In 2013, the First District Court of Appeals issued a decision in Universal Property and Casualty Insurance Co. v. Johnson, 114 So. 3d 1031 (Fla. 1st DCA 2013), concluding that an insurance carrier was not required to prove that an insured’s false statement was intentional in order to void the policy.
In this case, the insureds filed a claim as a consequence of a fire. During the investigation, it was discovered that one of the insureds had made a false statement on the application for insurance. Specifically, the insured answered “no” to the question: “Have you been convicted of a felony in the last ten years.” In fact, Mrs. Johnson had been convicted of five felonies within the previous ten years. At trial, the insured testified that the false statement on the application was unintentional. The jury found in favor of the insureds. The insurance company appealed. The First District reversed and directed that a judgment be entered in favor of the carrier.
The Policy at issue reads in relevant part:
“[T]he entire policy will be void if, whether before or after a loss, an insured has: (a) intentionally concealed or misrepresented any material fact or circumstance; (b) engaged in fraudulent conduct; or (c) made false statements.”
The Insureds argued that subsection (c) required the carrier to prove that the false statement was made intentionally with the intent to deceive. The First District disagreed writing: “Thus, under the policy here and under section 627.409(1), a misrepresentation ‘need not be fraudulently or knowingly made but need only affect the insurer’s risk or be a fact which, if known, would have caused the insurer not to issue the policy or not to issue it in so large an amount.’”
While Johnson eliminates the element of intent for false statements, the civil burden for proving an intentional misrepresentation is not as difficult as it would seem. “The knowledge element is satisfied where a representation is made ‘without knowledge as to either truth or falsity’ or when a representation is made ‘under circumstances in which the maker ought to have known, if he did not know, of the falsity thereof.’ See Thor Bear, Inc. v. Crocker Minzer Park Inc., 648 So. 2d 168, 172 (Fla. 4th DCA 1994); Accord, Sun Life Assurance Company of Canada v. Land Concepts Inc., 435 So. 2d 862, 863 (Fla. 4th DCA 1983)(“This particular element, scienter, can be established by showing (1) actual knowledge of falsity; or (2) lack of knowledge of either truth or falsity; or (3) circumstances under which the representor ought to have known, if he did not actually know, of falsity.”).
In Johnson, the insured had actual knowledge of the prior conviction. The insured completed the application for insurance and marked the box “no” under circumstances in which the insured ought to have known that the answer was incorrect. Therefore, under the above referenced legal authority, the trial court could have found that the incorrect answer (i.e. the misrepresentation) was indeed intentional.
Jorge Cruz-Bustillo is senior counsel with The Barthet Firm (www.barthet.com), a 14 lawyer commercial practice in Miami. Cruz-Bustillo heads up the firm’s insurance defense team which represents a number of property and casualty carriers in South Florida. He can be reached at firstname.lastname@example.org
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