recently held that an insurer waived the right to enforce an ordinance and law provision that required an insured to complete repairs to its property within two years, as the insurer had acquiesced to the insured’s failure to strictly adhere to the policy provision. Axis Surplus Ins. Co. v. Caribbean Beach Club Ass’n, Inc., 2014 WL 2900930 (Fla. 2d DCA June 27, 2014).

An insured sued its insurer after the insurer failed to reimburse the insured for the increased cost of construction to repair its building under an ordinance and law endorsement to the policy.  The endorsement stated that the insurer would pay for the increased cost of construction when the insured’s property was actually repaired and if the repairs were made within two years after the loss.  The insurer had denied payment to the insured for the increased cost of construction because the insured did not complete the repairs to its building within the required two-year period.  In its motion for summary judgment, the insured claimed that the insurer had waived its right to rely on the two-year provision because the insurer did not inform the insured that it would rely on it until nearly two years after the loss, and in all of the insurer’s prior communications with the insured, the insurer never raised the clause with the insured.  The trial court granted the insured’s motion for summary judgment, finding that the clause was a forfeiture provision that the insurer waived.  The insurer appealed.

The appellate court affirmed, finding that the two-year clause was a forfeiture provision that could be waived by actions of the insurer.  Because the clause was a forfeiture provision, the appellate court found that the insurer waived its ability to rely on the provision because the insurer had knowledge of the provision, but did not raise it with the insured until nearly two years after the loss.  The court held that the insurer had acquiesced to the insured’s failure to comply with the policy provision and, therefore, could not invoke its right to strictly enforce the forfeiture provision.