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March 12, 2025
CGL Policy not a Course of Construction Policy

Damage Before Project is Complete Excluded by CGL

Post 5013

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Consolidated appeals required the Eleventh Circuit to (1) decide whether an insured has standing to seek reformation before it makes a claim on the portion of the policy that it wants reformed, (2) construe an exclusion in a commercial general liability policy under Florida law, and (3) determine whether the district court properly denied the insured’s motion for attorney’s fees.

In Liberty Surplus Insurance Corporation v. Kaufman Lynn Construction, Inc., United Glass Systems Corp. Liberty Surplus Insurance Corporation v. Kaufman Lynn Construction, Inc., Nos. 23-12715, 23-12835, United States Court of Appeals, Eleventh Circuit (March 5, 2025)

See the full video at https://rumble.com/v6qh5hm-cgl-policy-not-a-course-of-construction-policy.html and at https://youtu.be/Y_peIPKxpiw

FACTS

The case involves JM Family Enterprises hiring Kaufman to build a new corporate campus in South Florida. Kaufman obtained a commercial general liability policy from Liberty Surplus Insurance to insure itself and its subcontractors. After Tropical Storm Eta caused significant water damage to the completed buildings, Kaufman sought indemnification from Liberty, which was denied based on the policy’s Course of Construction Exclusion (COCE). Liberty then filed a declaratory judgment action, and Kaufman counterclaimed for declaratory relief, breach of contract, and reformation of the insurance policy due to mutual mistake.

JM Family Enterprises hired Kaufman to build its new corporate campus in South Florida. The campus was to consist of three office buildings, a training and conference center, a sports and recreation building, a dining hall, an amphitheater, a central energy plant, a parking garage, and various landscaping and water features. To insure itself and its subcontractors, Kaufman obtained a commercial general liability policy from Liberty Surplus Insurance.

The district court granted Liberty’s motion for summary judgment, concluding that the COCE excluded coverage until the entire project was completed. The court also dismissed Kaufman’s reformation counterclaim for lack of standing. On appeal, the Eleventh Circuit reversed the district court’s dismissal of the reformation counterclaim, affirming that Kaufman had Article III standing to seek reformation. However, the court affirmed the district court’s ruling that the COCE precluded coverage for the water damage and denied Liberty’s motion for attorney’s fees.

ANALYSIS

The Course of Construction Exclusion (COCE) in the insurance policy issued by Liberty Surplus Insurance Corporation to Kaufman Lynn Construction, Inc. was significant because it determines the scope of coverage during the construction phase of a project. The COCE states that the insurance does not apply to any property damage at or to any project insured under the policy during the course of construction until the project is completed.

A court of equity has the power to reform a written instrument where, due to a mutual mistake, the instrument as drawn does not accurately express the true intention or agreement of the parties to the instrument. A mistake is mutual when the parties agree to one thing and then, due to either a scrivener’s error or inadvertence, express something different in the written instrument. Reformation can correct a mutual mistake in the description of the premises or articles insured due to the fact that in the case of a mere mutual mistake in the description of the subject matter equity will correct it to conform to the intention of the parties

Florida law subjects reformation claims to a five-year statute of limitations. An insured in Florida may need to bring a reformation claim soon after the issuance of the policy containing the mistake or risk forever losing the ability to fix the error.

The policy issued by Liberty to Kaufman was a general commercial liability policy and not a builder’s risk policy. The critical language in the COCE is the phrase “until the project is completed,” but the terms “project” and “completed” are not separately defined in the policy.

The language “until the project is completed” means that the COCE precludes coverage until the entire project is finished. It would have been better, of course, for Liberty to draft the COCE to expressly state that there is no coverage unless and until the “entire project” is completed. But Liberty’s failure to adhere to the standards of impeccable draftsmanship here does not result in ambiguity. The mere fact that a provision in an insurance policy could be more clearly drafted does not necessarily mean that the provision is otherwise inconsistent, uncertain or ambiguous.

The Eleventh Circuit concluded that Kaufman has standing to seek reformation of the policy. The Eleventh Circuit reversed the district court’s dismissal of the reformation counterclaim and remanded to the District Court for further proceedings.

With respect to the parties’ dispute about the policy the Eleventh Circuit affirmed the district court’s ruling that the COCE precludes coverage for the water damage to the buildings caused by Tropical Storm Eta.

ZALMA OPINION

A course of construction policy is designed to protect the owner and contractors for fortuitous losses in the course of construction. A commercial general liability policy is not intended to, and has no wording similar language to, a course of construction policy. The claims were for damage to the property that would be the subject of a course of construction policy but not a Commercial General Liability policy, especially one with a COCE.

(c) 2025 Barry Zalma & ClaimSchool, Inc.

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00:09:52
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Zalma’s Insurance Fraud Letter – January 15, 2026

ZIFL Volume 30, Number 2

THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL

Post number 5260

Read the full article at https://lnkd.in/gzCr4jkF, see the video at https://lnkd.in/g432fs3q and at https://lnkd.in/gcNuT84h, https://zalma.com/blog, and at https://lnkd.in/gKVa6r9B.

Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ This issue contains the following articles about insurance fraud:

Read the full 19 page issue of ZIFL at https://zalma.com/blog/wp-content/uploads/2026/01/ZIFL-01-15-2026.pdf.

