Tag Archives: AOB Claims

To Hail and Back: The Four Problems with Hail Claims and the Six Tools You Need to Solve Them

Hail Damage Insurance Claims


Coming to a Roof Near You

As you know, the water extraction assignment of benefits (AOB) issue has had the insurance industry’s center stage for the last couple of months. As a result, we have not heard that much about another trending type of claim. This other trending claim has many striking similarities to the water extraction AOB claims:

  • exponential increases in reported claims;
  • increasing claim payouts per claim; and
  • a industry of contractors, adjusters, and attorneys with growing expertise in litigating these claims.

Before you know it, this type of claim – hail damage claims – will be the center of attention for the insurance industry. The claims keep pouring in (even if the rainwater doesn’t), and no one has dissected the vast array of problems and solutions.

The Four Problems with Hail Claims

  • Suspicious Increases: Insurers are seeing drastic increases in hail claims without a corresponding increase in hail events;
  • An Offer that Can’t Be Refused: Insurers are concerned that roofers are driving these claims with a sales strategy that homeowners cannot refuse – roofers offer to provide homeowners with new roofs, and homeowners will only need to pay their deductible;
  • More Than Meets the Eye: Insurers are troubled when homeowners and their roofers request coverage to replace the entire roof despite an apparent lack of significant damage;
  • An Uneven Playing Field: Insurers are worried that consumer-friendly laws, such as prevailing party attorney’s fees, make the playing field uneven.

Are these concerns true?


Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

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

Before we go on, 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.

Problem #1: Suspicious Increases: Insurers argue that they are seeing drastic increases in hail claims without a corresponding increase in hail events.

True or False? Probably true, but there is not enough public Florida claims data to be sure.

The Data on Hail Events

According to the NOAA National Climactic Data Center, reported hail events in Florida have been up and down over the years:

florida hail claims data

Looking at this data, Florida insurers should not be receiving exponentially increasing amounts of hail damage claims, right? Think again.

The Data on Hail Claims

In “AOBs & Roofers?!” Scott Johnson provides the only publicly available Florida data that I am aware of.

Here’s what I learned from one insurer only a few days ago.

For five years, from 2007 to 2012, hail claims were barely on its radar, accounting for a mere 1-2% of total claim volume.  Enter the “roving roofers” armed with “insider secrets”. In 2013 hail claims rocketed 700% to over 7.9% of its total claim volume.

Last year the same insurer had an astounding 11.24% of its total claim volume from hail.  In other words—for five years (2007-2012) it paid $1.8m in hail claims.  Then, in just two years (2013 and 2014) it spent $8.3 million!

Without data, insurers have nothing but their opinions. Although Mr. Johnson’s data is limited, other Florida insurers would probably show similar statistics depending on the counties they do business in. If we in the insurance industry go by our experience, then we know there has been a substantial increase in the amount of hail claims over the years, without any corresponding increase in hail events.

This is why insurers are suspicious. Should they be? Probably, but without more data, it’s not a very convincing argument yet.

Problem #2: An Offer that Cannot Be Refused: Insurers are concerned that roofers are driving these claims with a sales strategy that homeowners cannot refuse – roofers offer to provide homeowners with new roofs, and homeowners will only need to pay their deductible.

True or False? It’s safe to say this problem is true.

I’ll save your attention span on this one and just insert some promotional materials I have been provided. Please keep in mind that I have no personal knowledge who created these advertisements or whether they were ever distributed. If you have any reason to dispute that these are not advertisements used by the companies described, please let me know.

hail ads

As you can see, these are very compelling sales strategies that homeowners will have a hard time refusing. We could go into detail about how these advertisements lead to easy sales … which lead to more easy sales … but we trust that you can see how quickly these businesses can grow.

On a roofer-by-roofer basis, your SIU department can identify any fraud by talking to the neighborhood and researching weather reports.

Maybe these advertisements are legal, maybe they are not.

Are they a genuine problem for insurers? Without question, the answer is yes.

