Immediate Attachment of Coverage for After-Acquired Vehicles under Florida Law

Introduction

This commentary examines Prime Property & Casualty Insurance Company v. Kepali Group, Inc., a May 2, 2025 decision by the Eleventh Circuit interpreting Florida law on “after-acquired auto” provisions in commercial automobile policies. Prime issued a fleet policy to Kepali covering January 23, 2019–January 23, 2020. In December 2019, a newly acquired Toyota Sienna (VIN ending in 3985) was involved in an accident. The insurer denied coverage on the ground that although Kepali had given timely notice within 30 days of acquisition, it never paid the additional premium nor obtained a formal endorsement before the policy expired. The central issue was whether Florida law requires prepayment of an additional premium as a condition to after-acquired auto coverage beyond the notice period.

Summary of the Judgment

The Court of Appeals affirmed the district court’s grant of summary judgment in favor of Kepali Group and its driver, holding that under Florida law the after-acquired auto provision triggered coverage upon acquisition and notice—even without prepayment of a supplemental premium. The policy’s “Owned Autos You Acquire After The Policy Begins” clause required only (1) that the insurer already covered all owned vehicles and (2) that the insured notify the insurer within 30 days of acquisition. The court refused to add an unexpressed term requiring payment before coverage attached or before the end of the 30-day period. It further held that Prime, which had available mechanisms (premium audit and formal cancellation procedures) to collect any owed premium, could not rely on a post-accident nonpayment to deny a defense. The insurer’s duty to defend thus arose, and any dispute over indemnity was reserved until resolution of the underlying tort action.

Analysis

Precedents Cited

Rabatie v. U.S. Sec. Ins. Co. (Fla. 3d DCA 1990 en banc): Held that coverage under an after-acquired auto clause attaches immediately upon vehicle acquisition, subject only to timely notice within the policy’s specified period, and that the insurer may later adjust premium by audit.
Lowe v. State Farm Mut. Ins. Co. (Fla. 5th DCA 1982): Emphasized strict compliance with notice requirements to secure after-acquired coverage; late notice after policy expiration forecloses coverage.
Key v. Allstate Ins. Co. (11th Cir. 1996): Under Florida law, insurers drafting complex policies must “state explicitly their intentions” to limit coverage, and courts will not rewrite unambiguous contracts to insert unstated conditions.
Billington v. Ginn-La Pine Island, Ltd. (Fla. 5th DCA 2016) and World-Class Talent Experience, Inc. v. Giordano (Fla. 4th DCA 2020): Confirmed enforceability of integration clauses barring extrinsic agreements not embodied in the written policy.

Legal Reasoning

1. Plain-Meaning Approach. The court applied Florida’s rule that insurance contracts are enforced according to their clear terms. The after-acquired auto provision stated only two conditions (existing fleet coverage and notice within 30 days); it said nothing about prepaying a supplemental premium by a certain deadline.

2. No Implied Term. The insurer argued that implicit in any coverage is a timely premium payment. The court rejected insertion of such a term, especially where the policy contained detailed premium-audit and cancellation clauses specifying how and when additional premium is determined and collected.

3. Premium Audit & Cancellation Mechanisms. The policy’s “Premium Audit” clause authorized Prime to compute final premium after the audit and bill the insured accordingly, with due dates on the bill itself. A separate cancellation clause required written notice before termination for nonpayment. By failing to use these contractually prescribed procedures, Prime could not sidestep its defense obligation.

4. Known-Loss Principle Inapplicable. Far from seeking after-the-fact coverage for a known loss, Kepali had requested coverage—and given notice—long before the December 6 accident. The court distinguished this situation from post-loss premium payments, which Florida law forbids.

Impact

Insurer Drafting Practices. Insurers writing after-acquired auto provisions in Florida must explicitly state if and when supplemental premiums become conditions precedent to coverage, or risk automatic attachment upon notice.
Policy Administration. Commercial insureds gain certainty that adding vehicles with timely notice secures immediate coverage, even if endorsement formalities or premium audits follow later.
Claims Handling. Denials based solely on missing endorsement paperwork or delayed premium payment may be untenable absent clear policy language.
Future Litigation. This decision will guide lower courts under Florida law to enforce after-acquired auto provisions according to their plain text, minimizing contract rewriting based on insurer expectations of payment timing.

Complex Concepts Simplified

After-Acquired Auto Provision: A policy clause that automatically extends coverage to vehicles the insured acquires after the policy begins—if certain conditions (like notice) are met.
Premium Audit: A post-period review by the insurer to reconcile estimated premiums paid with actual exposures during the policy term, resulting in additional bills or refunds.
Integration Clause: A contract term stating that the written policy embodies the entire agreement, preventing parties from enforcing separate or side agreements not in the text.
Duty to Defend vs. Duty to Indemnify: The insurer’s obligation to defend arises upon a covered suit’s filing; indemnity depends on the final outcome and damages.
Known-Loss Principle: An insurer need not cover losses already in existence when coverage is sought; it prevents buying insurance for a loss one already knows has occurred.

Conclusion

Prime Property & Casualty Insurance Co. v. Kepali Group, Inc. reaffirms that under Florida law, after-acquired auto coverage attaches immediately upon vehicle acquisition and timely notice—absent express policy language making prepayment a condition precedent. The decision underscores the judiciary’s reluctance to rewrite clear insurance contracts or infer unstated terms limiting coverage. Insurers writing in Florida must draft with precision if they intend to condition coverage on immediate premium payment. For insureds, this ruling provides greater certainty that added vehicles are protected from the moment notice is given, with premium reconciliation and endorsement formalities to follow through established audit and cancellation procedures.