The Role of Underwriting Files in First-Party Property Litigation Disputes

In Florida first party property litigation, the underwriting file can be an important but frequently disputed source of evidence. Underwriting files generally contain documents and information gathered by the insurance carrier when evaluating whether to issue, renew, modify, or cancel a policy.

What Is Typically Included in a Underwriting File?

An underwriting file may include documents such as:

• the application for insurance;
•  inspection reports and photographs;
• property questionnaires;
• prior loss history such as documents from other carriers or repair receipts; and
• communication with the carrier.

What Is Typically Included in an Underwriting File?

During the course of litigation, an insured often seeks the underwriting file in an effort to challenge coverage defenses.

For example:

• If a carrier claims that a condition was pre-existing, long-term, or otherwise excluded, the insured may argue that the pre-policy inspection or underwriting documents show that the carrier was aware of this condition when the policy was issued.
• If a carrier alleges material misrepresentation in the application process, then the underwriting file then may be used as evidence to support this.

Common Objections to Production

Generally, a carrier will argue that the underwriting file is protected and should not be produced when a request is made by an insured.
Common objections include:

• Relevance: the file does not make any fact regarding the cause, scope, or amount of the claimed loss more or less likely.
• Overbreadth: the request seeks information beyond what is relevant to the dispute.
• Proprietary information: the file contains confidential business information.
• Privilege: some or all of the file is protected from disclosure.

However, a privilege objection may be challenged as the file was generally created prior to the loss and may not be protected.

Additionally, one of the most common objections, if the case is at the trial court level, is that the documents in the underwriting file may be relevant for bad faith actions only, and as such, may not be available for production until after the trial court has resolved the underlying matter. Allstate Indem. Co. v. Ruiz, 899 So. 2d 1121 (Fla. 2005); Homeowners Choice Prop. & Cas. Ins. Co. v. Mahady, 284 So. 3d 582 (Fla. 4th DCA 2019) (“[U]ntil the obligation to provide coverage and damages has been determined, a party is not entitlement to discovery related to the claims file [ ] or to the insurer’s business policies or practices regarding handling of claims.”); Avatar Prop. & Cas. Ins. Co. v. Mitchell, 314 So. 3d 640 (Fla. 3d DCA 2021) (stating that documents were deemed irrelevant and not otherwise discoverable as coverage remained in dispute); and American Integrity Ins. Co. of Florida v. Venable, 324 So. 3d 999 (Fla. 1st DCA 2021) (holding that claim files and underwriting files are not subject to disclosure in breach of contract actions).

Case-by-Case Analysis

Florida courts generally examine whether the underwriting file is relevant to the claim and defenses actually pled, on a case by case basis.
Strong objections to production may exist when:

• coverage is denied based solely on a loss-related exclusion;
• no defense asserted regarding misrepresentation on the insurance application; and
• the underwriting decisions are unrelated to the claimed loss.

Conversely, objections may be more difficult to sustain when:

• the carrier alleges misrepresentation;
• the insured claims that the property’s condition predated the policy inception; or
• when the insured seeks documents showing that the carrier has knowledge of the property’s condition before issuing the policy.

Conclusion

Overall, the underwriting file can be useful in the defense of a first party action or it can be used against the carrier when produced. Therefore, it is important to remember that whether to produce the underwriting file or assert objections to withhold the documents is a strategic decision that must be discussed between counsel and the carrier.