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Is an Intentional Act of Discrimination Insurable?

A Dade County Jewish purchaser denied membership in a condominium filed suit. The Condominium’s insurance company (Ranger) defended under a reservation of rights, which means Ranger believed that it did not have an obligation to defend but did so until that issue could be decided. The suit was settled for $25,000, and Ranger refused to pay the settlement amount. 

The question presented was whether or not the public policy of Florida prohibited insuring against acts of intentional discrimination rather than unintentional discrimination. There is no doubt that insurance companies must insure against unintentional acts of discrimination, but insurance laws of at least two states prohibit insurance coverage for acts of intentional discrimination. The court had to balance the equities. Would insurance coverage encourage wrongful acts and would denial of coverage harm victims of discrimination? 

Florida has a long-standing policy of opposing religious discrimination. Article I, section 2 of the Florida Constitution provides: Basic rights.--All natural persons are equal before the law and have inalienable rights, among which are the right to enjoy and defend life and liberty, to pursue happiness, to be rewarded for industry, and to acquire, possess and protect property; except that the ownership, inheritance, disposition and possession of real property by aliens ineligible for citizenship may be regulated or prohibited by law. No person shall be deprived of any right because of race, religion or physical handicap. Most cases involving discrimination in Florida are based on the Human Rights Act of 1977 and the Fair Housing Act found in Chapter 760. 

The court held that compensating victims is secondary to deterring discrimination. Most discrimination cases are filed against commercial establishments which usually have adequate resources to compensate victims of discrimination; therefor, victims of discrimination will not go uncompensated, but insuring against intentional acts of discrimination will tend to increase the instances of discrimination. In an intentional discrimination case the damages should not limited to actual loss and should consist of punitive damages which involve a large enough sum to discourage the unlawful conduct; however, the court suggested that punitive damages are rarely imposed as a remedy under the aforesaid laws of Florida. In fact, under the Fair Housing Act punitive damages are limited to no more than $1,000. 

The pertinent portions of the Florida Fair Housing Act which provides remedies are found in section 736.34 of the Act, titled "Enforcement." They read as follows: (1) Any person who claims to have been injured by a discriminatory housing practice or who believes that he or she will be injured by a discriminatory housing practice that is about to occur may file a complaint with the commission.... Within 100 days after receiving a complaint, or within 100 days after the expiration of any period of reference under subsection (3), the commission shall investigate the complaint and give notice in writing to the person aggrieved whether it intends to resolve it. If the commission decides to resolve the complaint, it shall proceed to try to eliminate or correct the alleged discriminatory housing practice by informal methods of conference, conciliation, and persuasion … (4) If, within 180 days after a complaint is filed with the commission or within 180 days after expiration of any period of reference under subsection (3),[4 ]the commission has been unable to obtain voluntary compliance with ss. 760.20 –760.37, the person aggrieved may commence a civil action in any appropriate court against the respondent named in the complaint or petition for an administrative determination pursuant to s. 760.35 to enforce the rights granted or protected by ss. 760.20 –760.37.

Note: As an alternative to a State action an aggrieved party may elect to file in Federal court under the Federal Fair Housing Act without engaging in administrative exhaustion.