Tag Archives: property insurance

APPLICATION OF ORDINANCE AND LAW COVERAGE IN PROPERTY INSURANCE POLICY AND TWENTY-FIVE PERCENT RULE

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A recent case involved a homeowner’s all-risk property insurance policy with ordinance and law coverage. This ordinance and law coverage required the carrier “to cover costs that the [insureds] incur as a result of any ordinance that requires them to replace ‘the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against.” Weston v. Universal Property & Casualty Insurance Co., 50 Fla.L.Weekly D2307a (Fla. 2d DCA 2025).  The property insurance policy required the insurer to pay the actual cash value of the loss, minus any deductible, and “any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred.”  Id.

Here, the insureds sustained roof damage from a storm.  The insureds had an expert that opined, with a reasonable degree of certainty, that the entire roof needed to be replaced because “[t]here was damage to more than twenty-five percent of the roof, and the Florida Building Code provided that if more than twenty-five percent of the roof was damaged, then the entire roof should be replaced.”  Weston, supra.  The insureds also had an expert that testified to an estimate- the replacement cost of the damage as well as the actual cash value of that damage.

The trial court, however, granted directed verdict in favor of the insurer for three reasons. The court ruled that the insureds did not prove that the carrier breached the insurance contract because it did not prove the carrier failed to pay the actual cash value of the damage. Next, the court ruled that once the carrier paid the actual cash value, minus the deductible, it was not required to make further payments under the additional work was performed.  And lastly, the court ruled that the insurer made payment to the insureds based on its field adjuster’s estimate, which was the only estimate of the actual cash value. The appellate court found that all such reasons were erroneous.

First, the insureds did present evidence through expert testimony that the full roof needed to be replaced under the law and ordinance coverage and the twenty-five percent rule under the Florida Building Code. Thus, the trial court erred in rejecting the insureds’ actual cash value estimate that factored in the full roof replacement. The dispute between the insureds and insurer as to damage, the percentage of roof that was damaged to trigger the twenty-five percent rule, and repair costs were factual and should have gone to a jury.

Second, the insurer rejected the application of the twenty-five percent rule to the damages claimed by the insured. Thus, the insurer did not pay the actual cash value of the full roof replacement and damage.  “According to [the insurer], if an insured does not make repairs to their home after an insurer has determined that the repairs are unnecessary, then the insured is precluded from asking a court to determine whether the insurer improperly refused to cover the loss. This approach places insureds in the untenable position of paying for what they contend should be covered by the insurer and then hoping that the insurer will have a change of heart, despite repeated denials, and reimburse them for their loss.” Weston, supra.

Third, the insureds did not have a burden to provide the insurer with an actual cash value estimate before a lawsuit was filed. This is notable here where the insurer took the position before suit that its payment to the insurer fulfilled its obligation. Here, the insureds did submit estimates of roof repairs to the insurer; however, the insurer disagreed with them because the estimates were for full roof replacement, and the insurer did not agree with the full roof replacement.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

QUICK NOTE: BURDEN OF PROVING AND DEFENDING ALL RISK PROPERTY INSURANCE CLAIMS

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If you are pursuing an all-risk first-party property insurance claim on behalf of an insured, or defending such a claim on behalf of an insurer, a recent case includes a short snippet explaining the corresponding burdens of proof:

To make a claim under an all-risk policy, the insured must establish that her home suffered a covered loss while the policy was in effect. Once established, “the burden shifts to the insurer to prove that the cause of the loss was excluded from coverage under the policy’s terms.” And if an insurer relies on an exclusion to deny coverage, the insurer “has the burden of demonstrating that the allegations of the complaint are cast solely and entirely within the policy exclusion and are subject to no other reasonable interpretation.”The burden then shifts once more to the insured to prove an exception to the exclusion contained in the insurance policy. 

Spartan Services Corp. v. People’s Trust Ins. Co., 50 Fla.L.Weekly D1038a (Fla. 3d DCA 2025).

