A policyholder under an all-risk policy filed a claim for sinkhole damage to his home. Does the burden of proving that the damage was caused by a sinkhole fall on the policyholder or the insurer? A Florida court initially ruled that the burden falls on the insured, but that decision has since been overturned.
Alfredo Mejia’s Florida home was insured by Citizens Property Insurance Corporation when he filed a claim for damage caused by sinkhole activity. Mejia’s policy was an all-risk policy that excluded earth movement, settlement, and loss caused by a sinkhole — so he had paid an additional premium for a Sinkhole Loss Coverage Endorsement. That added sinkhole loss as a covered peril and stated that the earth movement and sinkhole exclusions did not apply.
In response to Mejia’s claim, Citizens retained engineering firm BCI to assess the damage claim made by Mejia. BCI concluded that the damage was not caused by a sinkhole, and Citizens denied Mejia’s claim. What followed was a trial on Mejia’s breach-of-contract, where Mejia presented his own evidence that his home had suffered structural damage due to sinkhole activity.
Prior to the trail, the court ruled Mejia had the burden of showing that the damage was caused by sinkhole activity during the policy period, despite the fact that Mejia had requested jury instructions that only required him to show only that his home was damaged while the policy was in place, and that required Citizens to show that the cause of the damage was not covered by the policy.
After presenting his evidence, the jury found Mejia had not established by the greater weight of the evidence that his home had suffered physical damage caused by a sinkhole. Final judgement was thereafter entered in favor of Citizens. Mejia responded by appealing the decision, holding that the trial judge had erred in allocating the burden of proof.
On Nov. 26, 2014, the Court of Appeals agreed with Mejia and remanded for a new trail. In Mejia v. Citizens Prop. Ins. Corp., 2014 WL 6675717, 2014 Fla. App. LEXIS 19526 (Fla.Dist.Ct.App., Nov. 26, 2014), Judge Stevan T. Northcutt ruled that a policyholder under an all-risk contract of insurance needs only to prove the insured property suffered a loss while the policy was in place. The burden then shifts to the insurance carrier to prove that the cause of the loss was excluded from coverage.
According to Lexology, the Court of Appeals panel also held that the trial court had also erred by excluding evidence that over the previous three years the insurance company had to pay approximately $9.5 million in fees to its expert witnesses from BCI. According to Judge Northcutt, this decision was directly relevant to the policyholder’s efforts to impeach the credibility of the carrier’s experts by showing bias.