Why it matters: A Florida federal court has ruled an endorsement specifically covering crop dusting trumped an exclusion in a coverage dispute involving the accidental spraying of a neighbor’s property while crop dusting. “When an endorsement conflicts with the body of an insurance policy, the endorsement controls,” the court declared. After a crop duster mistakenly sprayed a neighboring date palm nursery while spraying sugar cane farms, the date palm farm sued. The sugar cane farm insurer refused to defend the suit based on multiple policy exclusions. Although the court found that some of the exclusions might have applied to claims in the underlying complaint, a policy endorsement for the aerial application of chemicals restored coverage for the insured sugar cane farm.

Detailed discussion: Two farms were located next to each other in Palm Beach County, Florida: sugar cane growing and processing operations owned by Florida Crystals Corporation and Sugar Farms Co-op and the Date Palm Wholesalers, Inc. commercial nursery.

The sugar cane farms contracted with Roma Air Corp. to apply herbicide at their operations. In March 2013, Roma sprayed a powerful herbicide on a large area of land. According to the subsequent lawsuit filed by Date Palms, that area included not only the sugar cane farms but the date palm nursery as well, damaging many of the trees.

Date Palm sued Roma as well as the sugar cane farms alleging negligence, strict liability, and trespass. After the sugar cane farms requested a defense from National Union Fire Insurance Company of Pittsburgh, the insurer sought a declaration that the applicable policy imposed no duty to defend.

National Union moved for summary judgment, arguing that the claims in the Date Palm complaint fell within the scope of multiple policy exclusions and failed to allege an accident that could give rise to coverage under the policy.

The court first rejected the insurer’s argument that the Date Palm complaint alleged only intentional misconduct.

The complaint contained allegations of accidental harms, the court ruled, including the claim that the spraying of Date Palm’s property arose from a failure to investigate the ownership of the property.

Having established that the complaint fell within the scope of the policy, the court next reviewed the exclusions relied upon by National Union. Endorsement 7 provided that the policy does not cover claims “directly or indirectly occasioned by, happening through or in consequence of … pollution and contamination of any kind whatsoever.” The court found that Endorsement 7 excluded the claims in the Date Palm action.

The court then considered the language of Endorsement 13. While the provision restored coverage for harms arising from the aerial application of chemicals, it also excluded “[i]njury or damage to either property or crops being treated … by aerial application of chemicals.”

However, the Date Palm complaint sought more than just compensation for injury to property or crops being chemically treated, the court noted, by requesting lost profits resulting from the spraying. “Reading the Policy in [the sugar cane farms’] favor, the exclusion from coverage for injury or damage to property or crops thus does not apply to all of the relief sought in the Date Palm Complaint,” the court ruled. “Where the complaint in an underlying action contains claims both within and without the scope of coverage, an insurer’s duty to defend is triggered with respect to the entire action.”

Because Endorsement 13 created coverage for the claims in the Date Palm complaint—and the exclusions within the endorsement did not appear to remove coverage for all of those claims—National Union was not entitled to summary judgment on the duty to defend.

To read the decision in National Union Fire Insurance Co. v. Florida Crystals Corp., click here.