An agent's potential liability for misrepresenting the status of the property's flood coverage was at issue in Witlowski v. Richard W. Endlar Ins. Agency, 2012 Mass. App. LEXIS 192 (Mass. Ct. App. May 29, 2012).

   Plaintiff resided in the basement of a condominium unit. The condominium was located in a floodplain and designated by FEMA as an AE flood zone, an area of special flood hazard. Federal law required lending institutions to only issue loans for improved real estate located in special flood hazard zones if the property was insured for flood.

   Plaintiff purchased his unit in 2005. His mortgage lender sought from Endlar Insurance Agency proof of flood insurance on the unit. Endlar issued a one-page statement regarding insurance on the condominium. The document certified that the unit owner was insured under the Master Policy issued to the condominium. The lender then advanced the mortgage funds and plaintiff closed on his purchase.

    The condominium suffered substantial damage due to a flood on May 15, 2006. Plaintiff's unit was completely destroyed. One week after the flood, the condominium association told the four basement unit owners that their units were excluded from coverage under the Master Policy.

    Plaintiff sued, but summary judgment was granted to Endler. The appellate court reversed. The statement provided by Endlar could be construed to represent that the basement unit was covered by flood insurance. First, it was delivered in direct response to a request for verification of flood coverage. Second, on the summary judgment record it appeared that all the units in the condominium, other than the four basement units, were covered by the master policy. Third, the certificate contained no indication or warning that the plaintiff's unit was excluded entirely from such coverage.

   Therefore, there was an issue of fact as to whether the certificate falsely represented that the plaintiff's unit was covered under the Master Policy, and whether the plaintiff reasonably relied to his detriment on that representation. The summary judgment award was reversed.