Category Archives: Florida Insurance Defenses

The Top Ten First Party Property Insurance Blog Posts

Florida Homeowners Insurance Claims and Litigation Handbook
Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

 

First Party Property Insurance Blog’s Top Ten Posts and Pages

1. Our Getting Started Home Page: we built this page a few months ago to help people navigate the Blog, and it was viewed over 8,000 times. If you haven’t seen it, it is by far and away the best way to navigate through the Blog and find what information you need.

2. Our List of the Biggest and Fastest Growing Florida Homeowners Insurers: viewed over 1,000 times during its limited time on the Blog. Surprisingly, most of the people we speak with did not pay attention to this; however, if you’re in this business, it’s the most important thing to know.

3. Florida Homeowners Insurance Claims for Water Leaks and Damage, and the Constant or Repeated Seepage Exclusion: viewed nearly 1,000 times this year. This massive post includes everything you need to know about the most popular coverage issue in Florida homeowners insurance claims.

4. A $7M Alleged Insurance Fraud – Espinosa Arrest Affidavit: approximately 1,000 times since being posted this year. Unfortunately, we haven’t been able to publish any of the updates. Nevertheless, this post is by far and away the most entertaining post on the Blog.

5. Florida Homeowners Insurance Statutes: we had over 800 visitors view this page. It’s a page you must bookmark right now in your web browser. It’s the only easy way to find the Florida homeowners insurance statutes, and we included tons of additional content to help you, too.

6. Problems and Solutions for Assignment of Benefits Claims: nearly 1,000 people visited our site for analysis on the assignment of benefits issues, and this was the most popular AOB post this year. If we had the time, we would write a post on this issue every single day. This is such a hot topic right now. We encourage you to contribute on this issue by sending us information. If you want to guest post, we will gladly share it with hundreds of subscribers and thousands of readers, and we won’t hesitate to give you credit.

7. Florida Homeowners Insurance Claims for Hail Damage to the Roof – Article & Analysis: hundreds of people viewed this post from a few months ago. This is probably the second most controversial issue in the industry (behind the AOB claims issues). We would also welcome you to guest post on this issue; help our readers out; and give you and your company exposure.

8. Florida Homeowners Insurance Claims for Water Leak Not Excluded as a Matter of Law: hundreds of readers reviewed our detailed analysis on what could be the most important Florida homeowners insurance appellate decision of the year. If you haven’t read the case or my article and you’re handling homeowners insurance claims in Florida, then you’re committing malpractice. It’s an extremely important decision moving forward.

9. All of the Posts on the Citizens Sinkhole Settlements: here is a post on the most recent Citizens sinkhole settlement, and it has links to all of the other Citizens sinkhole settlements.

10. All the Posts on the Citizens Takeouts: here is a link to the latest post on this year’s Citizens takeouts. While reading that post, you can find links to all of the prior settlements.

If you have any questions about this article or anything else Florida homeowners insurance claims related, please contact us.


The Calm Before the Insurance Storm: What if Hurricane Wilma Made Landfall in Florida in 2015

Florida Homeowners Insurance Claims and Litigation Handbook

If you are looking for Hurricane Irma Florida insurance claims resources, click here.

Introduction

My Claims Journal series “Digitizing Claims Litigation: Providing Insurers with the Power and Control They Deserve” focused on the intersection of technology and property insurance claims.  In this article, I wanted to discuss more than technology and explore what could happen if a storm like Hurricane Wilma makes landfall in 2015.

Ask yourself: has anything changed in the past decade? We take a look at how indemnity exposure has changed; however, we really focus in on whether loss adjustment expenses would be any different, and we focus on whether the laws and technology have changed anything.

Hurricane Wilma only pummeled Florida for approximately five hours, but its legacy lasted another decade.  Nobody could have predicted that this storm would give rise to over a million insurance claims, and over nine billion dollars in damages.  Thousands Wilma claims were filed each year, and many were not resolved until just a couple of years ago.

Fast forward to 2015. Would anything be different if Hurricane Wilma made landfall in Florida today? It depends on what you focus on. A lot has changed, and a lot has stayed the same. Let’s explore the advances in two key areas: indemnity and loss adjustment expenses.

Indemnity

From an indemnity exposure standpoint, most of the developments since Hurricane Wilma have been positive.  Many of the traditionally hurricane-prone states have compiled financial protection against losses, including impressive catastrophe funds, effective reinsurance, and increased risk transfer to the private sector. Additionally, there has been a strong initiative to educate the nation about flood insurance.

