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Florida Appeals Court Rules that Policyholder’s Claim Was Wrongfully Dismissed


On August 23rd, 2017, Florida’s Second District Court of Appeal reversed a lower court decision in the case of Castro v. Homeowners Choice Property & Casualty Insurance Company. The trial court in this dispute had ruled that the homeowners could not bring a legal claim on the grounds that they failed to comply with their obligations under the insurance policy. In this post, our Fort Lauderdale insurance coverage dispute attorneys explain why the Second District Court of Appeal found that argument to be incorrect.

Case Analysis 

The Background 

In May of 2010, Castro and Lopez (the homeowners) noticed what appeared to be sinkhole damage on their property. They took quick action and filed a claim with their insurance company (Homeowners Choice). The insurer sent an engineering team to the home to conduct an in-depth investigation. After a review, the engineering team opined that there was no sinkhole activity present. The insurance company denied the claim based on a policy exclusion that disallowed recovery for “damage caused by earth movement”.

Alleged Failure to Comply 

Four years later, the homeowners hired their own engineering company to conduct an investigation of the property. This firm came back with the opposite result, assessing that the damage was in fact caused by sinkhole activity occurring underneath their property. Once again, the homeowners sought coverage for the loss. However, the insurance company denied the claim again, leading to a lawsuit being filed.

The insurance company responded to the lawsuit by arguing that it had to be thrown out on the grounds that Castro and Lopez failed to comply with the required duties listed under the policy. Specifically, the insurer argued that because Castro and Lopez failed to submit documents and records associated with their loss when they first filed a claim in 2010, their lawsuit must be dismissed as this amounted to a breach of contract. The lower court agreed with this view, and granted the insurer’s motion for summary judgment. 

The Insurance Company’s Denial Removed Conditions  

Upon review, Florida’s Second District Court of Appeal determined that the trial court made an error. While policyholders do have a legal obligation to fulfill their responsibilities listed within the policy, the homeowner’s in this specific case did not breach that duty. The reason is that once the insurance company denies the initial claim on the grounds that no covered loss occurred, it by definition removes the policyholder’s legal duty to take any additional specific action under the policy. Put another way, the homeowner’s lawsuit cannot be barred on the grounds that they failed to submit documents and records pertaining to their loss, because the insurance company already told them such a loss was not covered in the first place. 

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Was your property insurance claim rejected? Our Florida attorneys are standing by, ready to help. At Geyer Fuxa Tyler, we have helped many homeowners recover the full and fair compensation available under their policy. We are proud to represent clients throughout Broward County, including in Coconut Creek, Dania Beach, Lighthouse Point and Plantation.


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