Dade County, Florida sued State Farm Insurance Company (a major insurer of homes in south Florida), seeking a summary judgment that the insurer's replacement cost homeowners policies provided coverage for the expense of Building code upgrades and home elevation upgrades. The county required owners of homes devastated by hurricane Andrew to comply with such requirements of the South Florida Building Code when rebuilding. The insurer appealed an adverse judgment in favor of the county.

The policies at issue, Special Form 3 and Extra Form 5, contained two pertinent provisions. An ordinance or law clause provided that the insurer was not responsible for loss caused by enforcement of "any ordinance or law regulating the construction, repair or demolition of a building...." An increased cost limitation clause provided that the insurer "will not pay for increased costs resulting from enforcement of any ordinance or law regulating the construction, repair or demolition of a building...."

The county argued that the pertinent provisions were ambiguous because the insurer had failed to define "enforcement" and "increased costs" in the policies. The appeal court did not agree. It said that failure to define a term in a policy "does not necessarily render the term ambiguous." It should be given its ordinary meaning.

The court concluded that the ordinary meanings of "enforcement" and "increased cost" made the pertinent coverage limitations "directly applicable to the scenarios at issue in this action."

The summary judgment in favor of the county was reversed and the case remanded for entry of judgment for the insurer.

(STATE FARM FIRE AND CASUALTY COMPANY, Appellant v. METROPOLITAN DADE COUNTY ET AL., Appellees. Florida District Court of Appeal, Third District. No. 94-81. May 3, 1994. CCH 1994 Fire and Casualty Cases, Paragraph 4749.)