All that being said, the stakes are still very high. Real estate growth is all over the coast, and so are our greatest potential losses. Studies suggest that a hurricane like Hurricane Wilma will still have the same or greater indemnity impact on insurers in 2015.

Accordingly, although we did not learn our lesson and continued to build in the most disaster-prone areas, we were lucky enough to have a long enough gap in hurricanes to save a good amount of money.

Loss Adjustment Expenses

In addition to the lost profit of indemnity, loss adjustment expenses also skyrocket following a hurricane. If a hurricane makes landfall in 2015, will loss adjustment be any less expensive than it was in 2005?

Legal Developments’ Impact on Loss Adjustment Expenses

Lawyers and lawmakers spent the last decade trying to respond to the 2004 and 2005 hurricane seasons. Although there were some positive legal developments, the legal framework is mostly the same.

Florida’s 90-day rule statutory amendment imposed a significant burden on insurers: try to pay all hurricane claims within 90 days after receiving notice of the claim. Further, there have been no changes to the attorney fee statute benefiting successful attorneys representing homeowners. That being said, the ensuing property insurance bills in Florida helped mitigate some of the expense risks. Some of the positive laws in Florida since 2005 include reduced time limitations for hurricane claims, and opportunities to offer modified percentage deductibles.

Meanwhile, in courtrooms across Florida, lawyers spent nearly a decade trying to iron out the parameters of coverage for hurricane claims. When the dust settled, not much had changed.  The vast majority of cases can result in expensive and risky jury trials.

Conclusion

If a large scale hurricane like Wilma makes landfall in 2015, insurance companies should be proud that they likely have the financial resources to help their insureds recover. Unfortunately, despite the ensuing technology revolution and all of the legal expenses incurred in the past decade, adjusting and closing these claims will still cost insurers the same amount it cost them nearly ten years ago. Although the lawmakers and lawyers could not make any monumental breakthroughs, the industry can hold out hope that technology is inches away from revolutionizing how we view hurricane risk.


Have Any More Questions about Florida Homeowners Insurance Claims?

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Florida Sinkhole Homeowners Insurance Update Regarding the Second DCA on Sinkhole Burden of Proof

Florida Homeowners Insurance Claims and Litigation Handbook

Brief Summary

In Mejia v. Citizens, Florida’s Second DCA held that Citizens had the burden of proof to show that sinkhole activity was not the cause of the plaintiff’s property damage. Once Mejia proved the property suffered a loss during the policy period, Citizens was required to show that the loss was excluded under this policy. In addition, the Court ruled that the amount of money Citizens paid to its engineer during the previous three years ($9.5M) was admissible.

For a copy of the Mejia opinion, scroll to the bottom of this article.

This is one of several key sinkhole homeowners insurance opinions in the last couple of months. If you missed the last few, you can read them here:

Omega v. Johnson

Contract for Repairs Argument Upheld

2011 Statutory Structural Damage Definition Applies to Policies Issued After Senate Bill 408’s Effective Date

Homeowner Not Required to Produce Sinkhole Report Before Lawsuit


How does CaseGlide Solve This Problem?

To learn more about how our proprietary claims litigation software CaseGlide solves this problem, check out our First Party Property Insurance Blog article on CaseGlide here.


The Mejia Opinion

Download (PDF, 59KB)


Have Any More Questions about Florida Homeowners Insurance Claims?

If you have any questions about this article or anything else, please contact us.

Florida’s Fifth DCA Rules that Homeowners Insurer Does Not Have to Pay Attorneys’ Fees When it Flips Sinkhole Coverage Decision After Lawsuit

Florida Homeowners Insurance Claims and Litigation Handbook

 Overview:

According to Florida’s Fifth DCA, a homeowners insurer can reverse its position in a sinkhole case and still not be required to pay attorneys’ fees.  Read more about Omega Insurance Company v. Johnson to find out how Omega perfectly handled a disputed sinkhole claim.


 

In Johnson v. Omega Insurance Company, Florida’s Fifth DCA held that it is possible for a homeowners insurer to make a mistake in a sinkhole case and still not have to pay hundreds of thousands of dollars in attorneys’ fees.  I include a full copy of the opinion at the end of this post.

Facts

Omega, a Tower Hill company, followed the statutes from the beginning to end. Relying on a report from a professional engineering and geology firm, Omega initially denied the sinkhole claim. The homeowner hired an attorney, and that attorney hired an engineer to contradict Omega’s decision. According to the homeowner’s engineer, Omega’s engineer may have been wrong – there may have been sinkhole activity causing damage.