Remember, if you are an insured, you need to prove the loss occurred while the policy was in force.  This shifts the burden to the insurer to prove the loss was excluded under the policy. Then, the burden shifts back to the insured to prove an exception to the exclusion, or that the exclusion doesn’t apply.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

LET’S TALK ABOUT A STATUTORY FIRST-PARTY BAD FAITH CLAIM AGAINST AN INSURER

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Let’s talk about a statutory first-party bad faith claim against an insurer under Florida law. A recent opinion, discussed below, does a nice job providing a synopsis of a first-party statutory bad faith claim against an insurer:

The Florida Legislature created the first-party bad faith cause of action by enacting section 624.155, Florida Statutes, which imposes a duty on insurers to settle their policyholders’ claims in good faith.  The statutory obligation on the insurer is to timely evaluate and pay benefits owed under the insurance policy.  The damages recoverable by the insured in a bad faith action are those amounts that are the reasonably foreseeable consequences of the insurer’s bad faith in resolving a claim, which include consequential damages. 

“[A] statutory bad faith claim under section 624.155 is ripe for litigation when there has been (1) a determination of the insurer’s liability for coverage; (2) a determination of the extent of the insured’s damages; and (3) the required [civil remedy] notice is filed pursuant to section 624.155(3)(a).” 

“An insured may obtain a determination of the insurer’s liability and the extent of their damages by litigation, arbitration, settlement, stipulation, or the payment of full policy limits.”  Additionally, payment of an appraisal award by the insurer constitutes a determination of the insurer’s liability and the extent of the insured’s damages. 

Cingari v. First Protective Ins. Co., 49 Fla.L.Weekly D89a (Fla. 4th DCA 2023) (internal citations omitted).

The fact pattern in this case is somewhat nutty. This case dealt with a homeowner’s property insurance policy. The homeowners discovered cracks in their walls and submitted an insurance claim. The insurer issued two partial payments.  However, the homeowner felt its insurer was not properly adjusting the claim and filed a Civil Remedy Notice as the perquisite for a statutory bad faith claim. The homeowner subsequently invoked the appraisal process in the policy. The insurer agreed and the claim proceeded through the appraisal process (after a lawsuit was initiated for the court to appoint the umpire to preside over the appraisal process). The umpire found damages more than the partial payments paid by the insurer resulting in the insurer paying the policy limits under the policy.  The homeowner then filed a bad faith action against its insurer for failing to timely and properly adjust the loss. The insurer moved for summary judgment arguing that AFTER it paid the policy limits it discovered that the loss (that it paid for) was, in fact, excluded under the policy by an earth settlement exclusion. The trial court agreed with the insurer that because there was no coverage, there could be no bad faith claim against the insurer.

The appellate court concluded differently under the facts of the case: “we conclude the trial court erred in accepting the insurer’s argument that because no coverage existed, the homeowner was not entitled to litigate whether the insurer acted in bad faith.” Cingari, supra.  Why did the appellate court conclude differently? Two main reasons:

(1) The insurer never raised that “no coverage exists” to the umpire during the appraisal process.

(2) “[T]he focus of a first-party bad faith claim is whether the insurer in good faith timely and property investigated and resolved claims filed by the insured.” Cingari, supra. In other words, the focus centers on the insurer’s investigation of the cause of the loss. Remember, the insurer argued it did not discover the basis of the exclusion until AFTER it paid the policy limits per the appraisal process.

[T]he insurer’s statements that it ‘proceeded under an erroneous policy interpretation’ in the umpire appointment suit [for the appraisal] and ‘gratuitously’ paid the policy limits and appraisal award certainly raise an inference that the insurer did not properly investigate the claim. The homeowner argued…that the failure to properly investigate caused the insurer to improperly extend settlement of the claim through the appraisal process. In doing so, the insurer arguably violated the requirements in section 624.155(1)(b)1. and 2., Florida Statutes (2020), to ‘attempt[] in good faith to settle claims’ and ‘promptly settle claims[.]

 Cingari, supra.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

CONCEALMENT OR FRAUD PROVISION IN INSURANCE POLICY

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It is common for insurance policies to have a concealment or fraud provision that ultimately says the policy is void if the insured engaged in fraudulent conduct, intentionally concealed or misrepresented material facts, or made false material statements.  In a nutshell, lying is bad, which includes intentionally withholding material facts.

An insured may make misrepresentations during the insurance application process.  Or, an insured may make misrepresentations after a loss occurs, referred to as the post-loss context. The misrepresentations require different burdens of proof.

With respect to misrepresentations (fraud) during the insurance application process, “an insurer can later void a policy based on an insured’s false statement without a showing of intent to mislead.”  Gracia v. Security First Ins. Co., 47 Fla.L.Weekly D1866a (Fla. 5th DCA 2022).

