What Homeowners Need to Know about the Defense of Material Misrepresentation

There are many defenses and tactics that insurance companies use to avoid paying claims brought by policyholders for losses caused by severe storms, theft, vandalism, fire and other perils.  Florida homeowners insurance claims lawyer J.P. Gonzalez-Sirgo has extensive experience with these defenses and strategies because he has represented thousands of policyholders in Miami and the surrounding areas of Florida and previously handled many claims as an insurance adjuster. 

One of the most prominent defenses used by insurance carriers involves the allegation that an insured has made a material misrepresentation.  While such misrepresentations involve the process of applying for insurance, many policyholders are unaware that there are any issues with the information provided in their application until they file a claim for loss.  This form of sandbagging of policyholders is common despite the fact that such a practice has been rejected by Florida courts as a viable basis for denying claims.

This insurance company defense to paying claims arises out of Florida Statute §627.409, which provides in pertinent part:

“A misrepresentation, omission or concealment of fact, or incorrect statement may prevent recovery under the contract or policy only if any of the following apply:

(a)The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

(b)If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in loss.”

This language makes clear that inaccuracies or omitted information in an insurance application alone is not a sufficient basis to deny a property damage claim.  This defense may only justifiy a denial of a claim if the nature of the information that is distorted or undisclosed would have impacted the amount of the premium charged, amount of coverage or the decision to provide coverage.  In other words, the information at issue must impact the degree of risk in a way that would be relevant to the underwriting process.

When analyzing an insurance policy application to determine if a non-disclosure or inaccuracy would justify denying coverage or charging a higher premium, any ambiguity must be interpreted in a manner most favorable to the policyholder.  The standard principle of contract interpretation that justifies this principle is that ambiguities in the contract must be construed against the party responsible for drafting the contract/policy. 

A tactic that may occurr is for an insurance company to be aware or intentionally unaware of an inaccuracy in the application but continue receiving premium payment for years without objection.  The insurance company then essentially sandbags the policyholder by raising the issue of material misrepresentation only after a claim has been filed.  

If your claim for property loss has been denied by an insurance company, Miami homeowner insurance claims lawyer J.P. Gonzalez-Sirgo welcomes the opportunity to answer your questions and discuss your situation.  Mr. Gonzalez-Sirgo handles disputed claims against Citizens 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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