Creating Insurance Coverage Through Estoppel
Requirements of General Estoppel Defense
A party presents a justiciable defense of estoppel if he or she shows a misrepresentation of a material fact upon which the party asserting estoppel detrimentally relied. Langford v. Ferrera, 823 So. 2d 795 (Fla. 1st DCA 2001). Therefore, the elements of equitable estoppel are: (1) representation as to a material fact that is contrary to a later-asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel that is caused by the representation and reliance thereon. See State v. Harris, 881 So. 2d 1079 (Fla. 2004); Sun Cruz Casinos, L.L.C. v. City of Hollywood, Fla., 844 So. 2d 681 (Fla. 4th DCA 2003); Cosman v. Bea Morley Real Estate Group, Inc., 820 So. 2d 1040 (Fla. 4th DCA 2002). The doctrine of equitable estoppel precludes a person from maintaining inconsistent positions to the detriment of another. Marshall v. Marshall, 386 So.2d 11 (Fla. 5th DCA 1980).
Equitable estoppel is based on principles of fair play and essential justice and arises when one party lures another party into a disadvantageous legal position. Major League Baseball v. Morsani, 790 So. 2d 1071 (Fla. 2001). Equitable estoppel is the effect of the voluntary conduct of a party whereby he or she is absolutely precluded, both at law and in equity, from asserting rights which perhaps have otherwise existed, either of property, contract, or remedy, as against another person who has in good faith relied upon such conduct and has been led thereby to change his or her position for the worse and who on his or her part acquires some corresponding right, either of property, contract, or remedy. See Florida Dept. of Health and Rehabilitative Services v. S.A.P, 835 So. 2d 1091 (Fla. 2002); Major League Baseball v. Morsani, 790 So. 2d 1071 (Fla. 2001). More simply put, equitable estoppel is generally words or conduct which cause another person to believe a certain state of things exists and to consequently change his or her position in an adverse way. See Southeast Grove Management Inc. v. McKiness, 578 So. 2d 883 (Fla. 1st DCA 1991).
Equitable estoppel operates as a shield, not as a sword, and operates against the wrongdoer, not the victim. See Florida Dept. of Health and Rehabilitative Services, 835 So. 2d at 1091; Bergman v. DeIulio, 826 So. 2d 500 (Fla. 4th DCA 2002). Equitable estoppel is designed to prevent a loss rather than aid a litigant in gaining something. See State Agency for Health Care Admin. v. MIED, Inc., 869 So. 2d 13 (Fla. 1st DCA 2004). The prime purpose of the doctrine of equitable estoppel is to prevent a party from profiting from his or her wrongdoing. Major League Baseball, 790 So. 2d 1071 (Fla. 2001). Thus, where the words or conduct of one party causes another to forbear to his or her detriment, equitable estoppel may be applied to prevent harm to the innocent party. Miami Nat. Bank v. Greenfield, 488 So. 2d 559 (Fla. 3rd DCA 1986).
In order to assert a defense of estoppel, it is generally necessary that the representations, whether consisting of words, acts, omissions, or conduct of the party against whom the estoppel is being asserted, were believed by the party claiming the estoppel.State ex rel. Watson v. Gray, 48 So. 2d 84 (Fla. 1950). Moreover, the party asserting equitable estoppel must prove that he or she reasonably relied on the conduct of the other party. Miller v. American Banker's Ins. Group, 85 F. Supp. 2d 1297 (S.D. Fla. 1999) (applyingFlorida law).
Equitable estoppel rests largely upon injury or prejudice to the rights of him or her who asserts it. Because the function and purpose of the doctrine of estoppel is the prevention of fraud and injustice, there can be no estoppel where there is no loss, injury, prejudice, or detriment to the party claiming it. See State ex rel. Watson, 48 So.2d 84 (Fla.1950). Thus, the defense of estoppel by fraud and deceit is not proper where the evidence establishes no detrimental change in position by the party claiming the fraud and deceit. Krest-View Nursing Home, Inc. v. Sokolow, 177 So. 2d 775 (Fla. 3rd DCA 1965).
Creation of insurance coverage based on Estoppel and Detrimental Reliance
Most courts nationwide continue to adhere to the majority position asserted by the court in Republic Ins. Co. v. Silverton Elevators, Inc., 493 S.W.2d 748 (Tex. 1973), that estoppel may not be employed to expand coverage not otherwise provided in an insurance contract. See, e.g., Laidlow Environmental Services, Inc. v. Aetna Casualty & Surety Co., 524 S.E.2d 847, 852 (S.C. Ct. App. 1999) (estoppel and waiver cannot create coverage that does not otherwise exist); Martin v. United States Fidelity and Guaranty Co., 996 S.W.2d 506, 511 (Mo. 1999) (estoppel cannot be used to create coverage); Shepard v. Keystone Insurance Co., 743 F. Supp. 429, 433 (D. Md. 1990) (under Maryland law, “waiver and estoppel cannot be used to create liability where none previously existed, or to extend coverage beyond what was originally intended"); Fli-Back Co., Inc. v. Philadelphia Manufacturers Mutual Insurance Co., 502 F.2d 214, 216 (4th Cir. 1974) (same under North Carolina law).
