BAD FAITH IN THE CONTEXT OF PROPERTY INSURANCE CLAIMS (WEBINAR)

Posted on December 16, 2017December 16, 2017 by Edward Garber

Recently, I participated in a national webinar involving insurance bad faith in the property insurance context. My section of the webinar dealt with the elements and burden of proof in demonstrating bad faith by an insurer in various jurisdictions. If you are dealing with a property insurance claim, or believe there may have been bad faith by the insurer, make sure you are working with counsel equipped to handle the jurisdictional nuances in advising you of your rights and proving such a claim.

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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: INSURER’S DENIAL OF COVERAGE WAIVES RIGHT TO ENFORCE POST-LOSS POLICY CONDITIONS

Posted on October 29, 2017October 29, 2017 by Edward Garber

There is ostensibly a big difference between an insurance carrier DENYING coverage and simply asking for additional information, as permitted under the post-loss conditions of a property (first-party) insurance policy, right? Typically, the answer is yes and there is a big difference. If an insured refuses to comply with post-loss conditions under their insurance policy, they are shooting themselves in the foot (in most cases) by giving the insurer an out when it comes to coverage. If an insurance carrier denies coverage, however, the insurance carrier cannot then require its insured to comply with post-loss conditions in the property insurance policy.

In a recent decision, Ifergane v. Citizens Property Ins. Corp., 42 Fla. L. Weekly D12198a (Fla. 3d DCA 2017), the appellate court held that there was a factual issue as to whether a letter sent by the insurer constituted a denial of coverage versus a request for additional information per the post-loss policy conditions in the property insurance policy. This was a significant issue because the appellate court, in a prior appeal in the same case, found that the insured’s non-compliance with participating in an examination under oath would preclude coverage under the property insurance policy. But, if it turns out that the insurer actually denied coverage first, then the insurer, as a matter of law, waived its right to enforce post-loss policy conditions in the property insurance policy such as requiring the insured to participate in an examination under oath.

MAKE PRUDENT DECISIONS REGARDING YOUR HURRICANE IRMA PROPERTY DAMAGE CLAIMS

Posted on September 11, 2017September 11, 2017 by Edward Garber

Hurricane Irma barreled down on us with all of her forceful winds and torrential rains. She was scary and relentless. There was mass evacuation. Commercial flights were booked. Trains were booked. There was gridlock with the concern as to whether gas would even be available. There were many people that did not evacuate, uncertain as to the eventual path Irma would take. Originally projecting an easterly course, people on the east coast evacuated to the west coast, central Florida or out-of-state. She then shifted to a westerly course forcing people on the west coast to evacuate to the east coast, central Florida, or out-of-state. It was chaos stemming from the total unpredictability of Mother Nature. It was chaos stemming from the dreadful images of Hurricane Harvey. Mother Nature and all of her uncertainty is undoubtedly frightening, as proven by her devastation throughout the amazing state of Florida.

We are fortunate. We made it through her wrath. We have our life and our health. This is the most important. I repeat — the most important. Sure, there may be property damage at our house or in our community, but it could always be worse. I repeat again — it could always be worse. Assets are replaceable. Life and health is not replaceable.

When it comes to property damage, perspective is important. Do not forget perspective. Please do not engage in an emotional knee jerk reaction and hire the first person that comes your way to assist with the damage and fallout of Irma. Disaster unfortunately causes others and the unqualified to prey on vulnerabilities. Take a deep breath and do not neglect to digest your damage and do your due diligence on your course of action and hiring someone you will trust and know will assist in your needs. Here are some tips I encourage:

1) Survey the damage. After you have initially digested and assessed the damage, do another walk-through of your property and survey and notate the damage you are observing. Either get a pen and pad and write down your assessment or use your phone, ipad, or laptop to memorialize your observations.

2) Persuasively photograph the damage. Sure, everyone tells you to do this. But, I am telling you to look at the photos you take to ensure you are capturing the damage to the best of your ability. This means to focus on the elevation of your photo and the proximity of your camera or phone (in the case of a camera phone) to the damage or item you are capturing. The reason for this is to persuasively capture the damage – take photos from various elevations, angles, and distances to capture the water damage and hurricane-caused damage. Correlate the photo with your written survey. If you use a camera that is not a camera phone, date stamp the photograph.

3) Persuasively video the damage. Similar to above, if you have a systemic leak, do not just photograph that leak. Take a video of it that captures the water intrusion and movement of the leak. Correlate your video with your written survey. You can also take a video of the damage and narrate that damage as you are observing it.