Problem #3: More Than Meets the Eye: Insurers are troubled when homeowners and their roofers request coverage to replace the entire roof despite an apparent lack of significant damage.

True or False? Probably true, but expensive to prove!

If insurance company money was not available, no one would suggest that replacing the entire roof of a perfectly performing roof is a wise decision. But when an insurance company may be responsible, roofers and homeowners forget about economics.

What can insurers do? They can take a stand against the roofer, pay their attorneys hundreds of thousands of dollars, take the cases to trial, and hope that randomly selected jurors will understand their position.

So why don’t insurers simply fight these cases in Court?

In our next problem, we talk about why insurers feel there is an uneven playing field when these hail damage claims turn into court cases.

Problem #4: An Uneven Playing Field: Insurers are worried that consumer-friendly laws, such as prevailing party attorney’s fees, make the playing field uneven.

True or False? True.

Florida lawyers and the legislature have made it very difficult for insurers to find justice in the courts. We don’t want to bore you with a complete dissertation on the Florida court and legislative systems, so we will focus on four reasons why insurers are right – the playing field is not level in hail damage claims.

Juries are Too Late to the Party

First, insurers do not even get to know who decides the case – the jury – until after they have to pay their lawyers four to five times what it would cost to settle the case. (As you can see, this problem applies to all cases, not just hail claims). By the time insurers realize that their jury has no roofing experience, it’s too late for them to fold their cards. Thus, this legal process is set up to have all of the lawyers do hundreds of hours of work, charge hundreds of thousands of dollars, and then the insurers get to meet the most important people in the case – the jurors.

But isn’t that an equal risk that both sides face? Not really, and here’s why:

Unlike Insurers, Roofers have Nothing to Lose

That’s our second reason why the playing field is not level: if a roofer wins the lawsuit, the court will order the insurer to pay the roofer’s attorneys’ fees. If the roofer loses, he usually will not have to pay any attorneys’ fees. In short, insurers have tons of risks – whether they win or lose. Roofers? Virtually nothing to lose.

Low Expectations

The third reason why the playing field is not level is because a “win” for the roofer could mean $1. Yes, $1. With a few exceptions, if a roofer obtains a judgment against an insurer for $1 more than the insurer offered to pay, the roofers’ attorney will get hundreds of thousands of dollars in attorneys’ fees.

Sophisticated Parties, Unsophisticated Rules

The fourth reason why the playing field is not level is because the prevailing party attorneys’ fees law does not make sense in the roofer versus insurer context. The prevailing party attorney’s fees rule was intended to make sure our grandmothers across the state don’t have to pay an attorney to sue their insurance company. This attorney fee rule is a windfall for roofing companies whose sole purpose is to profit. And with sales strategies like these roofers are using, there is no doubt they will make plenty of money soon.

Six Solutions that Should Be in Your Hail Toolkit

Enough with the problems. Let’s talk about the six things you should have in your hail toolkit to prevent indemnity and expense leakage:

1. Engage engineers with hail experience

If you are reading this article, then you’re probably the type of person that has vetted the experts.

Or are you? Have you met all of your engineers investigating hail losses face-to-face?

This is an obvious point, but its importance cannot be overstated. If the jury believes your expert more than the other expert, you will probably win. Go meet with the engineers in the industry and find out who you would believe if you were a juror.

2. Gather your best minds (or hire them) and draft specific policy language for hail claims

After securing the right engineer experts, get your team together to evaluate whether you can draft specific policy language relating to aesthetic roof damage caused by hail. If you can carefully craft this exclusion and satisfy OIR, you can avoid the vast majority of the new claims.

3. Get familiar with all of the weather data tools

Our friend Nick Cammarata’s firm, SDII Global, handles hail claims across the country. When he investigates hail claims, he starts by heavily investigating these three databases:

4. Read Verisk’s E-Book “Property Hail Claims in the United States: 2000-2013

If only they had a 15 page report like this for Florida claims! In this report, Verisk provides hard data showing that the entire nation is seeing an exponential surge in how many hail claims are reported, and how much it costs to resolve them.