With respect to misrepresentations (fraud) during the post-loss context, there needs to be “proof of intent to mislead” by the insured.  Gracia, supra.

By way of example, in Gracia, summary judgment was entered in favor of the property insurer on a property insurance roof damage claim initiated by the insured based on misrepresentations the insured made regarding the pre-loss condition of her property. Prior to the issuance of the policy, there was an inspection report that indicated the property had prior roof and ceiling damage. During the insured’s deposition, the insured testified that the roof was in good condition during this time. The carrier, upon learning of this inspection report, raised the concealment or fraud provision in the policy claiming coverage should be voided and moved for summary judgment on this basis. Specifically, the insurer argued that the insured made false statements in her deposition concerning the pre-loss condition of her home supporting her coverage being voided. Yet, the insured’s position was that the loss subject of her claim occurred during the policy period, not before. Nonetheless, the trial court agreed with the insurer and granted summary judgment.  The appellate court reversed because the fraud in this post-loss context required the insurer to prove the insured’s INTENT. (The insurer needed to prove the element of intent.)  “Simply put, factual questions relating to fraudulent intent or state of mind are generally not ripe for summary judgment determination.” Gracia, supra.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

NOTIFICATION TO INSURER AND THE “UNTIMELY NOTICE” FIGHT

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Notice, notice, notice. This should be your mindset when it comes to notifying your insurance carrier of a potential claim or loss.  I get it. Notice means opening up a claim number and the potential increase in insurance premiums.  Yet, untimely notice could mean fighting with your insurance carrier as to whether you provided them prompt notice. Thus, I operate with the “notice, notice, notice” mindset in providing notice of a potential claim or loss that could trigger duties or obligations under the policy. It is the better safe than sorry approach and avoids the needless notice fight.

The property insurance opinion in SFR Services, LLC v. Hartford Insurance Company of the Midwest, 2022 WL 2340519 (S.D.Fla. 2022) illustrates this “untimely notice” fight and, importantly, how certain policy language can change the dynamics of this fight.  Here, notification of a hurricane roof damage claim was provided by the insured to the property insurer almost three years after the hurricane. In the interim, the insured had their roof repaired on multiple occasions. Finally, the insured notified the property insurer and the claim was denied. The insured sued the property insurer for coverage and the insurer moved for summary judgment arguing the insured failed to provide it timely notice as required by the policy.

“[N]otice is a condition precedent to coverage, and an insured’s failure to provide ‘timely notice of loss in contravention of a policy provision is a legal basis for the denial of recovery under the policy.” SFR Services, supra, at *2 (citation omitted).

However, just because an insurer claims it did not receive timely notice does not end the discussion. There is a two-step process.  “First, the Court must determine ‘whether the insured provided timely notice.’ Second, ‘if notice was untimely, prejudice to the insurer is presumed, but that presumption may be rebutted.’”  SFR Services, supra, at *2 (citations omitted).

Step 1- Whether the Insured Provided Timely Notice

Whether the insured provided timely notice employs a reasonable person standard.  “[N]otice is necessary when there has been an occurrence that should lead a reasonable and prudent man to believe that a claim for damages would arise.” SFR Services, supra (citation omitted).

Step 2- If Notice is Untimely and Prejudice is Presumed, that Presumption may be Rebutted

If notice is untimely, prejudice is presumed; but, this presumption may be rebutted by the insured.

To carry this burden, an insured must show that the insurer was able to inspect the property in the same condition it was in right after the loss by presenting evidence creating a genuine dispute of fact as to ‘(a) whether better conclusions could have been drawn without the delay in providing notice, (b) whether those conclusions could have been drawn more easily, (c) whether the repairs to the affected areas that took place in the interim would complicate and evaluation of the extent of the damage or the insured’s efforts to mitigate its damages, or (d) whether an investigation conducted immediately following the occurrence would not have disclosed anything materially different from that disclosed by the delayed investigation.’” 

SFR Services, supra, at *3 (citations omitted).

The Twist

But in this case, there is a twist.  And it is a crucial twist to this two-step process.

The Court looked at language in the property insurance policy that provided the insurer had “no duty to provide coverage under this policy if the [Insureds’] failure to comply” with their duties “is prejudicial to [Defendant].”  SFR Services, supra.

