Who has the burden of proof in a typical all-risk insurance policy which is now often referred to as an “open perils” policy? What does a policyholder typically have to prove to make a claim for property damage? These are fairly basic questions with answers that can become confusing when the burdens switch.

In Policyholders’ Burden Of Proof Under All-Risk Policies Is Characterized As “Relatively Light”, Merlin Law Group attorney Shaun Marker noted:

In litigation, parties’ burdens of proof are extremely important. Litigators must understand the burdens of proof applicable to the case they are involved in. Think of the difference between having to prove that a loss is covered pursuant to specific policy terms and having to prove only that a loss that was fortuitous and it affected the insured property. The first situation may be appropriate under a named-peril policy. The second is a policyholder’s burden of proof under an all-risk policy.

Marker then noted a New York case stating the fairly standard rule for the policyholder’s burden under an all-risk policy:

An insured making a claim under an all-risk policy has the initial burden to establish a prima facie case for recovery. An insured meets this burden by showing: ‘(1) the existence of an all-risk policy, (2) an insurable interest in the subject of the insurance contract, and (3) the fortuitous loss of the covered property.’ This burden has been characterized as ‘relatively light.’

Marker then commented about the burden shifting to the insurer to prove an exclusion:

Once an insured has met its burden of establishing a prima facie case, the burden shifts to the insurer to establish that an exclusion applies. The Court stated that the insurer’s burden is a ‘heavy one’ to negate coverage by virtue of exclusions in an all-risk policy.

The case I mentioned1 in last week’s post, Do You Have a Florida Property Insurance Dispute Over Valuation? Understand the Differences Between Replacement Cost Value, Actual Cash Value and How the Broad Evidence Rule Works, is a practical example of this concept. The court noted the argument between the parties regarding the damage to the church roof:

ASIC argues that most of the roof damage was not hurricane damage, but it does not contest the Church’s assertion that the hurricane caused at least some roof damage. Indeed, the parties were in agreement at the hearing that there was a covered loss during the policy period. They further agreed as to the burden-shifting framework for determining coverage under insurance policies. Under that framework, the insured bears the initial burden of establishing a loss the policy covered. If the insured shows a covered loss, the burden shifts to the insurer to show that an exclusion applies. (citations omitted)

With the parties admitting the shifting of the burden of proof concept, the court then discussed the practical effect if the matter were forced to a trial:

So with the parties essentially in agreement on all this, ASIC is left to argue that summary judgment on this issue would not advance the case in any meaningful way. And it may not end up making much practical difference. But at trial, it will keep the Church from having to meet its initial burden of showing a covered loss.

In arguing that such a finding would not meaningfully advance this case, ASIC argues that ‘[the Church] must prove that all of its claimed damages to both roofs are covered by the Policy.’… But this misstates the burden-shifting framework. Once the insured satisfies its initial burden by showing a covered loss, ‘the burden shifts to the insurer to show that the loss resulted from an excluded cause. The insured does not need to disprove any excluded causes.’ Citizens Prop. Ins. Corp. v. Munoz, 158 So. 3d 671, 674 (Fla. 2d DCA 2014)…

Again, ASIC ‘agrees that some roof shingles and some tabs of the roof shingles were damaged by winds from Hurricane Michael.’… Based on this acknowledgement, it is established that a covered loss occurred, and I will grant the Church’s motion to that extent. But to be clear, I do not find (and have not been asked to find) that all roof damage was covered. ASIC can still present evidence that only part of the roof damage was caused by wind, but it bears the burden of showing that any damage was the result of an excluded cause.

The trial court therefore granted the policyholder’s motion for a partial summary judgement and shifted the burden on the insurer to prove what part of the claimed loss was excluded.

Thought For The Day

Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof.
—John Kenneth Galbraith
1 Dupont-Butler v. American States Ins. Co., No. 1:20-cv-35 (N.D. Fla. Feb. 25, 2021).