Appellate Court Recognizes that Inflated Repair Estimates Void Coverage

May 6, 2019

April 2019

Florida Insurance Matters is a monthly update on Florida insurance-related legal developments by the Colodny Fass Insurance Litigation Practice, recently recognized as the Insurance Litigation Department of the Year in South Florida by the Daily Business Review.


Amy L. Koltnow, a Colodny Fass Shareholder, focuses her practice on representing insurance companies in complex insurance litigation and counseling insurers on claims resolution. She has represented insurers in connection with property damage and first-party coverage litigation, claims of “bad faith,” high-risk exposures, class actions and multi-district litigation.

For more information about Ms. Koltnow, click here.

Appellate Court Recognizes that Inflated Repair Estimates Void Coverage

The Third DCA affirmed final judgment in favor of the carrier after a jury found the insureds exaggerated the extent of the loss. The insureds reported a claim to State Farm for damages arising from pipe drainage problems. State Farm denied coverage for the claim. The insureds filed suit and State Farm asserted policy exclusions and material misrepresentations related to the scope and amount of the loss claimed. The trial court held as a matter of law that the policy covered the loss, but allowed the jury to decide the issues regarding the amount of damages and whether the insureds exaggerated the extent of the loss. The jury found the insureds had made a material misrepresentation, but still awarded the insureds $6,000 for drain repairs. The trial judge entered a final judgment finding the insureds were not entitled to any damages. The appellate court agreed and held that a material misrepresentation voids coverage for the claim. Alvarez v. State Farm, April 17, 2019 (3d DCA). 

Tips and Lessons 

  • “Soft fraud”, such as a grossly inflated estimate, is still fraud. Here, the insureds first stated there was no damage, then signed a proof of loss attesting to damages of $82,967, and also certified in a subsequent policy application that there was no damage.
  • In the claims investigation stage, obtain recorded statements, and a Sworn Proof of Loss. When defending a lawsuit, get sworn testimony about the damage and confirm the PA estimate is the amount of damages being sought.

Summary Judgment of No Coverage Upheld Where Opposing Expert’s Affidavit Conclusory and Speculative

Insureds sued their homeowner insurer for interior damage from a roof leak they claimed was caused by wind. The insurer argued the damage was from wear and tear and not wind. The insurer sought summary judgment on the issue of coverage supported by affidavits from a claims adjuster and roofing contractor. The insureds refuted the evidence with an opposing affidavit from an engineer (Al Brizuela) who stated the roof leak was due to a wind event. The engineer based his conclusions on his observations of damages to the roof—even though his inspection took place after the roof had been replaced. He also referenced wind speeds two weeks earlier at a location 3 miles away from the property. The trial court found the engineer’s opposing affidavits were conclusory, speculative and inadmissible to refute the insurer’s evidence and granted summary judgment in favor of the insurer. The appellate court agreed. Gonzalez v. Citizens Prop. Ins. Corp., March 13, 2019 (3d DCA).

Tips and Lessons 

  • Summary judgment may be an effective way to bring the issues in the case to a head and test the sufficiency of the opposing party’s evidence.
  • If an opposing affidavit is woefully insufficient, defense counsel may consider a tactical decision to proceed with a summary judgment hearing without deposing the opposing expert.