Instead of providing this report to Omega and allowing Omega to make a decision based on the new information, the homeowner’s attorney sued Omega, and then provided the report to Omega in discovery. As discussed below, Omega was entitled to rely on its engineering and geology firm’s report.

In response to the homeowner’s lawsuit, Omega submitted the case to neutral evaluation (which we know is mandatory), and the neutral evaluator sided with the homeowner – sinkhole activity may be the cause of the damage. In response to the neutral evaluator’s opinion, Omega agreed to comply with the neutral evaluator, accepted coverage, and tendered the policy benefits to the homeowner.

Now that there was no dispute, the homeowner made her next move: a motion for confession of judgment and attorneys’ fees.

Holding

The Fifth DCA determined Omega did everything right. By complying with every Florida statute for sinkhole claims, Omega did not do anything that wrongfully led the homeowner to resort to litigation. Accordingly, Omega did not have to pay the homeowner’s attorneys’ fees.

Takeaway

As you know, the homeowners insurers that are still litigating sinkhole cases rely very heavily on these arguments. In short, the argument is that the insurer is entitled to rely on its expert absent any competing reports.  When you combine that presumption with the confession of judgment doctrine, insurers believe that they should never have to pay attorneys’ fees when a homeowner’s attorney hides a report that could have led to no lawsuit in the first place.

You can bet these insurers are relieved that their hard work paid off in this case. With hundreds of thousands of dollars per case looming over every adjuster’s head on every case, a decision the other way would have been tough for these insurers to endure.

Of course, this outcome could have been different for a number of reasons- what if the homeowner did not have the report before filing the lawsuit?  Most homeowners’ attorneys would not make this same mistake today.

The Second DCA in Colella v. State Farm has a similar holding for insurers to rely on.  In Johnson, the Fifth DCA called Colella and Johnson “strikingly similar.”

For those remaining sinkhole cases (many have settled), homeowners insurers’ attorneys will have another tool in their arsenal.

The Big Takeaways

With sinkhole claims dwindling, the big takeaway here is that this logic can be applied to other types of insurance claims.  Johnson stands for the longstanding Florida proposition that homeowners need to give insurers a chance to fully evaluate the claim instead of “hiding the ball.” The sinkhole statutes may provide an added level of protection – the presumption of correctness – but the arguments in this case are undoubtedly applicable to any other case where the homeowner withholds information in her possession before she files the lawsuit.

Additionally, if you have been following along, you may have noticed that this is the third big sinkhole case in favor of homeowners insurers in the last two weeks. If you missed the first two, you better read them here:

Contract for Repairs Argument Upheld

2011 Statutory Structural Damage Definition Applies to Policies Issued After Senate Bill 408’s Effective Date


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And here is the complete copy of the order:

Download (PDF, 78KB)

Florida Sinkhole Homeowners Insurance Update Regarding the Contract for Repairs Argument Being Upheld

Florida Homeowners Insurance Claims and Litigation Handbook

Overview

One of the hundred million dollar sinkhole insurance questions has finally been answered by Florida’s Second DCA: even if the insurer denies a claim, homeowners are not entitled to coverage for the cost of subsurface stabilization repairs until they enter into a contract for those repairs.


McKee v. Tower Hill: the Rulings

In Andrew McKee v. Tower Hill, Florida’s Second DCA determined the following:

(For a full copy of the order, scroll to the end of this post.)

Subsurface Stabilization Repairs

  • The homeowner was not entitled to the cost of subsurface stabilization repairs because he failed to enter into a contract for those repairs.
    • Note #1: the Second DCA did not specify whether the homeowner could have entered into a contract during litigation or before the judgment.
    • Note #2: this is an important victory for Tower Hill because the homeowner likely argued that Tower Hill’s denial prevented it from entering into a contract for repairs.
      • The homeowner probably argued that it did not want to enter into a very large contract without assurances from Tower Hill that it would cover the cost. The homeowner probably also argued that Tower Hill’s denial was a breach that made the contract for repairs provision unenforceable.
      • Importantly, Tower Hill avoided these prior breach arguments and remained entitled to rely on the contract for repairs requirement.

