A Florida state court has awarded over $5.5 million to singer Gloria Estefan’s hotel company in a lawsuit against Landmark Insurance Company because the insurer wrongly refused to cover building code-related upgrade costs after two 2004 hurricanes, Hurricane Frances and Hurricane Jeanne, severely damaged the hotel property. The case is Pin-Pon Corp. v. Landmark American Ins. Co., No. 312009CA0122-44 (Fla. 19th Cir. Ct. Dec. 28, 2017).

In a December 28 order, Judge Paul B. Kanarek, of the 19th Judicial Circuit Court of Florida, ruled in favor of Estefan’s hotel company, Pin-Pon Corp. The judge held that the hotel’s code upgrade costs were covered under the insurance policy as additional costs required to repair a building after a storm due to changes in the state building code. The insurers had argued that the hotel company always intended to dramatically overhaul the former beachfront Palm Coast and turn it into a boutique hotel, and that much of the business interruption and cost of repairs were due to renovation, not storm damage. But the insurers had underestimated the extra time and resources the renovation required because of the storm damage, since the hotel had to be rebuilt before it could be remodeled. The hotel also had to complete additional renovations because the storm damage triggered building code requirements that apply to both damaged and undamaged property. Under the 2004 code, if 50 percent of a property is damaged, then the entire property must be brought up to code. The hotel reopened as Costa d’Este Beach Resort, a new white modernist structure, in September 2008, nearly four years after the hurricanes hit.

The case is an important reminder that insurance policies do not just cover the cost of repairing actual damage, but also the cost of complying with code requirements and other requirements to be able to reopen a business and make it functional. Moreover, it is important to consult with an insurance professional regarding the terms and conditions of one’s insurance policy before accepting the insurance company’s assertion of what should be paid, as it may be that the policyholder is owed a lot more than what the insurer offers to pay.