Florida Appeals Court Orders Insurer to Defend Rescission Claim in Title Dispute

[Peter Walther]

This is a recent decision where a title insurer denied coverage to an insured owner who had been named in a suit to rescind the deed into the insured.  The insurer claimed the Complaint alleged matters which were excluded from coverage and therefore liability was denied.  The insured sued the insurer, and the trial court agreed with the insurer and dismissed the insured's complaint.  The insured appealed and the appeals court agree with the insured and reversed the lower court's decision.

I handled a similar title claim where the complaint alleged among other things, the insured knew or should have known about the Plaintiff's prior contract and therefore the deed into my insured should be rescinded.  I believed the company had liability because the allegation "should have known" was outside the policy exclusion.  There was lots of discussion in the department about whether the matter was in fact covered but my opinion ultimately prevailed.  The conversation, as well as this decision, left me wondering how many insureds are denied policy coverage and cannot afford to bring a suit against the insurer and are unable to recover their loss.