Complex Evidentiary Rules and Burden of Proof Issues Can Dramatically Impact Insurance Coverage Disputes

When insurance companies refuse to pay claims for structural damage caused by sinkholes, the financial impact on homeowners can be staggering.  Fortunately, many policyholders represented by experienced Florida insurance claims lawyers successfully challenge such denials.  While policyholders might try to negotiate directly with their insurance carrier, an insured has virtually no chance without legal representation in breach of contract or statutory bad faith litigation against insurance defense lawyers.  Subtle complexities involving evidentiary rules and the burden of proof can have a profound impact on the outcome of a claim dispute.

Mejia v. Citizens Property Insurance Corp., the recent Florida appellate court case out of the 2nd District, demonstrates the importance of evidentiary standards and the burden of proof in breach of contract claims involving insurance disputes.  The policyholders suffered a loss which they asserted was caused by sinkhole activity.  The homeowners had an all-risk policy that excluded claims involving sinkholes.  The all-risks policy provided coverage for “all losses not resulting from misconduct or fraud unless the policy contains a specific provision expressly excluding the loss from coverage”.  Sinkhole activity and earth movement were expressly excluded.  However, the policyholders paid an additional premium for a rider to cover sinkhole damage. 

The insured filed a claim, but Citizens denied the claim based on the opinion of BCI, an engineering firm retained by the insurer to evaluate the claim.  BCI indicated that the property did not suffer structural damage nor was any damage caused by sinkhole activity.  The trial court found for the insurance company, and the policyholder appealed.

The appellate court first addressed the burden of proof used to evaluate the case by the trial court.  The insurer argued that the insured had the obligation of proving that the damage to the property was caused by a sinkhole during the policy period.  While the trial court accepted the insurance company contention that this was the appropriate burden of proof, the appellate court rejected this standard in cases involving insurance claims disputes under an all-risk policy.  Under this type of homeowners insurance policy, the appellate court concluded that the insured is only required to establish that the damage occurred during the policy period.  The burden then shifts to the insurance company to establish that the cause of the loss was excluded from policy coverage. 

The appellate court also overruled the trial court’s finding that the insured could not introduce evidence regarding the financial relationship between the insurance company and its expert.  The insurance company successfully argued at trial that the $9.5 million paid over a three year period by the insurer to BCI was not relevant.  However, the appellate court again disagreed, and ruled that evidence of the extensive financial relationship between Citizens and BCI was admissible to prove bias.

This case demonstrates the technical complexities involved in insurance litigation that go beyond the substantive issues.  If you have questions about Miami-Dade homeowners insurance claims, you are welcome to contact my Miami insurance claims law firm.  My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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