It is no secret that insurance adjusters will not hesitate to cite multiple policy provisions justifying a claim denial. I refer to this method as the “kitchen sink” approach, as it accurately describes the attempt to utilize every conceivable exclusion/condition remotely applicable in various insurance claims. It is quite common for an insured to receive a denial letter citing a laundry list of excluded causes of loss.

For example, a denial letter might read:

Based on the information obtained by our investigation, including but not limited to the inspection of your property, [Insert Insurance Company name here] has determined that no coverage is afforded for conditions due to wear and tear, marring, deterioration, inherent vice, latent defect, defect, mechanical breakdown and/or improper installation as it relates to conditions on your roof whether observed or not. Accordingly, no payment will be made at this time.

The letter will then go on to cite a few pages worth of exclusionary language, half of which may be irrelevant to the nature of the subject claim. While this method is questionable on its face, it is consistently employed for three very specific reasons/goals. The first, and undoubtedly most important reason, is to use as many arguments as possible at their disposal to deny claims and ultimately save money. Further, this method serves to dissuade policyholders from pursuing an otherwise meritorious claim, as they are now under the impression that their insurer can rely on multiple policy exclusions/conditions justifying their coverage decision. Finally, insurers rely on multiple provisions to “cover their rear” should the policy provision they otherwise would have relied on turn out to be grossly inapplicable in the future.

This strategy alone presents issues, but perhaps even more egregious is when the denial letter cites conflicting policy provisions attempting to justify their denial of the claim. One example is when an insurer cites one of the many exclusions listed above, such as wear and tear, and additionally alleges that they were prejudiced in their investigation due to late reporting of the claim. For example, I have seen many denial letters with language almost identical to the following:

Based on the inspection, our investigation determined that the damages to your roof appears to be related to a lack of maintenance, wear and tear, and deterioration, which is not covered by your policy. (Emphasis added).

Further, due to the amount of time that has elapsed since the alleged date of loss, [Insurance Company] is unable to determine the cause of the claimed damages, and therefore, has been prejudiced in its investigation. (Emphasis added).

It does not take an expert to see the inherent contradiction that arises from simultaneously relying on these provisions in denying a claim. It poses a question that reveals the logical inconsistency: How can you determine that the damage was due to an excluded peril if you were not able to determine the cause of loss due to late notice?

The answer to this question relates to the three goals as set out above. The purpose of alleging both an excluded cause of loss and prejudice is not to inform the policyholder good faith application of the policy that led to the denial of coverage, it is to accomplish those goals and dispose of as many claims as possible. This conduct represents a violation of numerous requirements imposed on insurers by Florida law, as described by the following statutory provisions.

Florida Statute 626.9541(1)(i)(3)(f) states as follows:

Failing to promptly provide a reasonable explanation in writing to the insured of the basis in the insurance policy, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement.

Further, Florida Statute 626.9541(1)(i)(3)(b) provides:

Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.

It seems self-evident that both claiming you “determined” the cause of loss while simultaneously alleging you were “unable to determine the cause of loss” fails to provide a reasonable explanation for denial of a claim. Similarly, it is hard to imagine a convincing argument that doing so is not a blatant misrepresentation of insurance policy provisions relating to coverage at issue. Nonetheless, insurance carriers and their representatives will continue to cite contradicting policy provisions in an attempt to accomplish their goals, and attorneys, such as those at Merlin Law Group, will continue to hold them accountable.