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Insurer May Deny a Claim When Insured Lies on Application  

Rescission Requires Return of Premium Denial of Claim Does Not  

Cesar Benitez appealed the trial court\'s entry of final summary judgment  in favor of Universal Property and Casualty Insurance Company  ("Insurer") in a first-party property insurance dispute over a water  damage claim.  In Cesar Benitez v. Universal Property And Casualty Insurance Company,  No. 4D21-3281, Florida Court of Appeals, Fourth District (October 12,  2022) the Court of Appeals was asked to interpret a statute and the  policy wording.  

FACTS  

In his application for a policy with Insurer Benitez reported no  previous losses on his property. However, after Benitez filed a claim  for new damage, Insurer\'s inspector found signs of pre-existing damage  and repairs. Insurer denied Benitez\'s claim but continued to collect  premiums from him for several years. Benitez then sued for breach of  contract, and Insurer asserted an affirmative defense based on section  627.409, Florida Statutes (2019). The statute provides:  (1) Any statement or description made by or on behalf of an insured or  annuitant in an application for an insurance policy or annuity contract,  or in negotiations for a policy or contract, is a representation and  not a warranty. Except as provided in subsection (3), a  misrepresentation, omission, concealment of fact, or incorrect statement  may prevent recovery under the contract or policy only if any of the  following apply:  (a) The misrepresentation, omission, concealment, or statement is  fraudulent or is material to the acceptance of the risk or to the hazard  assumed by the insurer. \\xa7 627.409(1)(a), Fla. Stat. (2019) (emphasis  added).  

Additionally, Insurer\'s policy allowed denial of coverage if Benitez  "[i]ntentionally concealed or misrepresented any material fact or  circumstance; (2) [e]ngaged in fraudulent conduct; or (3) [m]ade  material false statements; relating to this insurance."  The Insurer also moved for dismissal based on fraud on the court or, in  the alternative, for summary judgment pursuant to section 627.409 based  on material misrepresentations.  At a hearing on that motion, Benitez did not dispute his failure to  disclose the prior claim in both his policy application and discovery  responses to interrogatories and sworn statements in his deposition.  Benitez instead argued the Insurer could not claim rescission as an  affirmative defense because the Insurer had continued to collect  premiums from him for approximately two years after learning of the  prior undisclosed claim. The Insurer contended it sought only to deny  coverage under section 627.409 and not to rescind the policy