Westchester Surplus Lines Insurance has reached a settlement with a Florida condominium association over a hurricane damage claim—three years after the association submitted loss estimates that insurers blasted as wildly inflated, even calling them 'outrageous.'
The long-running dispute drew intense scrutiny, turning a routine storm claim into a high-stakes battle over just how far damage estimates can go.
“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—applies only to Westchester. The terms remain undisclosed, and the federal judge overseeing the case has not yet approved the deal. According to the condominium association’s attorney, the other insurers named in the lawsuit must still review the agreement before any broader resolution can move forward.
Westchester—part of Chubb and based in Alpharetta, Georgia—was represented by attorneys from the Cozen O’Connor law firm. Early in the case, the insurer argued that the scale of Portofino’s claim raised serious questions, noting that the condominium association had initially filed a proof of loss for just $6.5 million—a figure far below the damages later being sought.
Later, the condominium association hired its own appraiser, who estimated the losses at more than $233 million. That dramatic jump raised red flags for the insurers. In their request for a declaratory judgment, Portofino’s attorneys argued the figure "which raises significant questions concerning the appraiser’s interest and honesty, as well as the fraudulent nature of the claim and its supporting documentation."
Insurers argued that Hurricane Sally—a Category 2 storm that struck the Pensacola area in 2020—caused only limited damage. In fact, many units at Portofino appeared largely untouched, with some condos selling for as much as $800,000 even after the storm passed.
Insurers also argued that the condominium association failed to comply with a key cooperation clause in its policies—an obligation they say policyholders must meet during the claims process.
In 2023, Portofino asked the court to dismiss the insurers’ lawsuit, arguing that the appraisal panel had not yet determined a final loss amount. The condo association’s legal team also pushed back on Westchester’s fraud allegations, saying the original proof of loss covered only part of the damage. They added that the condominium’s appraiser had merely offered a professional opinion—not an inflated valuation meant to drive up the claim.
Attorneys representing Westchester could not immediately be reached for comment Wednesday. Ed Fleming, a lawyer for Portofino, said the settlement is confidential and declined to discuss its terms. Several other insurers involved in the dispute have already reached settlements, and more agreements are expected in the months ahead.
Photo: The Portofino condo buildings on Pensacola Beach. (AdobeStock)
