George and Inna Botelho owned a high-value house with a roof that had gone badly improper lengthy earlier than Indian Harbor ever issued a coverage. Contractors deserted the job, the roof remained incomplete for years, and water entered the house each time it rained. That underlying actuality framed every little thing that adopted, together with the courtroom’s final determination to rule in opposition to the policyholders. 1
The courtroom didn’t deny protection as a result of rain just isn’t a fortuitous occasion or as a result of inside water injury can by no means be coated. In reality, the insurer’s personal witnesses conceded that rain and storms are traditional likelihood occasions. As a substitute, your complete case turned on what occurred earlier than the coverage ever took impact, particularly what was stated and never stated within the insurance coverage software.
When the Botelhos utilized for protection, they answered “no” to a query about whether or not they deliberate building or renovation within the coming 12 months, although they had been actively acquiring bids to repair the roof. They disclosed prior losses in a normal method however didn’t reveal that the roof had been left unfinished and was permitting water to intrude repeatedly. They then signed a press release certifying they had been unaware of any circumstances which may give rise to a declare, regardless of figuring out water had been getting into the house for years. The courtroom considered these solutions as intentional and materials misrepresentations.
Florida regulation is unforgiving on this level. If an insurance coverage coverage comprises a concealment or fraud provision, and the insurer proves an intentional, materials misrepresentation referring to the insurance coverage, protection could be voided completely. To keep away from this, the policyholders argued that the insurer inspected the house after binding protection, noticed the unfinished roof, and selected to proceed insuring the property. They framed this as a voluntary assumption of danger.
The courtroom rejected that argument. The decide held that a post-binding inspection doesn’t cleanse a false software. His holding was that the regulation doesn’t reward candidates who misstate materials info after which hope the provider’s later diligence will save them.
What makes this case significantly sobering is that the courtroom by no means reached the extra nuanced protection questions. There was no ruling on ensuing loss, defective workmanship exclusions, precise money worth disputes, or lack of use damages. As soon as the misrepresentations within the software had been established, the remainder of the talk turned legally irrelevant. Abstract judgment was entered, and the case was over.
There’s a lesson right here for policyholders and for these of us who advise them. Insurance coverage is constructed on disclosure. Attempting to “preserve issues separate from insurance coverage,” as one insured testified, is a harmful mindset. Purposes matter. Statements of no loss matter. Even well-meaning candidates who observe a dealer’s recommendation to shade the reality can discover themselves with out protection once they want it most.
This determination doesn’t imply insurers ought to get a free go on dangerous claims dealing with, nor does it diminish the significance of holding carriers to their guarantees. However it does remind us that the muse of the insurance coverage contract is honesty at inception. With out that, even the strongest protection arguments can collapse earlier than they’re ever heard.
Thought For The Day
“The belief of the harmless is the liar’s most great tool.”
— Adolf Hitler
1 Botelho v. Indian Harbor Ins. Co., No. 9:24-CV-81400 (S.D. Fla. Jan. 8, 2026).