4) Obtain a copy, if you can, of your property insurance policy or your declaration page so that you can submit a claim ASAP. If you have a property insurance policy, have this handy. Insurance is complex and it is always advisable that you work with a professional when submitting a claim under your policy for hurricane-related damage. You will want to submit an insurance claim soon to report the damage caused by Irma. Your property insurer is anticipating claims caused by Irma.

5) Hire a trustworthy and qualified professional. There will be a lot of lawyers and/or public adjusters soliciting your business. Lots of them. They will be offering to help. Some will have good intentions. Others will not. They will want you to pay them a contingency percentage of anything you receive from your property insurer (oftentimes, a minimum of 20% or more based on the issue). You want someone QUALIFIED and you can TRUST – that you know will not take advantage of the situation and will keep you informed and give you the best advice so that you can make the most informed decisions. This is very important and based on the severity of the damage you may want to explore different options to compensate a professional.

6) If you hire a contractor, make sure they are licensed. If you hire a contractor to implement immediate repairs and remediate water intrusion, make sure they are licensed and read what you sign. A reason to engage a professional is to ensure you are properly notifying your property insurer and you are not being taken advantage of by hiring a qualified professional. Also, make sure you save all contracts, invoices, and payments you make to preserve a basis for reimbursement from your property insurer.

7) Do not unilaterally discard any damaged contents or otherwise. Do not start throwing things away or discarding damage before you engage in items 1 – 5 above. A reason you want to hire a professional is so that you do not prejudice your rights by discarding potential evidence before notifying your insurer.

The key is not to act haphazardly based on your emotional reaction to the damage. I know it is emotional. I get it. But, because it is emotional, you want to make sure that you are implementing prudent decisions moving forward to maximize your property insurance. You want to make sure you are implementing a path that benefits YOU!

ILLUSORY INSURANCE COVERAGE: REAL OR UNREAL?

Posted on August 18, 2017August 18, 2017 by Edward Garber

In insurance coverage declaratory relief actions, there are times an insured will argue that the insurance policy coverage is illusory. Typically, an insured will raise this illusory argument if its insurer is denying coverage based on an exclusion or limitation in the policy. If a court agrees and deems the coverage illusory, the court will construe the policy to afford coverage to the insured. This is the obvious value of the argument: coverage!

“A policy is illusory only if there is an internal contradiction that completely negates the coverage it expresses to provide.” The Warwick Corp. v. Turetsky, 42 Fla.L.Weekly D1797a (Fla. 4^th DCA 2017). Thus, if a policy grants coverage in one section but then excludes the same coverage in another section, the coverage would be deemed illusory. Id. quoting Tire Kingdom, Inc. v. First S. Ins. Co., 573 So.2d 885, 887 (Fla. 3d DCA 1990). An illusory policy was found in the following examples: (a) a policy covered certain intentional torts but then excluded intended acts; (b) a policy covered advertising injury but elsewhere excluded advertising injury; and (c) a policy covered parasailing but excluded watercrafts. Id. (citations omitted). In all examples, coverage in the policy was completely swallowed up by an exclusion rendering the coverage illusory. Stated differently, coverage was completely contradicted by an exclusion in the policy rendering the policy absurd.

However, if an exclusion or limitation in the policy does not entirely swallow up the coverage, the policy is not illusory. The Warwick Corp., supra. For example, if a policy covers advertising injury but excludes advertising injury caused by a violation of law, the coverage is not illusory. The exclusion does not completely swallow up the coverage as it only excludes advertising injury cased by a violation of law. Id. (citation omitted).

In The Warwick Corp., the insured argued that the excess commercial property insurance policy that covered four hotels was illusory because its coverage was limited to the value of the hotel, which equaled the amount payable under the primary property insurance policy. Although the court acknowledged that it would be very rare that the excess policy would ever be triggered for one of the hotels, it held that the policy was not illusory because the limitation did not completely swallow up the coverage (as there was an unlikely circumstance that could trigger coverage for the hotel). Additionally, the court noted that the insured was a sophisticated entity that paid a minimum premium for minimum coverage under the excess policy for the hotel, meaning it elected to buy the policy and coverage it bought which is a choice it cannot change after-the-fact.

As you know from reading my prior posts, insurance coverage is important so make sure you know what risks are covered and what risks are not for your business interests.