Breach of Contract

  • Despite Tower Hill’s argument that the homeowner prematurely filed suit without complying with policy conditions, the Second DCA appeared to uphold a finding that Tower Hill breached the contract.  This is not 100% clear from the order.
    • Note #1: the Second DCA held that the sinkhole loss settlement provision and post loss conditions were conditions to the amount of coverage provided, not coverage itself.
    • Note #2: I have not had the opportunity to review the briefs, but based on the opinion, this leads me to believe that the homeowner may still be entitled to his attorney’s fees.
      • Why? Because he may have prevailed on the underlying breach of contract action, and he likely will be able to obtain a judgment for the coverage to repair the above ground, cosmetic damages.
      • If Tower Hill filed a valid Proposal for Settlement, though, then it may not be required to pay the homeowner’s attorney’s fees.
      • If the Court finds Tower Hill breached the contract, the attorneys fees at this stage could exceed $200,000.00.

Prejudgment Interest

  • Lastly, the Second DCA determined Tower Hill was not required to pay prejudgment interest for the subsurface repairs because, as noted above, the homeowner is not entitled to the cost of those repairs, and this was outside of Tower Hill’s control.

Conclusions

The Good News

This case clarifies the issues on a common set of circumstances in Florida sinkhole claims.

The Bad News

  • Too little, too late?: This ruling comes a bit late – tens of thousands of sinkhole claims have been resolved without any insurer taking this common, specific issue through the appellate process.
  • Expensive Unanswered Questions: The Second DCA is required to focus on the specific issue it is asked, and it will not give advisory opinions. This leaves a few important questions unanswered:
    • This ruling does not answer the question of whether a homeowner can enter into a contract during litigation.
  • Attorney’s Fees: Depending on some other issues outside of this ruling, Tower Hill may have “won the battle but lost the war” because they may be required to pay the homeowner hundreds of thousands of dollars in attorney’s fees … despite this favorable ruling.

Takeaway

You have to applaud Tower Hill and the homeowner’s attorneys for finally taking this issue this far up the judicial chain, and finally giving the the Florida homeowners insurance industry some guidance on this set of facts.  This ruling, however, would have had 100x the impact if it was issued 5 years ago, and comes with several limitations that make it hard to determine its overall impact on the remaining cases.


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And here is the complete copy of the order:

Download (PDF, 48KB)

What Hurricane Wilma Insurance Claims Taught Us for the 2014 Florida Hurricane Season

Florida Homeowners Insurance Claims and Litigation Handbook

If you are looking for Hurricane Irma Florida insurance claims resources, click here.


Any questions? 

Please contact us.


Overview:

Although it has been eight full hurricane seasons since Hurricane Wilma, we can still learn lessons about how the next Florida hurricane could impact Florida’s homeowners insurance industry.

Hurricane Wilma was one of the most powerful storms ever.  Within 24 hours of becoming a hurricane, Wilma intensified to winds of 185 mph. By the time it reached Florida, its wind speed dropped to 120 mph; however, that drop in windspeed did not correlate to a drop in damages.

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By the time Hurricane Wilma passed, Florida suffered approximately $20.6 billion dollars in damages. Hurricane Wilma left 98% of South Florida without power.  These approximately 6,000,000 people would go on for 8-15 days without any power. Ultimately, this 2005 storm was the fifth costliest storm in United States history.

Florida’s homeowners insurers responded to record claim numbers.  In response to the more than 1 million property insurance claims, Florida homeowners insurers paid out more than $9.2 billion dollars.

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Hurricane Wilma made landfall one year after the famous 2004 hurricane season, when three powerful storms ravaged Florida.  Unlike the 2004 hurricane claims, though, Hurricane Wilma claims would continue punish Florida’s homeowners insurers for years to come.

The Biggest Surprise

From the insurance claims perspective, Hurricane Wilma’s biggest surprise was that it kept generating claims for several years. Unlike any prior hurricane, Hurricane Wilma produced tens of thousands of supplemental, reopened, and late hurricane damage claims.

In these claims, which lasted through 2010, homeowners or public adjusters would notify homeowners insurers that there was damage or that more damage had occurred.  In other words, despite Hurricane Wilma making landfall almost nine years ago, homeowners insurers have only gone a few years without handling hurricane insurance claims. Some insurers claimed that homeowners requested the reopening of 25% of the claims they previously believed were resolved.

As a statistical example, in the year of 2010, Citizens received approximately 600 Hurricane Wilma lawsuits and another 645 Hurricane Wilma claims.  In the homeowners insurance industry, this lag time is what Hurricane Wilma will be remembered for.

