There are several forms of insurance fraud that can rescind insurance coverage for insureds’ claims. Generally, we witness such fraud contained in applications for insurance policies, staged accidents, and claims to health care providers rendering treatment to injured policy holders. To combat the rise in insurance fraud cases, insurers’ have implemented concealment or fraud provisions that authorize the insurer to deny coverage for a insurance claims by the insured if the insured intentionally concealed or misrepresented any material fact or circumstances or engaged in fraudulent conduct before or after a claimed loss.
In Yolanda Vargas v. SafePoint Insurance Company, 47 Fla. L. Weekly D171a (Fla. 3rd DCA 2022), Florida’s Third District Court of appeal recently addressed the interpretation of Homeowners’ insurance policy’s containing “Concealment or Fraud” provisions providing for forfeiture of coverage when an insured makes “false statements relating to this insurance.” The insured, YolandaVargas, reported a loss to her First-Party Insurance Carrier, SafePoint Insurance Company, resulting from water damage due to a plumbing leak. Safepoint’s corporate representative testified that SafePoint immediately requested repair invoices from any prior claims and photographs of the pre-loss condition of the property. Vargas failed to provide this information and, instead, submitted a sworn proof of loss with an itemized estimate of her property damage prepared by a public adjuster.
After conducting its own investigation, SafePoint denied coverage and Vargas commenced suit. Safepoint served Vargas with its first set of interrogatories asking Vargas to disclose any previous claim made on the property. Vargas responded by recalling a roof claim made ten years prior. Vargas did not disclose any prior claims involving water damage. In her deposition, Vargas stated that she had not made any prior insurance claims involving a plumbing leak on the property. After receiving these answers, Safepoint added an affirmative defense based on the “Concealment or Fraud” provision of the insurance policy. To support this affirmative defense, Safepoint deposed Christina Crossway, the corporate representative of Citizens Property Insurance Company. Crossway testified that Vargas made a prior claim on the property in 2013 for “a broken water pipe under the kitchen sink” resulting in “water damage to the kitchen cabinets.” The damaged areas listed under this prior claim included many of the same areas in the claim Vargas had submitted to Safepoint.
Safepoint moved for summary judgment based on the “Concealment or Fraud” affirmative defense. The motion asserted that Vargas had violated the concealment or fraud provision in the contract by failing to disclose the previous water leak in her deposition and interrogatory answers and by including damages from the previous claim in her sworn proof of loss. Vargas argued that while Safepoint had submitted evidence of a prior claim, it had submitted no evidence to counter Vargas's statement under oath that she did not recall the prior claim when giving her interrogatory answers and deposition testimony. The trial court granted Safepoint's motion for summary judgment.
The legal question addressed by the Third District Court of Appeal was whether the term “false statement” in this post-loss context means (1) incorrect statement or (2) intentionally incorrect statement as the insurance policy in question failed to define this term. The term “false statement” holds two distinct meanings, the first being “contrary to fact or truth” and latter being “deliberately untrue.” However, while “false” is included in both meanings, the more common usage of the word, certainly in the legal context, carries the connotation of an intentionally deceptive statement. The District Court of Appeal concluded that the term “false statement” in this post-loss context, includes an element of intent to mislead, which, in the case at hand, involves a genuine issue of material fact. The Third District Court of Appeal reversed and remanded trial court’s ruling.
Policy provisions should be considered in direct and assignee claims when analyzing potential Motions for Summary Judgement, like the Concealment and Fraud provision involved in SafePoint Insurance Company. Callahan and Fusco will continue to monitor court decisions on this issue.