NEGLIGENT PROCUREMENT OF INSURANCE

Posted on May 13, 2017May 13, 2017 by Edward Garber

As you know, insurance is an important part of risk assessment for many, many business needs. Oftentimes, an insured relies on an insurance broker or agent to procure specific insurance to meet its express business objectives and risks. Notably, there is a potential negligence claim associated with an insurance agent or broker’s negligent procurement of insurance for an insured. While this is not the easiest claim to prove, a recent Third District case explained this standard:

It is well settled that “where an insurance agent or broker undertakes to obtain insurance coverage for another person and fails to do so, he may be held liable for resulting damages for . . . negligence. More specifically, and as applicable here, “[a]n agent is required to use reasonable skill and diligence, and liability may result from a negligent failure to obtain coverage which is specifically requested or clearly warranted by the insured’s expressed needs.” As explained by our sister court, “[t]his general duty requires the agent to exercise due care in correctly advising the insured of the existence and availability of particular insurance, including the availability and desirability of obtaining higher limits, depending on the scope of the agents undertaking.”

Kendall South Medical Center, Inc. v. Consolidated Ins. Nation, Inc., 42 Fla. L. Weekly D1071a (Fla. 3d DCA 2017) (internal quotations omitted).

In this case, a leak occurred on commercial leased premises. The commercial tenant had a property insurance policy that provided $100,000 of coverage for the physical improvements and contents of the property. However, there was a 90% coinsurance provision. A coinsurance provision shifts risk to the insured when the insured purchases less coverage than the value of the property.

As a result of the coinsurance provision, the insured only received a fraction of its damages, and less than the $100,000 in coverage. The insured, however, claimed it was under the belief it would recover $100,000 in insurance proceeds as that was what it told its agent it needed. The insured sued its insurance agent claiming the agent’s failure to advise it that the procured policy did not address its expressed insurance needs. “[W]hen an insured alleges that it specifically communicated its insurance needs to an agent who then undertook to procure a policy addressing such needs, the insured states a cause of action for negligent procurement where it also alleges that, without providing an explanation that different coverage was required, the agent procured a policy not meeting those expressed needs.” Kendall South Medical Center, supra.

Perhaps this could have been avoided had the insured reviewed the specific terms of the insurance policy. Perhaps there are e-mails or other records where the insurance agent explained that the coverage the insured was seeking could not be procured without a coinsurance provision that shifted the risk to the insured. Know your insurance and know the risks and coverage afforded to you!

BENEFIT TO INSURED UNDER PROPERTY INSURANCE POLICY – CONCURRENT CAUSE DOCTRINE

Posted on December 2, 2016December 2, 2016 by Edward Garber

The Florida Supreme Court in Sebo v. American Home Assurance Co., Inc., 41 Fla. L. Weekly S582a (Fla. 2016) gave really good news to claimants seeking recovery under a first-party all-risk property insurance policy. The Court held that the concurrent cause doctrine and not the efficient proximate cause doctrine was the proper theory of recovery to apply when multiple perils—an excluded peril and a covered peril-combined to create a property loss. (The facts of this case can be located here.)

In this case, there really was not a dispute that defective construction (an excluded peril) and rain and wind (covered perils) combined to create the asserted property loss. The issue was whether the loss should be covered when both an excluded peril combines with a covered peril to cause the loss.

There are two different trigger theories to determine whether coverage applies.

The first is the efficient proximate cause doctrine which states that when there are concurrent perils that caused a loss, the peril which set the other peril in motion (the primary peril) is the peril to which the loss is attributable. So, if the primary peril is an excluded peril, there is no coverage.

The second is the concurrent cause doctrine which states that when concurrent perils cause a loss there is coverage, even when one of the perils is an excluded peril. This is a much more favorable doctrine to an insured!

Here, there was no reasonable way to determine the efficient proximate cause of the loss since the facts reveals that rain and wind combined with defective construction to cause the loss. For this reason, the Supreme Court held that concurrent cause doctrine applied meaning there was coverage even though defective construction was an excluded peril.

If you have a first-party property insurance claim, make sure to utilize the services of counsel that maximizes your ability to argue coverage under the policy.

EXAMPLE OF IMPORTANCE SUPPORTING THEME FOR INSURANCE COVERAGE

Posted on July 29, 2016July 29, 2016 by Edward Garber

The case of Divine Motel Group, LLC v. Rockhill Ins. Co., 2016 WL 3902041 (11^th Cir. 2016) illustrates the importance of presenting and supporting your theme for insurance coverage. This theme needs to be well thought out and considered in the context of maximizing insurance coverage. Otherwise, you are navigating in the world of insurance exclusions without a strategic agenda as to why an exclusion does not apply, such as there is an exception to the exclusion that your theme fits under.

