'INSURANCE COVERAGE BY ESTOPPEL IS NOT A BAD FAITH CLAIM.'

  In Bishop v. Progressive Express Ins. Co., ___ So. 3d ___, 2015 WL 63648 (Fla. 1st DCA January 6, 2015), a Florida appellate court was faced with an appeal from a summary judgment.  The trial court entered the summary judgment, in part, on a claim of "insurance coverage by estoppel" against an insurance company.  The complaint detailed the insurer's alleged conduct.

    On appeal, Florida's First District Court of Appeal reversed the summary judgment on this claim.  The appellate court was careful from the start to outline the limitations on any such claim:

     Undertaking communication, conduct, and steps in defense of an underlying action, heavily dependent upon the circumstances, may rise to a coverage by estoppel claim. This appeal involves an allegation an insurer made statements and undertook actions which led a business owner to believe she had insurance coverage for the underlying action; all this despite the insurer's knowledge of facts which would have permitted it to deny coverage.

Bishop v. Progressive Express Ins. Co., ___ So. 3d ___, 2015 WL 63648, *1 (Fla. 1st DCA January 6, 2015).  "This “coverage by estoppel” claim requires a representation of material fact, reasonable reliance, and a detrimental change in position (i.e., prejudice) as a result of the reliance."  Bishop v. Progressive Express Ins. Co., ___ So. 3d ___, 2015 WL 63648, *1 (Fla. 1st DCA January 6, 2015).

    The appellate court reversed the trial court's summary judgment in favor of the insurance company on the "coverage by estoppel" claim in this case.  However, the appellate court was careful to point out that its reversal was as a matter of law and did not weigh the facts, which is the job of the trier of fact and not the task of the Court:

Here, we do not pass on the strength of the business owner's claims regarding the insurer's conduct and actions or what the business owner believed afterwards. That is for the trier of fact to determine. We write only to confirm the cause of action exists, such a claim does not sound in bad faith, and here it was for the trier of fact to determine the ultimate weight to give the insurer's conduct versus the reasonableness of the business owner's reliance.  We REVERSE the court's grant of summary judgment in favor of the insurer as to this count and REMAND for further proceedings.

 

Bishop v. Progressive Express Ins. Co., ___ So. 3d ___, 2015 WL 63648, *1 (Fla. 1st DCA January 6, 2015).

    Whether and to what future fact patterns this holding will be applied remains to be developed.  However, this holding fits with a rule of law which is rarely invoked with success in Florida.  The rule is what the appellate court meant in its condensed version of the rule in the first quotation from the appellate court in this case, above.

    You would  not necessarily know from that statement of Florida law that so far the rule of "coverage by estoppel" in cases involving liability insurance has been limited to situations involving a liability insurance company with a duty to defend undertaking the defense of its insured without a reservation of rights, and then only where the lack of a reservation misled the insured to its prejudice when the insured reasonably relied on the insurance company's undertaking of the insured's defense without reseravation.

    The appellate court's statement of this rule is repeated here for the reader's ease of comparison:

     Undertaking communication, conduct, and steps in defense of an underlying action, heavily dependent upon the circumstances, may rise to a coverage by estoppel claim. This appeal involves an allegation an insurer made statements and undertook actions which led a business owner to believe she had insurance coverage for the underlying action; all this despite the insurer's knowledge of facts which would have permitted it to deny coverage.

 

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