The insured argued that this policy language removes the presumption of prejudice in favor of the insurer and shifts the burden on the insurer to PROVE prejudice, i.e., that the insured’s failure to comply is prejudicial to the insurer.  There is a huge difference between prejudice being presumed because of untimely notice (which has to be rebutted by the insured) and the insurer required to prove the prejudice.  The Court found that under this language in the policy, the insurer is actually required to show prejudice:

Upon careful consideration, the Court must reject the body of precedent within this district that a presumption of prejudice may arise when a policy provision requires that an insured’s failure to comply with an enumerated duty be prejudicial to the insurer. Because there is no presumption of prejudice, a genuine issue of material fact remains as to whether the Insureds’ failure to timely notify Defendant was prejudicial, and the Motion must be denied. To hold otherwise would create a regime under which an insurer may obtain a different result in federal court than that required by the new line of cases in Florida state court.

SFR Services, supra.

This “twist” changes the dynamic of the “untimely notice” fight all due to policy language that basically says that the insurer has no coverage obligations if the insured’s failure to comply with his/her/its duties is prejudicial to the insurer.  The Court’s ruling is ultimately saying that the insurer cannot hide behind the presumption of prejudice requiring the insured to rebut the prejudice because the policy, itself, puts that burden on the insurer.  Big difference.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

ENDORSEMENT TO INSURANCE POLICY CONTROLS

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I’ve said this before, and I’ll say it again: an insurance policy is a complicated reading and this reading gets compounded with endorsements that modify aspects of the policy.

What you think may be covered may in fact not be covered by virtue of an endorsement to the insurance policy.  This is why when you request an insurance policy you want to see the policy PLUS all endorsements to the policy.  And when you analyze a policy, you need to do so with a full reading of the endorsements.

An endorsement to an insurance policy will control over conflicting language in the policy.  Geovera Speciality Ins. Co. v. Glasser, 47 Fla.L.Weekly D436a (Fla. 4th DCA 2022) (citation omitted).

The homeowner’s insurance coverage dispute in Glasser illustrates this point.  Here, the policy had a water loss exclusion.  There was an exception to the exclusion for an accidental discharge or overflow of water from a plumbing system on the premises.   But there was an endorsement.  The endorsement modified the water loss exclusion to clarify that the policy excluded water damage “in any form, including but not limited to….”  Examples were then given which did not include the accidental discharge or overflow of water from a plumbing system.

The homeowner filed an insurance coverage dispute against the property insurance carrier for a water damage claim. Specifically, a pipe in a bathroom burst causing water damage.  The insured claimed this was covered because of the accidental discharge or overflow of water from a plumbing system exception.   The trial court agreed.  The appellate court did not.  Why?

The answer is simple. The endorsement.  “The insurer’s endorsement language…expressly excludes damages caused by water in any form, including plumbing system accidents. Although the policy’s ‘Exception [t]o c.(6)’ expressly covers accidental discharges of water from a plumbing system, it is superseded by the endorsement which excludes water loss in any form.”  Glasser, supra.

The insured argued, as it should, that the endorsement did not explicitly identify that water damage included accidental discharges of water from a plumbing system indicating that such was covered under the policy.  While true, the appellate court disagreed with this sentiment.  “‘[T]he 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.’  While this policy may require the reading of multiple policy provisions, it is unambiguous and simply does not cover the water loss suffered by the insured.”  Glasser, supra (internal citation omitted).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

 

AN INSURANCE POLICY ISN’T AMBIGUOUS JUST BECAUSE YOU WANT IT TO BE

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When it comes to insurance contracts, there is a rule of law that states, “where interpretation is required by ambiguity in insurance contracts[,] the insured will be favored.”  Pride Clean Restoration, Inc. v. Certain Underwriters at Lloyd’s of London, 46 Fla. L. Weekly D2584a (Fla. 3d DCA 2021) (citation and quotation omitted).  Stated another way: ambiguities in insurance contracts will be interpreted in favor of the insured and against the insurer.

With this rule of law in mind, insureds oftentimes try to argue ambiguity even when there is not one.  This was the situation in Pride Clean Construction.  In this case, the property insurance policy contained a mold exclusion that stated the policy did NOT insure for “a. loss caused by mold, mildew, fungus, spores or other microorganism of any type, nature, or description including but not limited to any substance whose presence poses an actual or potential threat to human health; or b. the cost or expense of monitoring, testing, removal, encapsulation, abatement, treatment or handling of mold, mildew, fungus, spores or other microorganism as referred to in a) above.”  Not only did the policy not insure for loss caused by mold, it went further to state it was NOT insuring for any mold testing or abatement.