In Divine Motel Group, an insured pursued its property insurer for rainwater damage stemming from a tropical storm. The property insurance policy contained the following exclusion for rain damage in addition to an exception to the exclusion:

[Rockhill] will not pay for loss of or damage to … [t]he interior of any building or structure, or to personal property in the building or structure, caused by or resulting from rain, … whether driven by wind or not.” The policy contained an exception to this exclusion, providing that Rockhill would pay for damage to the interiors caused by rain if “[t]he building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain … enters.” The policy listed “windstorm” as a covered cause of loss.

Divine Motel Group, supra, at *1.

Huh?!? An exclusion and an exception to an exclusion?!? That’s right. In a nutshell, the rainwater exclusion says that the policy does cover damage caused by rain. But, as an exception, the policy will cover rainwater damage if the property FIRST sustained damage to its roof or walls by a loss covered under the policy through which the rainwater enters.

The insured argued that the exception to the exclusion applied because the rainwater entered through roofs and walls damaged by the tropical storm (e.g., a covered cause of loss to the roof or walls through which the rain entered).

The problem for the insured was that it was unable to point to any competent evidence, including opinions from its expert, that there was damage to the roof and walls through which the rainwater entered. There the problem lies, as you can imagine, since there was no competent evidence to support the insured’s theme which was that the exception to the rainwater damage exclusion applied.

The morale is that if relying on an exception to an exclusion, the theme of the case, including expert opinions, needs to be specifically centered around the exception. There needs to be competent evidence in the record to prove that an exception to an exclusion applied. For instance, in this case, there was nothing in the record to prove that the tropical storm damaged the roofs and walls through which rainwater entered triggering the exception to the exclusion.

ENSUING LOSS EXCEPTION IN PROPERTY INSURANCE POLICIES

Posted on October 3, 2015October 3, 2015 by Edward Garber

Property insurance policies such as builder’s risk policies contain a design defect / faulty workmanship exclusion (as well as other exclusions for excluded risks or perils). But, certain exclusions such as the design defect / faulty workmanship exclusion may contain what is referred to as the “ensuing loss exception.” Stated differently, a design defect / faulty work is excluded from the insurance policy BUT losses ensuing (or separately resulting) from the design defect / faulty work are excepted from this exclusion and covered under the policy. If your initial reaction as to the application of the ensuing loss exception is “huh?!?,” then that exact sentiment is shared by others. Trust me!

The Florida Supreme Court decision in Swire Pacific Holdings, Inc. v. Zurich Ins. Co., 845 So.2d 161 (Fla. 2003) dealt with a design defect exclusion that read:

Loss or damage caused by fault, defect, error or omission in design, plan or specification, but this exclusion shall not apply to physical loss or damage resulting from such fault, defect, error or omission in design, plan or specification.

This initial part of this exclusion is a design defect exclusion. The underlined part is the ensuing loss exception to this exclusion.

In Swire, errors and omissions with the structural design and, therefore, structural work, of a condominium project halted the issuance of the certificate of occupancy for the condominium. The developer incurred $4.5 million to retain a new structural engineer to modify the plans as well as corrective structural work in the field. The developer then submitted a builder’s risk insurance claim. The builder’s risk insurance carrier denied coverage based on the foregoing design defect exclusion arguing that the developer incurred money to correct a design defect, but there were no covered losses or damages ensuing from the design defect. The Florida Supreme Court agreed with the builder’s risk insurer:

Swire’s [developer’s] sole claim here is an attempt to recover the expenses incurred in repairing a design defect. No ensuing loss resulted [from the design defect] to invoke the exception to the exclusionary provision…. No loss separate from, or as a result of, the design defect occurred. Therefore, we conclude…Swire is not entitled to recover the expenses associated with repairing the design defect. To hold otherwise would be to allow the ensuing loss provision to completely eviscerate and consume the design defect exclusion….This [builder’s risk insurance] contract does not operate as a warranty for faulty workmanship and should not be transformed into a guarantee against design and construction defects.

Swire, 845 So.2d at 167-68.

In a more recent case, Peek v. American Integrity Ins. Co. of Florida, 2015 WL 5616294 (Fla. 2d DCA 2015), a property insurance policy contained the following ensuing loss exception:

“We do not insure loss to property described in Coverages A and B caused by any of the following. However, any ensuing loss to property described in Coverages A and B not excluded or excepted in this policy is covered.”