Florida has joined the minority position creating or allowing coverage for an insured based on estoppel. Crown Life Ins. Co. v. McBride, 517 So.2d 660 (Fla. 1987). In Crown Life, the insured, through discussions with the insurer and the insurance broker was allegedly led to believe that coverage existed. Id. at 661. The insured brought suit, and the case went to the jury on the theories of estoppel and oral contract. Id. The jury verdict and final judgment in respondent's favor on these theories was affirmed by the district court on the authority of the general rule in applying equitable estoppel to insurance contracts- estoppel may be used defensively to prevent a forfeiture of insurance coverage, but not affirmatively to create or extend coverage. Six L's Packing Co. v. Florida Farm Bureau Mutual Insurance Co., 268 So.2d 560 (Fla. 4th DCA 1972). At issue was whether the doctrine of promissory estoppel could be asserted to obtain coverage based on relied upon representations by the insurer to the insured. Crown Life Ins. Co., 517 So.2d at 662.
The Florida Supreme Court carved out an exception to the majority and general rule, and held that the form of equitable estoppel known as promissory estoppel may be utilized to create insurance coverage where to refuse to do so would sanction fraud or other injustice. Crown Life Ins. Co., 517 So.2d at 662. The court reasoned that promissory estoppel should be applied where the promisor [insurer] reasonably should have expected that affirmative representations would induce the promise [insured] into action or forbearance substantial in nature, and where the promisee shows that such reliance thereon was to his detriment. Id.
The court ultimately held that the respondent failed to meet his burden of proving his detrimental reliance upon Crown Life's representations, because the respondent offered no written policy, memoranda, witnesses, or other evidence to support its own self serving testimony. Id. Therefore, the Florida Supreme Court quashed the decision of the district court and remanded the case. Id. at 663.
Accordingly, the result of the Crown Life case and its progeny is that the form of equitable estoppel known as promissory estoppel may be utilized to create insurance coverage where to refuse to do so would sanction fraud or other injustice, and that injustice may be found where the promisor reasonably should have expected that his affirmative representations would induce the promisee into action or forbearance and where promisee shows that such reliance was to his detriment. See, e.g., Crown Life Ins. Co., 517 So. 2d 660 (Fla. 1987); Kissimmee Utilities Authority v. Florida Mun. Ins. Trust, 686 So. 2d 766 (Fla. 5th DCA 1997); Jones v. State, 606 So. 2d 709 (Fla. 1st DCA 1992); State Farm Fire & Cas. Ins. Co. v. Ortiz, 560 So. 2d 1350 (Fla. 3rd DCA 1990).
Thus, the critical elements of promissory estoppel in the insurance context are that:
• the insurer or its agent must have made a representation to the insured after the issuance of the policy and before the incident giving rise to a claim under the policy • this representation must have led the insured to believe that coverage existed • the insured must have relied upon the representation to his or her detriment • this reliance must have been reasonable, and foreseeable to the insurer.
When promissory estoppel is not applicable, the traditional rule continues to apply, so as to deny the creation or extension of coverage. State Farm Mut. Auto. Ins. Co. v. Hinestrosa, 614 So. 2d 633 (Fla. 4th DCA 1993).
 See Professional Underwriters Ins. Co. v. Freytes & Sons Corp., Inc., 565 So. 2d 900 (Fla. 5th DCA 1990) (no estoppel when insured had never even inquired about coverage and could not meet threshold requirement of promise or representation); Homrich v. American Chambers Life Ins. Co., 594 So. 2d 348 (Fla. 5th DCA 1992) (representations by an agent as to coverage under an insurance policy made before the policy is issued do not estop the insurer from denying coverage); Executive Health Services, Inc. v. State Farm Fire and Cas. Co., 498 So. 2d 1268 (Fla. 2nd DCA 1986).
 Emanuel v. U.S. Fidelity and Guar. Co., 583 So. 2d 1092 (Fla. 3rd DCA 1991); Professional Underwriters Ins. Co. v. Freytes & Sons Corp., Inc., 565 So. 2d 900 (Fla. 5th DCA 1990).
 Middlesex Mut. Ins. Co. v. Levine, 675 F.2d 1197 (11th Cir. 1982); LeMaster v. USAA Life Ins. Co., 922 F. Supp. 581 (M.D. Fla. 1996); Crown Life Ins. Co. v. McBride, 517 So. 2d 660 (Fla. 1987); In Interest of B.T., 597 So. 2d 398 (Fla. 1st DCA 1992).
 Grimes v. Waters, 564 So. 2d 235 (Fla. 1st DCA 1990) ; Criterion Leasing Group v. Gulf Coast Plastering & Drywall, 582 So. 2d 799 (Fla. 1st DCA 1991); Masonry v. Miller Const., 558 So. 2d 433 (Fla. 1st DCA 1990).