Insurer May Deny a Claim When Insured Lies on Application
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Rescission Requires Return of Premium Denial of Claim Does Not
Cesar Benitez appealed the trial court’s entry of final summary judgment in favor of Universal Property and Casualty Insurance Company (“Insurer”) in a first-party property insurance dispute over a water damage claim.In Cesar Benitez v. Universal Property And Casualty Insurance Company, No. 4D21-3281, Florida Court of Appeals, Fourth District (October 12, 2022) the Court of Appeals was asked to interpret a statute and the policy wording.
FACTS
In his application for a policy with Insurer Benitez reported no previous losses on his property. However, the Insurer’s inspector found signs of pre-existing damage and repairs. Insurer denied Benitez’s claim but continued to collect premiums from him for several years. Benitez then sued.
Additionally, Insurer’s policy allowed denial of coverage if Benitez “[i]ntentionally concealed or misrepresented any material fact or circumstance; (2) [e]ngaged in fraudulent conduct; or (3) [m]ade material false statements; relating to this insurance.”
ANALYSIS
While section 627.409 provides that an insurer may seek rescission of a policy, the plain language of the statute alternatively allows for an insurance provider to deny coverage of an individual claim.
The Insurer’s affirmative defense was based on the statute, and the Insurer made clear at the summary judgment hearing that it was not seeking rescission of the policy pursuant to the statute but was instead seeking the alternative remedy of denial of the claim.
The trial court properly granted summary judgment on Insurer’s denial of coverage of Benitez’s claim based on material misrepresentations.
ZALMA OPINION
Rescission is an equitable remedy whereby both parties to the contract of insurance are put back into the position they were in before the policy came into effect and treats the insurance as if it never existed. An insurer who rescinds must return the premium. However, by the terms of the policy, and Florida statutes, if the insured lies about material facts the insurer may simply deny the claim and leave the policy in force. As my mother, rest her soul, told me often: “Liars never prosper.” This case proved her right.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected] and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.
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See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
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FACTUAL BACKGROUND
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Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
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Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
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See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
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This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
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