In a recent decision that should raise red flags for public adjusters and policyholders, a federal judge granted summary judgment in favor of Indian Harbor Insurance Company. 1 The ruling is a lesson that when it comes to insurance claims and litigation, it is not enough to argue about fairness or merely present repair invoices. Courts expect policyholders to come prepared with competent, detailed evidence, typically in the form of expert testimony, to prevail in disputes over scope of damage, causation, and the amount of property damage.
The case involved commercial property in Pensacola, Florida, that suffered damage during Hurricane Sally in September 2020. Bagelheads, Inc., the insured, submitted a claim under its all-risks policy. The insurer did not deny coverage and paid $171,010.62 on the claim. However, Bagelheads contended that this amount was insufficient and filed suit for breach of contract, alleging underpayment. The plaintiff relied on invoices for roof and HVAC repairs totaling approximately $126,000, which were higher than the estimates provided by the insurer’s expert. Notably absent, however, was any expert testimony from Bagelheads addressing causation, repair scope, or expert testimony on the reasonable amount of damage.
Indian Harbor Insurance Company moved for summary judgment, pointing out that the total paid was more than both the expert’s estimate and what Bagelheads could substantiate through invoices. The insurer emphasized that their expert, while unable to precisely separate hurricane-related damage from wear and tear, estimated total repair costs lower than what had already been paid. They further argued that because Bagelheads had not disclosed or retained any experts, it could not create a triable issue regarding damages or causation.
In its response to the motion for summary judgment, Bagelheads leaned heavily on legal principles. Bagelheads argued that under Florida law, once a policyholder shows a loss occurred during the policy period, as they had done with undisputed hurricane damage, the burden shifts to the insurer to prove any exclusions. It claimed that the insurer had not met its burden because its expert admitted he could not separate covered from excluded damage. It also insisted that the issue of damages should be left to a jury and that invoices and lay testimony from the property owner should suffice to raise a factual dispute.
The court rejected Bagelheads’ arguments. It acknowledged that the insurer bore the burden of proving exclusions but found that issue irrelevant in light of the uncontested fact that the insurer had already paid more than any documented or estimated damage. Crucially, the court held that while a property owner may testify about the general value of property, testimony about complex issues like repair scope and causation, particularly in distinguishing hurricane damage from deterioration, typically requires expert opinion. The court emphasized that Bagelheads provided no such opinion nor any lay testimony regarding the issue beyond the invoices themselves. As a result, there was no evidence from which a reasonable jury could conclude that Indian Harbor had underpaid the claim.
For public adjusters and policyholders, the lessons from this case are clear and profound. First, invoices alone rarely carry the day. In litigation, courts are not swayed by invoices unless they are directly tied to covered damage through competent testimony. Second, lay testimony from a property owner, while useful in some contexts, generally cannot substitute for expert analysis when the dispute involves the cause and extent of damage. Third, relying solely on the burden-shifting doctrine in all risk policies is an uncertain proposition unless backed by substantive evidence that can withstand judicial scrutiny. Lastly, the absence of an expert can be fatal. Even in straightforward hurricane cases, if the insurer’s expert is the only qualified voice on scope and value of repairs, and the plaintiff has no expert to counter it, the court may find no genuine issue of material fact.
This case serves as a wake-up call to those representing policyholders: Be proactive in retaining qualified experts, ensure their reports are tied to covered perils, and understand that what seems obvious to a layperson is often insufficient in the courtroom. Whether you are preparing a claim or positioning for trial, Bagelheads reminds us that success depends not just on what was damaged, but on how well you can prove it.
Thought For The Day
“I have learned from my mistakes, and I am sure I can repeat them exactly.”
— Peter Cook
1 Bagelheads v. Indian Harbor Ins. Co., No. 3:24-cv-00258 (Fla. Cir. Ct. Dec. 20, 2024).
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