Late Notice of Hurricane Claims

In the process of dealing with these very complex insurance coverage issues, Florida courts issued libraries of rulings that carved out new homeowners insurance law.  As you know, First Party Property Insurance Law Blog previously discussed several Hurricane Wilma cases from 2012 and 2013.  In those cases, courts were faced with determining whether a homeowner, in 2008 or 2009, could report a homeowners insurance claim for Hurricane Wilma.

As you also know, the courts never provided a hard line on how late is too late for insurance coverage.  Although there was a statute of limitations, the vast majority of the cases involved claims that did not violate the statute of limitations. Instead, they were cases where the homeowners insurers were concerned that they could not tell whether the reported damage was from Hurricane Wilma, another storm, or wear and tear.  Instead of saying something to the effect of “notice is late when it is received three years after the hurricane,” Florida courts addressed each case’s expert testimony and other evidence. Ultimately, this issue led to the legislative changes discussed below.

Preparing for the Next Florida Hurricane

For those of you getting ready to handle claims this 2014 hurricane season, you need to know how the law has changed.  The most important statutory amendment is:

  • homeowners now have only three years from the date of the Hurricane’s landfall or damage to report the claim to their homeowners insurers.  Fla. Stat. § 627.70132.

So instead of eight or nine years of claims and litigation, Florida homeowners and homeowners insurers can expect the next major hurricane to generate perhaps four or five years.  If the next Florida hurricane makes landfall in a populated area like Miami, Fort Lauderdale, West Palm Beach, or Tampa Bay, then homeowners insurers can expect at least 1 million claims, as we saw with Hurricane Wilma.

Armed with the case law and statistics from Hurricane Wilma, adjusters and attorneys should be ready to apply what they learned for the next hurricane. Homeowners insurers will undoubtedly take more precautions during the initial inspections to try to limit the need for supplemental and reopened claims.  Public adjusters and homeowners’ attorneys will expedite their reinspections to ensure their clients don’t miss out on additional available coverage by failing to report it within three years. Lastly, everyone now knows it will take several years, not months, to put the next hurricane behind us.

Takeaway:

Unless insurers have new systems in place, the next hurricane will be just as tough on insurers as the last one.  My fear is that insurers still handle claims just like they did in 2005 – manually.  For those insurers that understand that technology has changed in the past nine years, we legal technology innovators are here to help with automated legal documents, data analytics to predict settlement, and structured project management software to reduce costs.  For those insurers still doing things the old fashioned way, call us when you need power and control over escalating legal fees and poor outcomes.

If you want more information on legal checklists and guides to prepare for hurricane season, please message me.


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Florida’s Second DCA Enforces Residence Premises Defense in Homeowners Insurance Claim

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

We are all about getting results.  Read this article to find out about our one-of-a-kind successes with the “residence premises” defense.

Make sure to read all the way to the end to receive our free offer for a Litigation Report.


In a case where I was the attorney at the trial court level, Florida’s Second District Court of Appeals determined the insureds did not have homeowners insurance coverage for a sinkhole claim under an HO-3 policy because they did not reside at the property.

photo from http://i2.cdn.turner.com/money/2011/03/28/real_estate/us_housing_vacancy_rates/vacant_house.gi.top.jpg

If you are not familiar with the HO-3’s coverage requirement that the homeowners reside at the property, please review my analysis of the “residence premises” defense in this post.

Here is the Second DCA’s per curiam affirmed order:

Download (PDF, 273KB)

Although the decision is a PCA rather than a written order, I am excited to learn that this lengthy battle is (probably) over and that my client was able to enforce its policy’s requirements.  Insurers, insureds and their attorneys have been ignoring this “residence premises” issue for years.  Many thought that insurers lost the right to enforce the occupancy requirement when Florida courts construed the vacancy exclusion in the insureds’ favor.  By refocusing the attention to the definition of “residence premises,” the courts understood and appreciated that my client only agreed to insure this home if and when the insureds occupied it.

If you have any questions and want further information or documents, please contact us.

Takeaway:

I can bet you at least half of your attorneys have never heard of this defense, and another 25% aren’t checking for it because you aren’t asking them for it.

If you want guides, checklists, and templates for winning this “residence premises” defense, please message me.


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Florida Homeowners Insurance Questions, the Loss Settlement Provision, and When is Alleged Underpayment Not a Breach of the Policy?

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Overview

The Loss Settlement provision is, without a doubt, the most overlooked homeowners insurance policy provision.  There are tens of thousands of lawsuits filed every year where the parties dispute what the homeowners insurer owes to the homeowner.