In this case, the insured sustained hurricane-related damage.  This damage included mold remediation services.  The insured (that assigned her benefits under the policy to the mold remediator) argued the policy was ambiguous because it does not identify whether it covers a covered loss that causes mold.  In making this argument, the insured relied on Florida’s Supreme Court case, Sebo v. American Home Assurance Co., Inc., 208 So.3d 694 (Fla. 2016), that adopted what is known as the “concurrent cause doctrine,” holding:  “[T]hat when independent perils converge and no single cause can be considered the sole or proximate cause [of the loss], it is appropriate to apply the concurring cause doctrine.” – “[T]he concurrent cause doctrine provides that coverage may exist where an insured risk constitutes a concurrent cause of the loss even when it is not the prime or efficient cause [of the loss].”  Pride Clean Construction, supra (internal quotations and citation omitted).

Here, however, there was no reason to apply the concurrent cause doctrine to determine the cause of the loss and whether the loss was caused by mold [excluded] or a hurricane [covered], because the policy contained a blanket exclusion that excluded “the cost or expense of monitoring, testing, removal, encapsulation, abatement, treatment or handling of mold.”  Mold remediation was blanketly excluded; hence, the cause of the mold was irrelevant for purposes of the policy covering mold remediation-type costs.

This brings up an important consideration.  Read your policy and understand what is covered and what is not covered.  If there is a concern regarding mold or mold remediation, you need to understand your rights as to whether there is a policy that can meet your insurance needs even if the policy includes a certain sub-limit to provide some coverage.  But you can extend this beyond mold because blanket exclusions will automatically exclude certain coverage and you want to make sure you have an understanding as to what is excluded – no matter what – to ensure your rights are sufficiently insured!

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

COURTS WILL NOT REWRITE YOUR POST-LOSS PROPERTY INSURANCE OBLIGATIONS

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In the preceding posting, I wrote about making sure you comply with your property insurance policy’s post-loss policy obligations.  By failing to comply, you can render your policy ineffective meaning you are forfeiting otherwise valid insurance coverage, which was the situation discussed in the preceding posting.  As an insured, you should never want this to occur!

In another case, discussed here, the property insurance policy had a preferred contractor endorsement.  This means that instead of paying the insured insurance proceeds, the insurer could perform the repairs with its preferred contractor.   Typically, the insured will pay a discount on their premium for this preferred contractor endorsement.  The insurer elected to move forward with the repairs based on the preferred contractor endorsement but the insured performed the repairs on his own and then sold the house.  By doing this, the appellate court held the insured rendered his policy ineffective by breaching his own policy (and failing to allow this post-loss obligation to take place).  The explicit terms of the policy allowed the insurer to perform the repairs instead of paying the insured insurance proceeds.  The court could NOT rewrite the post-loss obligations in the policy by requiring the insurer to pay insurance proceeds when the insurer, per the preferred contractor endorsement, elected to perform the repairs.

Your insurance policy is a contract and will be treated as a contract.  Please make decisions with this in mind and consult counsel before taking positions that may be violative of your own contract and render your policy ineffective.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

COMPLY WITH YOUR INSURANCE POLICY’S CONDITIONS PRECEDENT (POST-LOSS OBLIGATIONS)

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I am of the opinion that if your property insurer requests a sworn proof of loss, furnish one with the assistance of counsel (preferably).  Ignoring the insurer’s request or refusing to comply with insurer’s request is NOT value-added; it is simply placing you at a disadvantage based on the insurer’s argument that you, as the insured, materially breached the policy.  I generally find no value having to confront this expected argument.  Instead, I find value making an effort to comply with post-loss obligations including the insurer’s request to submit a sworn proof of loss.  Working with counsel can help you comply with post-loss obligations (conditions precedent) while not weakening the value or merits of your claim.

By way of example, in Edwards v. Safepoint Ins. Co., 46 Fla. L. Weekly D1086a (Fla. 4th DCA 2021), the insured did not provide its property insurer with the requested sworn proof of loss.  The insurer moved for summary judgment that the insured’s failure to submit the sworn proof of loss was a material breach of the policy that rendered the policy ineffective.   The trial court agreed and granted summary judgment.   The Fourth District Court of Appeal affirmed explaining “[a] total failure to comply with policy provisions made a prerequisite to suit under the policy may constitute a breach precluding recovery from the insurer as a matter of law.  If, however, the insured cooperates to some degree or provides an explanation for its noncompliance, a fact question is presented for resolution by a jury.” Edwards, supra, quoting Haiman v. Federal Ins. Co., 798 So.2d 811, 812 (Fla. 4th DCA 2001).

