Insurer had reasonable grounds to deny coverage where the plaintiff’s property was not covered under the insurance policy because he did not reside there.

The plaintiff appealed the trial court’s grant of summary judgment in favor of the insurer in this breach of contract case. The plaintiff never resided in the subject property but had a third party manage the property for him. After a water leak caused substantial damage, the insurer initially indicated it would pay the claim, but later determined it was not covered since the policy required that it be used as a residence. The plaintiff sued alleging the insurer acted in bad faith in denying the claim. The United States Court of Appeals for the Eleventh Circuit determined that the plaintiff failed to satisfy the residency requirement and that the insurer was not estopped from denying coverage just because it had initially indicated it would cover the claim.

Case Law Alert, 1st Qtr 2012