Do you want to know what neither side probably looked at?  The Loss Settlement provision – the provision that actually describes the homeowners insurer’s obligation to pay a claim.  Read this article to learn more about how this provision could decide your case.

Make sure to read until the end because we offer you a free Litigation Report analyzing the ways to improve your case outcomes while paying the least amount possible.


Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.


One of the most important questions in property insurance litigation is whether an insurer can obtain a summary judgment in a damages dispute. Stated otherwise, can an insurer prevail on a summary judgment motion when the insured alleges the insurer underpaid the claim? You might ask, “how is that possible?” How can an insurer and the Judge agree that even if the insurer allegedly underpaid the insured, the insurer did not breach the contract? If you can answer these questions, then you understand the difference between underpayment and breach.

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To understand the answers to these questions, you must examine the Florida cases discussing loss settlement provisions. Following are some examples:

 

1. Slayton v. Universal

Download (PDF, 13KB)

Slayton holds that even if an insured allegedly underpaid pursuant to the policy, the insurer could have simultaneously complied with its policy obligations as a matter of law. While Slayton is limited to the facts and statutes at issue in the case, its rationale may be applied to any insurance dispute.

Rather than promote litigation, judges should do what Slayton did and allow the insurer to rely on the insured to present a genuine policy dispute before bringing a lawsuit. In Slayton, the Court held that the insured should have used the benefits the insurer paid to the insurer to repair the home and then submit a supplemental claim to the insurer if the original payment was insufficient. Instead, the insured sued the insurer without attempting to conduct the repairs with the payments provided by the insurer. Ultimately, in Slayton, the Fifth DCA upheld the trial court’s finding that the insurer, by providing the payment to the insured, complied with the policy as a matter of law.

By enforcing the loss settlement provision’s requirements, the Fifth DCA in Slayton held that the insurer did not breach the contract, even if it arguably underpaid the claim.

 

2. Ceballo v. Citizens

Download (PDF, 46KB)

In Ceballo, the insureds alleged that they proved a total loss of Ordinance and Law coverage pursuant to the Valued Policy Law statute and argued the insurer should have paid the coverage. The insureds further claimed that the insurer’s failure to pay the coverage constituted a breach of the contract. The insurer responded that before the insureds could be entitled to this coverage, the policy required the insureds to incur Ordinance and Law damages. To put this into context, the policy and statute at issue in Ceballo provides that the insureds were not entitled to replacement cost coverage until they incurred the damages. Like the Fifth DCA in Slayton, Florida’s Supreme Court in Ceballo determined that the insurer did not breach the contract despite the insureds’ allegations that the insurer underpaid. Thus, the insureds could not present a damages dispute to the jury, and the insurer was therefore entitled to judgment in its favor on that issue.

 

3. Buckley Towers v. Citizens

Download (PDF, 96KB)

Likewise, the Eleventh Circuit in Buckley Towers considered the lower court’s finding that the insured was excused from incurring damages under the policy. Similar to the policy at issue in Ceballo, the policy at issue in Buckley Towers provided that if in insured wants replacement cost coverage, it must incur the damages. If the insured does not incur the damages, the insured can only obtain actual cash value. Despite this policy requirement, the lower court held that the insurer’s alleged underpayment excused the insured’s performance in that regard.

The Eleventh Circuit Court of Appeals reversed, determining that the insured could not use the prevention of performance doctrine to avoid a requirement that the damages be incurred. Unlike the lower court, the Eleventh Circuit refused to “rewrite the policy.” The Eleventh Circuit held that the insured was required to make the repairs before he or she would be entitled to the replacement cost coverage. In other words, until the repairs were complete, the insurer was correct in issuing only the coverage for actual cash value. The court found that by using the prevention of performance doctrine, the lower court impermissibly rewrote the policy that was freely negotiated between the parties. Even when facing allegations of underpayment, the Eleventh Circuit determined the insurer did not breach as a matter of law. In short, Buckley Towers, like Ceballo and Slayton, shows that courts must adhere to the loss settlement provisions in a policy.

So what do these cases tell you?

First and foremost, beware when relying heavily on the black letter law in these cases because the statutes and policy forms have changed. Instead of focusing on the holdings of these cases, focus on the courts’ interpretations of the loss settlement provisions. In each case, the court determined that the insureds were not entitled to a trial on damages until they demonstrated compliance with the loss settlement provisions. Second, you must scrutinize your loss settlement provisions, whether you are dealing with a sinkhole claim, water claim, or tile claim, before accepting the opposing party’s allegations as fact. Ultimately, the loss settlement provision may make alleged underpayment a question for the judge and not the jury.