In Edwards, however, it was undisputed the insured failed to submit the sworn proof of loss.  Thus, there was a total failure to comply.  More so, the Fourth District held that under Rodrigo v. State Farm Florida Ins. Co., 144 So.3d 690 (Fla. 4th DCA 2014), “(1) an insurer need to show prejudice when the insured breaches a condition precedent to suit, (2) proof of loss is a condition precedent to the insured’s suit, and (3) the insurer did not waive the sworn proof of loss requirement by tendering payment because [i]nvestigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim does not constitute a waiver of a sworn proof of loss requirement.” Edwards, supra (internal quotations omitted).

Clearly, this is not the outcome that any insured wants.  But this outcome was due to the insured not complying with its post-loss obligation, or condition precedent to suit, that was requested by the insurer.  As you can see, not doing so was not value-added, it disadvantaged the insured to the point where its failure was deemed to render the policy ineffective to its detriment.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

BLINDLY RELYING ON PUBLIC ADJUSTER OR LOSS CONSULTANT’S FALSE ESTIMATE CAN PLAY OUT BADLY

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Insurance policies, particularly property insurance policies, have a concealment or fraud provision that, in essence, gives the insurer an out if the insured submits a fraudulent claim, a false claim, or conceals material facts.   Unlike a traditional fraud claim where a party needs to prove intent, the provision is broad enough that it does not require any intent behind making a false statement.  See Mezadieu v. Safepoint Ins. Co., 46 Fla.L.Weekly D691c (Fla. 4th DCA 2021).   For this reason, and as exemplified below, do NOT blindly rely on a public adjuster or loss consultant’s estimate that contains false statements because those false statements, particularly if you know they are false, can play out badly for you! Review the estimate and ask questions about it to make sure you understand what is being included in the loss or damages estimate.

In Mezadieu, a homeowner submitted a claim to her property insurance carrier due to a second-floor water leak emanating from her bathroom.  She submitted an estimate from her public adjuster that included damages for her kitchen cabinets directly below the second-floor bathroom, as well as other items on her first-floor.  Her carrier denied coverage based on the exclusion that the policy excludes damage caused by “[c]onstant or repeated seepage of water or steam…which occurs over a period of time.”

The homeowner filed a lawsuit against her property insurance carrier.  In interrogatory answers, she verified she was seeking the damages per the estimate prepared by her public adjuster.  During her deposition, she reiterated this point.  However, and this is a big however, she acknowledged that her public adjuster’s estimate contained false statements: “when asked if the reported leak caused damage to the kitchen cabinets, [she] disclosed that the cabinets had actually been damaged by a prior leak in the kitchen – a leak which [she] made a claim for with a different insurer – and the leak did not cause any damage to the kitchen cabinets.”  Mezadieu, supra.   Indeed, she conceded that her second-floor bathroom leak caused no damage to her kitchen and she did see any water damage on her first floor, although such damage was included in her public adjuster’s estimate.

The insurance carrier, after amending its affirmative defenses, moved for summary judgment based on the concealment or fraud provision which excluded coverage if an insured: “(1) Intentionally concealed or misrepresented any material fact or circumstance; (2) Engaged in fraudulent conduct; or (3) Made a false statement; relating to this insurance.” Mezadieu, supra.

The trial court granted summary judgment attributing the false statements to the homeowner “because she adopted the estimate as her own in both her sworn interrogatory answers and deposition testimony, and because [her adjuster] was acting as her agent.”  Mezadieu, supra.  The appellate court concurred because: (a) she adopted the estimate as her own statement; and (b) even if she did not intend to rely on false statements in her public adjuster’s estimate, the policy does not require that a false statement needs to be made with intent.  As the appellate court explained, and reinforcing why reviewing and asking questions about any estimate is a must:

[An] insured cannot blindly rely on and adopt an estimate prepared by his or her loss consultant without consequence.  This is not to say that an insured will always be bound by the representations made in an estimate prepared by his or her loss consultant. However, when an insured relied on or adopt an estimate containing material false statements to support his or her claim, the insured is bound by the estimate and cannot avoid application of the concealment or fraud simply because he or she did not prepare the estimate.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.