Coverages A and B contained exclusions for latent defects, corrosion, faulty workmanship and pollution. Thus, the property insurance policy did not cover these items but it did cover “any ensuing loss…not excluded or excepted in this policy.”

Peek dealt with homeowners moving into a house with Chinese drywall. The homeowners contended that the Chinese drywall resulted in a noxious smell and corroded air conditioning coils. The homeowners contended that the defective drywall (exclusion) resulted in (a) the loss of use of their house due to the noxious smell and (b) damage in the form of corrosion to air conditioning coils, and that such items should be covered under the ensuing loss exception.

The Second District Court of Appeal disagreed with the homeowners regarding the application of the ensuing loss provision. The court explained:

An ensuing loss follows as a consequence of an excluded loss, and the crux of the ensuing loss provision is that there must be a covered cause of loss that ensues from the excluded cause of loss….Given that American Integrity [property insurer] proved that the Chinese drywall was an excluded defective construction material, it was the Peeks’ [homeowners] burden to demonstrate that the policy covered a loss that occurred subsequent to and as a result of that excluded peril.

First, the evidence below demonstrated that the odor present in the Peeks’ home was a manifestation of the sulfur gases emanating from the Chinese drywall and that the corrosion was caused by the chemicals released by the sulfur gases, which emanated from the Chinese drywall. As such, the losses were not “ensuing.” …

Additionally, both of the claimed ensuing losses are specifically excluded under the policy because an excluded cause of loss—defective Chinese drywall—led directly to another set of exclusions—pollution and corrosion….. Here, the damage to the Peeks’ home and consequently the odors and corrosion of metals and electronics were directly related to the defective Chinese drywall and thus directly stemmed from an excluded risk. Thus coverage was excluded under the express terms of the insurance contract.

Peeks, supra, at *4.

Recovering losses or damage under an insurance policy can be challenging in light of the various exclusions in the policy. Even the ensuing loss exception to exclusions, as demonstrated above, does not except from policy exclusions the types of losses that an insured may seek to recoup.

A BUILDER’S RISK INSURANCE TIDBIT

Posted on August 29, 2014August 29, 2014 by Edward Garber

Builder’s risk insurance is a form of all-risk property insurance that protects an owner’s property / project from perils during the course of construction subject to the exclusions identified in the policy. Sometimes there is the question when negotiating a contract between an owner and general contractor whether to name the contractor as an additional named insured (along with the owner) and/or a loss payee under the builder’s risk insurance policy procured by the owner. A contractor prefers, and should prefer, to be included as a named insured and/or loss payee to ensure it is protected and paid for a covered loss during construction. In reality, it is much better for the contractor to be identified as a named insured; being identified as a loss payee simply means the contractor can be paid insurance proceeds (it can be named on the check), but it is not an insured under the policy.

Each of the standard form construction agreements contain slightly different language regarding a contractor’s interest under a builder’s risk policy procured by the owner. For example, the AIA would require the builder’s risk insurance to include the interests of the owner, the general contractor, subcontractors, and sub-subcontractors. Ok; this makes sense but it does not specifically require the owner to name these entities as named insureds under the policy and/or loss payees. Rather, the AIA contains language that allows the owner to adjust the claim as a fiduciary with the payment made to the owner as a fiduciary. The ConsensusDOCS provide better language for the contractor that would require the owner to name the contractor as a named insured. Again, being identified as a named insured is preferable as it allows the contractor to assert a builder’s risk claim directly against the policy as an insured. And, from an owner’s perspective, sometimes it is preferable to allow the contractor to assert a claim for a loss associated with a peril that may be covered even if the peril is due to the negligence of the contractor. While the standard form contracts require the owner to bear the cost of the deductible, an owner may want to shift that deductible to the contractor if the contractor is seeking to recoup losses under the policy for a peril due to its negligence.

Finally, the standard form contracts do contain a waiver of subrogation for losses against the owner, contractor, subcontractors, etc. to the extent covered by property insurance. This means that the property insurer is waiving rights to recoup insurance proceeds it paid associated with a claim against a third party included in the waiver of subrogation provision. This provision should not be deleted as the contractual waiver of subrogation benefits both the owner and contractor.

