Waiver and Estoppel in Florida Homeowners Insurance Claims
Why is it that homeowners insurers have to wait until its too late until they find out that the homeowners have evidence to show there may be a defense for waiver and estoppel? First, read this article to understand what waiver and estoppel is and how it is used in Florida homeowners insurance litigation. Second, scroll to the bottom of this article to set up a free meeting with our professionals to provide you with a free Litigation Analysis that will explain how and why routine issues like these should never be noticed too late again.
Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:
Before we go on, if you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.
Update: this is one of the most important articles on this blog to read, especially for newer attorneys and adjusters. I have helped many carriers implement protocols for ensuring that everyone knows about waiver and estoppel and to help create tools to automate the process avoiding one of these costly mistakes. You have got to understand all of these cases if you are going to litigate these cases.
Make sure to read all the way to the end of this post to learn how I propose making sure carriers cheaply guarantee they avoid waiving and being estopped from litigation defenses.*
In my experience, when I am confronted with insureds’ attorneys’ argument that the insurer was waived or estopped from asserting a defense, I know I have a good defense. For anyone who does not know, insureds’ attorneys almost always argue that some act by an insurer constituted a waiver of a particular defense. Knowing exactly what will be argued and how to respond can be the difference between winning and losing, as there are great cases that outline exactly how to respond to these arguments.
To have waiver, you have to have (1) the existence at the time of the alleged waiver of a right; (2) the actual or constructive knowledge of that right; and (3) the intention to relinquish that right. See Leonardo v. State Farm Fire & Cas. Co., 675 So. 2d 17, 178 (Fla. 4th DCA 1996). Other than promissory estoppel, there is no creation of coverage by estoppel in Florida. See Doe v. Allstate Ins. Co., 653 So. 2d 371 (Fla. 1995). To have estoppel you must have (1) a representation as to a material fact that is contradicted by a later asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party relying on the representation and caused by the representation. See Lloyds Underwriters at London v. Keystone Equip. Fin. Corp., 25 So. 3d 89, 93 (Fla. 4th DCA 2009).
As noted below, unless you have a legal defense based on the nature of the defense provision being asserted, pay close attention to whether the party claiming the estoppel or waiver has actually presented evidence to support each of these elements.
Some Defenses Simply Cannot be Waived
An insurer can allegedly waive or be estopped from asserting a defense to an otherwise covered claim, but an insured cannot gain through estoppel or waiver a coverage that it never had. See generally Unijax, Inc. v. Factory Ass’n, 328 So. 2d 448, 455 (Fla. 1st DCA 1976). The Fourth DCA in Lloyds Underwriters at London v. Keystone Equip. Fin. Corp. provided one of the more detailed outlines of the distinction between what can and cannot be waived. 25 So. 3d 89, 93 (Fla. 4th DCA 2009). The Keystone decisions suggests that if a claim is specifically covered but was not covered for some other reason, then the insurer must timely assert that other reason when it becomes aware of its existence. In that case, you would not be re-writing the policy to provide coverage; instead, you would be rewriting the policy to avoid forfeiture. An example of something that cannot be waived is the policy limit. Nationwide Mut. Fire Ins. Co. v. Voigt, 971 So. 2d 239, 242 (Fla. 2d DCA 2008). Another example of something that cannot be waived is additional coverage provided by an endorsement that was not issued. See AIU Ins. Co. v. Block Marina Investment, Inc., 544 So. 2d 998 (Fla. 1989). Further, a policy period is not something that can be waived. U.S. Fidelity and Guar. Co. v. American Fire and Indem. Co., 511 So. 2d 624 (1987).
In sum, I think of it as follows: if deleting the provision with the defense at issue would leave a blank page without any coverage (policy period, policy limit, and I would argue, the structure covered), then it cannot be waived. If deleting the provision with the defense at issue would still leave provisions that provided coverage, then there is at least an argument that it can be waived, unless that provision is an essential part of how the coverage is distributed.
The Evidence of Waiver or Estoppel Must Be More Than an Inference
It is important to point out for the Court if the insureds’ attorney is only suggesting that there was waiver, rather than showing evidence of waiver and specific reliance on a specific position that later changed. Otherwise, an insured simply alleging that the reliance was reasonable without evidence of the same should not overcome a summary judgment on waiver or estoppel grounds See generally Reliance Mut. Life Ins. Co. of Ill. v. Booher, 166 So. 2d 222 (Fla. 2d DCA 1964); Blue Cross and Blue Shield of Florida, Inc. v. Ming, 579 So. 2d 771 (Fla. 5th DCA 1991); Carneiro Da Cunha v. Standard Fire Ins. Company/Aetna Flood Ins. Program, 129 Fl. 3d 581 (11th Cir. 1997); Unijax, Inc., 328 So. 2d at 455.
Timing to Assert the Defense
Attorneys representing insureds also will argue that the insurer waited too long to assert the defense. One example is Johnson v. Life Insur. Co. of Georgia, where the Florida Supreme Court imputed an agent’s knowledge to the insurer to prohibit the insurer from later asserting a defense based on misrepresentation in the application. 52 So. 2d (Fla. 1951). The counterargument for an insurer can be that the insurer did not have knowledge of the misrepresentation or defense until more recently, and then it acted promptly on the defense at that time. See United Services Automobile Association v. Clarke, 957 So. 2d 554 (Fla. 4th DCA 2000).
The following link from the Butler Pappas website has some great cases regarding when late might not be too late to assert a coverage defense: http://www.butlerpappas.com/512.
Ultimately, the case law suggests that insureds, insurers, and their attorneys should all be armed with the information they need to make sure that all bases are covered. For every argument, there is a counterargument. Without a comprehensive understanding of these issues (and the vast array of waiver and estoppel issues not addressed in this post), it could be easy to get tripped up in a hearing on these issues. The best you can do is learn the nuances, or ask someone who already has.
*April 30, 2014 Update: How does Todd Legal, P.A. prevent these mistakes from becoming too costly*
How can you make sure that every adjuster and every attorney past, present, and future check to see if there were actions or omissions that may constitute waiver and estoppel of an otherwise solid defense? Will an email work? No. New adjusters and attorneys will never get it. Will a note to the file work? Come on, give me a break.
But guess what will work? If you shift your communication and case strategies from out of emails and Word documents and into a web-based project management portal. Then, you can make sure every adjuster and every attorney on every case is asked whether there may be a waiver or estoppel issue, and you have to go no further than two clicks online to find the answer for your specific case. What does this do? Saves you a ton of money. Instead of finding that out after your summary judgment or trial, Todd Legal, P.A. automatically embeds this question into every case to limit the surprises and reduce the costs resulting from a coverage decision error.
I offer innovative services and software that can automatically implement the strategy changes to be consistent with the information in this article. If you want to know more about how I can help your company or firm ensure that your strategies are up-to-date and complied with by all of your colleagues and vendors, then contact me. Furthermore, if you want a litigation project manager with a powerful software tool that allows your attorneys to draft top-down approved legal documents in every case with the click of a button, then read more about my services here.
The more you automate these routine tasks, the more time you will have to proactively manage your claims and cases.
We have actually made these issues a “fill-in-the-blank” and “check-the-box” evaluation on our web-based software, CaseGlide. You should, too. Message me if you need any help turning the waiver and estoppel evaluation into a structured system to save costs and obtain better results.
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