The new property insurance tactic to avoid payment and thereby delay or deny assessment is to claim that the policyholder requested too much and the amount requested is fraudulent. A Florida case, American Capital Assurance Corporation v. Leeward Bay at Tarpon Bay Condominium Association 1 which will be reviewed by the Florida Supreme Court, will eventually settle these issues.
The background to the case is as follows:
American Capital insured Leeward Bay thirty-four buildings. After Hurricane Irma damaged its buildings, Leeward Bay filed a policy claim. American Capital agreed to cover and pay out approximately $ 76,000 of the loss. Leeward Bay then filed a $ 8,135,115 loss certificate and requested a policy assessment. The following month, Leeward Bay sued American Capital for breach of contract and moved to stay and force assessment. In response, American Capital claimed that the policy was invalid. It denied the allegation, allegedly, because Leeward Bay overflowed its claim and thereby invalidated the policy due to fraud. the claim goes far beyond its actual value which constitutes a deliberate misrepresentation and / or concealment of facts. "American Capital claimed that Leeward Bay included" things in their estimate that should not have been included.
The Court found that the case was "a dispute over the extent of the loss [or amount] not whether there is coverage", and granted Leeward Bay's proposal. In his written order, the trial judge ordered the valuer to "specify each category and component of the damage assessed, the cause of the damage and the costs thereof."
To us in the field of real estate insurance, all insurance company lawyer claims that the policyholder has items in the estimate that should not be included. For the most part, the same lawyers claim that the amounts requested by the policyholder are inflated. If it were the simple allegations that had to be made, virtually no property insurance cases would ever go to trial if that was what an insurer wanted to do.
The Court of Appeal took this approach to the case:
We now join the third district and adopt the dual-track method because the specific facts in this case show why it is preferable. In particular, American Capital initially granted coverage. It then claimed fraud when it did not agree with Leeward Bay's alleged exaggerated estimate of its loss. It seems clear to us that this case necessarily involves the amount of the loss. all coverage disputes are intertwined with the amount of the loss. The assessment would probably help the trial when the latter decides whether Leeward Bay fraudulently inflated its claim. The dual-track approach is not only legally effective, but may also be necessary if the conclusions of the assessment are linked to the liability of the court.
The case was then confirmed as one in conflict with other appeals decisions. believes that the case should first be tried. Florida's Supreme Court will now decide what courts to do in situations like this.
A sad antidote for the policyholder is that American Capital has recently received compensation. Who says judging followed by disputes is faster and better?
I, Assessment ordered where the insurer's demand was found in a timely manner – and no assessment of no adjustment I argued for having an insurance company "adjust" each item of a loss before the evaluation can proceed gives only further delays and reasons for not fully investigating a claim:
Nowhere in the policy does it require that the entire claim must be "adjusted" before an assessment is requested or a lawsuit is filed. All that must happen to trigger the assessment is a disagreement about the "size of the loss." It seems that here, where the insurer has become aware of the loss and after five months, the parties could not agree on “the size of the loss, even after a conciliation meeting and a check was issued for the undisputed amounts, everything in the dispute or which can be in question is determined by assessment, if it is required in time and not waived. I do not agree with the second quoted part of this decision.
This decision will certainly lead to major delays and quibbles of questions of insurers who want to extend the time when the settlement of loss amounts will be determined.
Those in the assessment and claims world should closely follow what the Florida Supreme Court decides. It will either turn assessment into something that is quick and useful or instead require a possible abandonment because procedures are dragged out and are twice as costly when two methods of dispute resolution – assessment and disputes – become the normal way to finally resolve disputes.
Thought for the day
You can delay, but the time will not come.
1 Am. Capital Assurance Corp. against Leeward Bay in Tarpon Bay Condo. Ass’n 306 So.3d 1238 (Fla. 2d DCA 2020). review granted SC20-1766 (Fla. 8 February 2021).