“Concealment or Fraud” Provision Requires Proof Insureds Acted Knowingly or Intentionally in Order to Void Policy

Jul 1, 2021

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.


“Concealment or Fraud” Provision Requires Proof Insureds Acted Knowingly or Intentionally in Order to Void Policy

The homeowners reported a claim of property damage from Hurricane Irma, which the insurer denied. The homeowners then submitted a sworn proof of loss with a damage estimate for $103,809 for roof and interior repairs. After suit was filed, the insurer asserted the policy’s “concealment or fraud” provision alleging the homeowners made a false statement concerning the cost to replace the roof. The homeowner testified at trial he had estimates to replace the roof ranging from $25,000 – $32,000, even though the Xactimate estimate submitted to the insurance company sought $52,800 to replace the roof, and he was “professionally advised” to sign the sworn proof of loss for $103,809. The estimator admitted $52,800 was “inaccurate and inflated”. However, before his deposition, he corrected the estimated roof cost to $28,000. The jury found in favor of the homeowners and awarded damages of $26,425. The insurer appealed the verdict. The appellate court found the “concealment or fraud” provision ambiguous. Construing the provision most favorable to the insureds, the court held the policy required proof of knowing or intentional fraudulent conduct by the insureds to trigger the “concealment or fraud” provision to void the policy. Anchor Prop. and Cas. Ins. Co. v. Trif (4th DCA, June 2, 2021). 

Tips and Lessons

  • The court held proof of intentional and material fraudulent conduct applied only to post-loss conduct; false statements in insurance applications that materially affect coverage need not be intentional to void the policy. 
  • The court recognized the outcome at trial could have gone either way. Insurance companies should evaluate litigation cases early on and utilize strong proposals for settlement to combat the risk of an unfavorable jury verdict. 
  • Defense counsel should be asking insureds detailed questions about damage estimates and statements in insurance applications

Judgment Upheld in Favor of Insurer on $3,000 Mitigation Cap

The vendor/assignee performed water mitigation services following a water loss. After completing the work, the vendor submitted an assignment of benefits contract and invoice for work performed in the insured’s condominium unit. The assignment agreement contained a provision stating the agreement operated as a direct request to the insurance company for approval to exceed the cap. The insurer did not respond to the vendor’s submission within 48 hours. but paid the $3,000 cap. The vendor filed suit seeking the balance of its invoice. The insurer sought summary judgment based on the policy’s cap and the vendor’s failure to seek approval before exceeding the cap. The vendor argued the agreement contained a request to exceed the cap and the insurer did not respond within 48 hours as required. The trial court granted summary judgment in the insurer’s favor finding the “request” contained in the assignment contract was a “gotcha” tactic. The appellate court affirmed the judgment and held the vendor was obligated to request and obtain approval to exceed the policy’s cap. The sentence “buried” in the assignment agreement was not a valid request to exceed the policy cap. Certified Priority Restoration v. Citizens Prop. Ins. Corp. (4th DCA, June 30, 2021). 

Tips and Lessons

  • Finally, a strong appellate opinion highlighting suspect tactics used by mitigation vendors.