 Takeaway:

You shouldn’t allow your attorneys to overlook this provision, and you should have systems in place to make sure it isn’t overlooked.  Your provision is the same in every case, but it needs to be read in light of the case law.

Don’t trust this type of issue to junior associates.  Get your best management and best attorneys together, create a system for ensuring compliance, and never think about it again.

If you want checklists, guides, and legal document templates on the Loss Settlement provision, please message me.


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Florida Homeowners Insurance Claims Update: The Corporate Representative’s Deposition Bill of Rights (And Wrongs) via Carlton Fields

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Overview

This article is arguably the most popular article on the First Party Property Insurance Blog.

When a homeowner sues his homeowners insurer, his attorney often requests the insurer to have someone speak for the insurer on the record.  This is called the corporate representation deposition, and it could be the turning point in the case.  Read this article to learn the details.

If you read to the end, I will tell you about how to solve this issue.


Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.



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I found a very interesting article today, and it gives me the opportunity to share my insight on the issues associated with corporate representative depositions of insurance companies.  I also want you to read all the way through the end of this article for my proposed solution to this issue.

http://www.carltonfields.com/the-corporate-representatives-deposition-bill-of-rights-and-wrongs-03-16-2012/

http://www.calbizlit.com/.a/6a00d83451e4e569e2017d3c23c8a4970c-800wi


For anyone who is involved in property insurance litigation, corporate representative depositions in breach of contract cases are a big hassle. Whether a sinkhole claim, long term water claim, or late notice claim, insured’s attorneys will eventually ask for this deposition. For the insured’s attorneys, they are a hassle because they want the deposition to happen as soon as they request it and on their terms; however, the insurer’s attorney will not allow it without limiting the deposition.The insured’s attorney wants someone to speak for the insurer so the attorney can ask why the insurer reached the conclusion it did.This sounds fair, right?

For the insurer’s attorney, however, the deposition is a burden because it requires the attorney to confer in good faith with the insured’s attorney to try to limit the scope of the deposition to what he or she believes is proper.What is proper is discussed in more detail below.In addition, the insurer’s attorney must file an objection and/or motion with the Court and argue it to have the Court understand that the deposition might cause irreparable harm by invading privileges.Further, the insurer’s attorney must go to great lengths to prepare the corporate representative for the hours of questioning that may ensue (see Testifying to the Facts of Someone Else’s Investigation).The insurer’s arguments: (a) the insured’s attorney already knows the answers to the questions asked and (b) if the insured’s attorney was so interested in discovering facts, then why didn’t he or she first ask for the depositions of those with personal knowledge, including the adjusters and experts?

The “Bill of Rights” article by Carlton Fields is great because it helps let us remember how burdensome the deposition is for the insurer.First, the insurer has to appoint an eloquent supervisor who has the general knowledge and experience to bind the corporation with his or her testimony.The representative must learn the entire claim file from its inception until the date of the deposition.This can involve review of hundreds to thousands of pages of EUO and deposition testimony, reports, photographs, estimates, and journal notes.In addition, the representative might be required to testify to facts as if the representative was the field adjuster, claim examiner, engineer, and contractor!There are at least two limits worth discussing at this point.Although the insured’s attorney might try to ask the corporate representative to “be a lawyer” and interpret policy provisions, the representative does not have to answer these types of questions. Corporate representatives also are not required to testify about coverage in general.

This article contains what the author dubs “the Corporate Representative’s Deposition Bill of Rights (and Wrongs).”As discussed by the author, this is not a very helpful set of rights for the insurer.Instead, it is more like a “Bill of Obligations.”The article is fantastic, however, because it cogently describes all of the effort that must go into the deposition.The “rights” are as follows:

1. You do not have the right to remain silent, meaning that you must know:

a. more than just the representative’s personal knowledge;

b. more than just one of the insurer’s department’s knowledge;

c. more than just the knowledge that the insurer has;

d. the knowledge of former employees;

e. information that arises from evidence in the case; and

f. information that takes an inordinate amount of time and effort to obtain information the insurer learned through its lawyers.

2. Anything you say can be held against you (or the corporation).

3. You have the right to an attorney.

4. You have the right to not be the person with the most knowledge of the claim.

5. You have the right to know the general scope of what will be asked at the deposition.

Wow!This does not sound like a “Bill of Rights” to me; however, it is a “Bill of Truth.”Regardless of how ominous this sounds, there are few limits on what an insured’s attorney can ask at a corporate representative’s deposition.