“FORFEITURE” PROVISIONS IN INSURANCE POLICIES

Posted on July 3, 2014July 3, 2014 by Edward Garber

Insurance policies contain what are referred to as “forfeiture” provisions. These are provisions where an insured through its actions / conduct can arguably forfeit coverage under the policy for a peril or claim that would otherwise be covered under the policy. Typical examples of forfeiture provisions are post-loss obligations contained within the policy such as submitting timely notice, submitting a proof of loss, or complying with an examination under oath provision in a policy. As it pertains to these post-loss obligations (submitting timely notice, submitting a proof of loss, or agreeing to submit to an examination under oath), an insured should comply with them in order to remove any argument from the insurer that the insured forfeited coverage through non-compliance.

The recent case of Axis Surplus Ins. Co. v. Caribbean Beach Club Association, Inc., 39 Fla. L. Weekly D1350c (2d DCA 2014), demonstrates how an insurer can waive a forfeiture provision in a policy. In this case, the insured condominium had a property insurance policy. Fire was a covered peril under the policy. The policy also contained additional coverage (at an additional insurance premium) through an Ordinance or Law Coverage endorsement. This endorsement stated:

“b. With respect to the Increased Cost of Construction:

(1) We will not pay for the increased cost of construction:

(a) Until the property is actually repaired or replaced, at the same or another premises; and

(b) Unless the repairs or replacement are made as soon as reasonably possible after the loss or damage, not to exceed two years. We may extend this period in writing during the two years.”

A fire damaged the property in April 2003. After the governing authority inspected the damage, in late 2004, it implemented the 50% rule that provided “if a building is more than 50% damaged, any reconstruction or repair must comply with current building codes.” This is the reason the insured condominium paid the additional premium for the Ordinance or Law Coverage endorsement. The implementation of this rule resulted in a huge increase to required construction costs because this meant that the condominium would need to replace the damaged building to comply with current flood elevation codes.

Initially, the insurer was cooperating with the insured condominium and was prepared to pay for the replacement work for the fire damage since fire damage was a covered peril. It engaged a contractor that prepared a replacement estimate and intended to pay the full replacement cost. However, in late June 2005, more than two years after the fire damage, the insurer told its insured condominium that it will not pay the increased costs of construction pursuant to the endorsement as it would rely on the two-year clause contained in the endorsement that provided: “Unless the repairs or replacement are made as soon as reasonably possible after the loss or damage, not to exceed two years. We may extend this period in writing during the two years.” In other words, since the repairs were not made within two years from the loss or damage and never extended by the insurer, the insurer was denying the increased construction costs as a consequence of the governing authority requiring the repairs to comply with current code requirements.

The insured filed a lawsuit against the property insurer arguing that the insurer waived the right to rely on the two-year repair period in the endorsement. The insured argued that the two-year provision was essentially a forfeiture provision that an insurer can waive. The Second District agreed that the two-year provision was a forfeiture provision and, relying on Florida law, explained:

“Florida law abhors forfeitures. As a result, [i]f an insurer intends to stand on any forfeiture reservation, it should inform the insured as soon as practicable after it has ascertained facts upon which it bases its forfeiture. It is equally well established that when an insurer has knowledge of the existence of facts justifying a forfeiture of the policy, any unequivocal act which recognizes the continued existence of the policy or which is wholly inconsistent with a forfeiture, will constitute a waiver.”

Caribbean Beach Club Association, supra (internal citations and quotations omitted).

Based on this law, the Second District held that the insurer waived its right to rely on this two-year forfeiture provision. The insurer knew about the two-year provision to complete repairs from the date of loss and never brought it to its insured’s attention knowing full well that its insured expected that the insurer was going to pay the claim including the increased costs of construction as the result of the local governing authority implementing the 50% rule. And, the insurer continued to adjust the claim even after the two-year window actually expired. Since the insurer was not substantially prejudiced by the insured’s noncompliance with the two-year provision, and the insurer could not support that it was prejudiced, the Second District found that the two-year window did not apply and the insured was entitled to the increased costs of construction per the endorsement. To that end, the Court further held:

“The trial court correctly found as a matter of law that the two-year clause was a forfeiture provision waived by Axis [insurer]. When an insurer acquiesces to an insured’s failure to strictly adhere to a timetable of payment or performance, courts are inhospitable to the insurer’s sudden invocation of strict enforcement of forfeiture provisions.”

Caribbean Beach Club Association, supra.

For more information on forfeiture provisions, such as complying with post-loss obligations in a policy, please see: https://floridaconstru.wpengine.com/complying-with-post-loss-policy-conditions-under-an-insurance-policy/.