Florida Court Analyzes Shifting Burden Between Policyholder and Insurance Company under All-Risk Policy

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

There are many procedural and evidentiary issues that make the process of pursuing a legal claim complicated when your insurance carrier denies your claim.  While the law provides remedies and legal venues to pursue your rights, the path to obtaining benefits under a homeowner’s policy can be convoluted and complicated.  One issue that homeowners will have to understand and navigate effectively if they pursue a lawsuit for breach of contract against their insurer is the nature of the shifting burden of proof in a lawsuit involving an insurance claims dispute.  A recent case decided by the 2nd District Court of Appeal of Florida provides an overview of this shifting burden under an “all-risk” homeowner’s policy.

In Citizens Property Insurance Corporation v. Salkey, 2016 WL 746344 (Fla. 2d DCA 2016), policyholders filed a sinkhole claim with Citizens.  Under the insured’s all-risk policy, the property was covered for all perils unless they were expressly excluded.  While the policy specifically excluded sinkhole damage, it also contained an endorsement for “direct physical loss” resulting from sinkhole activity.  The policyholders filed a lawsuit for breach of contract after their sinkhole claim was denied.  The jury reached a verdict in favor of the policyholders in the amount of $542,883, and the insurance carrier appealed the judgment.

In the trial court, the parties disputed the issue of causation regarding the loss.  The insurance carrier alleged the cause of the damage was due to soil issues related to a reclaimed mine rather than sinkhole activity.  This contention was supported by a report from an engineering company that concluded mill-related soil problems were the cause of the loss.  The insureds’ experts conceded that the soil reclaimed in the mine zone was a factor that contributed to the loss, but sinkhole activity was the most substantial factor in causing the loss.

The judge provided jury instructions regarding the shifting burden of proof.  Initially, the insured has the duty to establish the property was damaged by a sinkhole.  If the insured meets this burden, the judge indicated the burden then shifts to the insurer to establish “… all of the damage is non-sinkhole related.  If you find that any damage is caused by sinkhole activity, or that sinkhole activity is acting in conjunction with any other cause, the Defendant [insurer] has not met its burden, and you must find that the damage is a covered loss.” [Emphasis in original].

The insurance company objected to this jury charge, which was used by the policyholders’ attorneys extensively during closing arguments. 

On appeal, the court confirmed that policyholders under an all-risk policy must initially establish that the loss occurred during the policy period.  After this had been proven, the burden is on the insurer to demonstrate the loss was caused by an excluded cause.  When a loss is caused by multiple perils, the “efficient proximate cause doctrine” determines coverage.  Under this doctrine, the peril that constituted the most substantial factor in triggering the loss must be covered under the policy.

Based on this standard, the appellate court reasoned the instruction from the trial judge indicated the relevant consideration was whether sinkhole activity was the exclusive cause of the property damage.  Since the damage stemmed from multiple causes, the trial judge committed error by indicating that the claim was covered because the insurer failed to prove that the mine-related sole issues were the ONLY cause of the damage.

This type of subtle distinction illustrates how complex issues related to the burden of proof and evidentiary rules can impact the outcome of an insurance claims dispute lawsuit without regard for the merits of the case.  Insurance companies salivate at the prospect of pitting their team of insurance defense attorneys, adjusters, and experts against unrepresented policyholders with valid claims.  Our law firm often sees policyholders who have bravely waged this fight only to learn they are outgunned by a company with expertise, resources, and experience. 

You can reach Attorney J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email J.P. directly at [email protected].

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