Westchester Surplus Lines Insurance has reached a settlement with a Florida condominium association in a hurricane claim, three years after the condo claimed damages that insurers said were so inflated that they were termed “outrageous.”
“This matter involves an egregious and overinflated first-party Hurricane Sally insurance claim, where the Defendants seek over $230 million for damages allegedly sustained to the Defendants’ condominium buildings that remain standing and in good condition,” reads the 2023 lawsuit complaint filed by Westchester and 15 other insurers that covered Portofino, one of the largest and best-known high-rise condos on Pensacola Beach.
The settlement agreement, filed in U.S. District Court in Pensacola, is only for Westchester. The terms were not disclosed, and the federal judge in the case has yet to sign off on the agreement. All other insurers named in the lawsuit also must review, the condo association attorney said.
Westchester, a Chubb company based in Alpharetta, Georgia, was represented by attorneys with the Cozen O’Connor law firm. The insurer argued early in the case that Portofino’s claim was felt to be so over the top because the condo association had initially submitted a $6.5 million proof of loss.
Later, the condo hired its own appraiser who suggested the loss was more than $233 million, “which raises significant questions concerning the appraiser’s interest and honesty, as well as the fraudulent nature of the claim and its supporting documentation,” Portofino’s lawyers wrote in asking for declaratory judgment on the claim.
Hurricane Sally, a Category 2 storm that hit the Pensacola area in 2020, caused only minor damage, the insurers argued. Many Portofino units were relatively unharmed, with some selling for as much as $800,000 each after the storm.
The condo association also failed to comply with a cooperation provision in the policies, the insurers contended.
Portofino in 2023 asked the court to dismiss the insurers’ case, noting that the appraisal panel had not reached a final amount on the loss. The condo’s legal team also denied Westchester’s fraud allegations and said that the initial proof of loss was only for partial damages, and that the condominium’s appraiser had offered only an opinion, which did not inflate the claimed amount.
Attorneys for Westchester in the case could not immediately be reached for comment Wednesday. Ed Fleming, a lawyer for Portofino, said the settlement is confidential and he could not discuss the terms. A number of other insurers involved have already settled, and more are expected in coming months.
Photo: The Portofino condo buildings on Pensacola Beach. (AdobeStock)
Topics
Catastrophe
Natural Disasters
Hurricane
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