An insurer’s corporate representative’s deposition in a breach of contract case, however, is different from any other corporate representative’s deposition for a variety of reasons.With the proper preparation and, frankly, hard work, an insurer’s attorney can ensure that the corporate representative does not testify to what it should not testify to.In short, these limits are:

1. privileged information regarding claims handling;

2. privileged information regarding company-wide policies and procedures;

3. privileged communication between the insurer and its attorneys; and

4. legal interpretation of the insurance policy.

As much hard work is required to limit the deposition, the insurer’s attorney has to expend equally enough effort to prepare the corporate representative by promptly and thoroughly educating the representative about information known to the field adjuster, claim examiner, any engineers, any contractors, and, believe it or not, the lawyer.This sounds like a lot of effort, and it is.Nevertheless, if the insurer can conquer the corporate representative deposition, then the insurer will have shown the insured and, potentially, the jury, why the insurer reached the conclusion it did. As the voice of the insurer, the corporate representative has the opportunity to solidify the insurer’s defenses.

Takeaway:

Corporate representative depositions should not be handled by emails and Word documents.  Stop it now.

Corporate representative depositions need to trigger a system of events to ensure homeowners insurers are protected.  The system should include “check the box” and “fill in the blank” tasks that homeowners and their attorneys determine to be necessary.  This shouldn’t be up for discussion, as all time should be focused on preparation, not evaluating what to do for the 1,000th time.

Corporate representative depositions should also trigger a set of automated legal documents to save clients thousands of dollars in legal fees.  This is a simple system.

If you are interested in learning more about our checklists and guides for handling corporate representative depositions, please message me.


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Testifying to the Facts of Someone Else’s Investigation

Florida Homeowners Insurance Claims and Litigation Handbook

A very informative article on Examinations Under Oath (“EUOs”) appears in the summer 2013 edition of Litigation Management. The article, written by Tower Hill’s Lincoln LeVarge and Butler Pappas’s Gerald Albrecht, can be accessed here:

http://www.litigationmanagementmagazine.com/litigationmanagementmagazine/summer_2013#pg1

The most interesting takeaway from the article that I want to emphasize is that insurers may have to submit representatives to testify about facts that attorneys obtain through the EUO process, especially if the insurer relies on those facts to issue a coverage determination.

This consequence of the EUO process is often overlooked. As you know, an insurer often retains an attorney to conduct to an EUO and relies on the information obtained during the EUO. If the case proceeds to litigation, the insured’s attorney will typically request that the insurer produce representatives to testify regarding how the EUOs led to coverage determinations, regardless of the insurers’ representatives’ level of involvement in the EUOs and without providing privileged information. A representative who can demonstrate active involvement in the coverage determination, as well as a strong grasp of the EUO results, will present well during the deposition and to a jury.

A similar situation is when insurers retain experts to investigate claims during the coverage stage. Often, expert reports are so detailed that claim examiners do not confirm the findings with the expert. If the case proceeds to litigation, however, an insured’s attorney will try to determine to what extent the insurer relied on the expert. Indeed, when an insured’s attorney conducts the deposition of the claims examiner, the attorney will typically ask about every fact surrounding the coverage process, including whether the representative called the expert to inquire about the report. Like the EUO process, if a claims examiner can testify that he or she spoke with the expert about the report, then the insurer’s reliance on the expert will be more credible. This is true for long term water claims, sinkhole claims, and, most importantly, late notice cases.

These are simple but helpful points to think about. Of course, insurers are entitled to a variety of privileges against disclosure of certain aspects of the coverage process, and I will discuss that in great detail in future posts. Privileges aside, all parties involved in a coverage investigation should still be aware that someone may ultimately have to testify testify to the facts supporting the defenses. If those facts involve an insurer’s reliance on his or her attorney and expert, then a claims representative should try to be able to testify why such reliance was reasonable.


Florida Homeowners Insurance Claims and Litigation Handbook and Litigation Data Reports:

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

If you are in the Florida homeowners insurance claims industry and are looking for a guide with the key cases, strategies, laws, attorneys, and adjusters, or if you’re looking for Florida litigation data reports, please visit this page to learn more about our Florida Homeowners Insurance Claims and Litigation Handbook.

Questions?

Have any questions about Florida’s homeowners insurers, policies, and claims, please feel free to contact us.

 

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