The Contents of the January 15, 2026 Issue of ZIFL Includes:

Use of the Examination Under Oath to Defeat Fraud

The insurance Examination Under Oath (“EUO”) is a condition precedent to indemnity under a first party property insurance policy that allows an insurer ...

00:09:20
January 14, 2026
USDC Must Follow the Finding of the Administrator of the ERISA Plan

ERISA Life Policy Requires Active Employment to Order Increase in Benefits

Post 5259

Read the full article at https://lnkd.in/gXJqus8t, see the full video at https://lnkd.in/g7qT3y_y and at https://lnkd.in/gUduPkn4, and at https://zalma.com/blog plus more than 5250 posts.

In Katherine Crow Albert Guidry, Individually And On Behalf Of The Estate Of Jason Paul Guidry v. Metropolitan Life Insurance Company, et al, Civil Action No. 25-18-SDD-RLB, United States District Court, M.D. Louisiana (January 7, 2026) Guidry brought suit to recover life insurance proceeds she alleges were wrongfully withheld following her husband’s death on January 9, 2024.

FACTUAL BACKGROUND

Jason Guidry was employed by Waste Management, which provided life insurance coverage through Metropolitan Life Insurance Company (“MetLife”). Plaintiff contends that after Jason’s death, the defendants (MetLife, Waste Management, and Life Insurance Company of North America (“LINA”)) engaged in conduct intended to confuse and ultimately deny her entitlement to...

00:07:30
January 13, 2026
Mediation in State Court Resolves Action in USDC

Failure to Respond to Motion to Dismiss is Agreement to the Motion
Post 5259

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In Mercury Casualty Company v. Haiyan Xu, et al., No. 2:23-CV-2082 JCM (EJY), United States District Court, D. Nevada (January 6, 2026) Plaintiff Mercury Casualty Company (“plaintiff”) moved to dismiss. Defendant Haiyan Xu and Victoria Harbor Investments, LLC (collectively, “defendants”) did not respond.

This case revolves around an insurance coverage dispute when the parties could not be privately resolved, litigation was initiated in the Eighth Judicial District Court of Nevada. Plaintiff subsequently filed for a declaratory judgment in this court.

On or about April 15, 2025, the state court action was dismissed with prejudice pursuant to a stipulation following mediation. Plaintiff states that the state court dismissal renders its ...

00:04:26
December 31, 2025
“Sudden” is the Opposite of “Gradual”

Court Must Follow Judicial Precedent
Post 5252

Read the full article at https://www.linkedin.com/pulse/sudden-opposite-gradual-barry-zalma-esq-cfe-h7qmc, see the video at and at and at https://zalma.com/blog plus more than 5250 posts.

Insurance Policy Interpretation Requires Application of the Judicial Construction Doctrine

In Montrose Chemical Corporation Of California v. The Superior Court Of Los Angeles County, Canadian Universal Insurance Company, Inc., et al., B335073, Court of Appeal, 337 Cal.Rptr.3d 222 (9/30/2025) the Court of Appeal refused to allow extrinsic evidence to interpret the word “sudden” in qualified pollution exclusions (QPEs) as including gradual but unexpected pollution. The court held that, under controlling California appellate precedent, the term “sudden” in these standard-form exclusions unambiguously includes a temporal element (abruptness) and cannot reasonably be construed to mean ...

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December 29, 2025
Doctor Accused of Insurance Fraud Sues Insurer Who Accused Him

Lack of Jurisdiction Defeats Suit for Defamation

Post 5250

Posted on December 29, 2025 by Barry Zalma

See the video at and at

He Who Represents Himself in a Lawsuit has a Fool for a Client

In Pankaj Merchia v. United Healthcare Services, Inc., Civil Action No. 24-2700 (RC), United States District Court, District of Columbia (December 22, 2025)

FACTUAL BACKGROUND
Parties & Claims:

The plaintiff, Pankaj Merchia, is a physician, scientist, engineer, and entrepreneur, proceeding pro se. Merchia sued United Healthcare Services, Inc., a Minnesota-based medical insurance company, for defamation and related claims. The core allegation is that United Healthcare falsely accused Merchia of healthcare fraud, which led to his indictment and arrest in Massachusetts, causing reputational and business harm in the District of Columbia and nationwide.

Underlying Events:

The alleged defamation occurred when United ...

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December 15, 2025
Zalma’s Insurance Fraud Letter – December 15, 2025

Zalma’s Insurance Fraud Letter

Read the full article at https://lnkd.in/dG829BF6; see the video at https://lnkd.in/dyCggZMZ and at https://lnkd.in/d6a9QdDd.

ZIFL Volume 29, Issue 24

Subscribe to the e-mail Version of ZIFL, it’s Free! https://visitor.r20.constantcontact.com/manage/optin?v=001Gb86hroKqEYVdo-PWnMUkcitKvwMc3HNWiyrn6jw8ERzpnmgU_oNjTrm1U1YGZ7_ay4AZ7_mCLQBKsXokYWFyD_Xo_zMFYUMovVTCgTAs7liC1eR4LsDBrk2zBNDMBPp7Bq0VeAA-SNvk6xgrgl8dNR0BjCMTm_gE7bAycDEHwRXFAoyVjSABkXPPaG2Jb3SEvkeZXRXPDs%3D

Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/

Zalma’s Insurance Fraud Letter

Merry Christmas & Happy Hannukah

Read the following Articles from the December 15, 2025 issue:

Read the full 19 page issue of ZIFL at ...

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