5. Talk to Lisa Miller to find out more about how you can help her AOB legislative efforts moving forward

One of the best ways to stop suspicious hail claims is to join Lisa’s effort to legislate AOBs right out of the industry. Of course, hail claims and emergency water extraction claims are two different animals; however, it will only be a matter of time before all of these roofers use AOBs to create litigation factories. As you may have noticed, we need all of the help we can get as the legislature continues to put the AOB issue on the backburner.

All you have to do is join Lisa and her clients. They have spent years pushing the legislature closer and closer towards solving this problem and, until we get some more support, we might continue to face standstills in the legislature. Of course, AOB legislation won’t prevent homeowners (rather than roofers) from reporting suspicious hail claims; however, it will prevent the landslide of new claims that will undoubtedly occur if the legislature does not pass the right AOB law.

Many insurers have already thrown their support behind Lisa’s efforts to stifle AOB claims, and your company should, too.

6. Use data analytics and automation to eliminate unnecessary indemnity and loss payout leakage for hail claims

Using claims and litigation software, your claims team and legal counsel can:

  • know the result of a hail damage claim the second it is reported;
  • automate the routine documents towards solidifying your coverage position; and
  • streamline quality processes to efficiently resolve each claim.

Legal defense fees for hail claims are quickly skyrocketing without any clear end in sight.  If you can leverage all of your prior and future claims data, you may not have to spend a dime to know the best possible outcome and who needs to be involved to get you there.

If you would like to know more about claims and litigation software customized for Florida homeowners insurers, sign up for CaseGlide’s “Six Ways to Split Legal Defense Costs in Half this Year Free Webinar” today.

To Hail and Back

Ultimately, the problems with hail damage claims will not go away by themselves. It’s going to take a real team effort to keep Florida homeowners’ insurance premiums down. After seeing how quickly the sinkhole and water extraction industries grew, we shouldn’t wait until hail claims get to those same dangerous levels.

Every insurer knows the tools they need to solve this problem today. We need experts like Nick to give insurers a backbone at trial to fight the frivolous hail claims. We need insurers to jump to support Lisa’s ongoing legislative efforts, and help her support these same efforts next year. We need data and reports showing the financial impact of these claims, rather than just opinions. Last but not least, insurers should pounce on opportunities to use claims and litigation software to resolve these claims as effectively and efficiently as possible.

Unpack your tools, and let’s go to work.

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


Florida Homeowners Insurance Claim for Long Term Water Leak Not Excluded as a Matter of Law

Florida Homeowners Insurance Claims and Litigation Handbook


In Price v. Castle Key Indemnity Company, Florida’s Second DCA recently dealt a heavy hit to homeowners insurers’ arguments using the continuous/constant or repeated seepage defense.

Drop of water



The facts in Price were a prime example of a long term water damage insurance claim. The homeowners insurer gathered strong evidence, and was able to show that this leak continued for weeks and weeks without any stoppage. The insurer’s evidence was startling: over a period of more than 30 days, over 195,000 gallons of water escaped from a pipe going to the homeowner’s toilet.  Faced with this evidence, the trial court granted summary judgment for the insurer.

The Second DCA disagreed with the insurer and the trial court. The Second DCA’s reason: the terms “sudden” and “seepage” were “less than clear” when applied to these facts. Accordingly, the Second DCA determined that these words created a latent ambiguity.  The Second DCA instructed the trial court to allow a jury to determine coverage in this case, instead of a judge.

Disappointing Discussion

Although this is the most heavily litigated coverage issue in Florida homeowners insurance, the Second DCA did not take much time to explain its decision.

These long term water damage opinions don’t come often. Usually, claims do not have such egregiously long leaks, or they have some type of dispute on the duration … so they should be determined by a jury. When the rare case like this pops up, you would think the Second DCA would take the chance to explain what types of long term water damage should be covered as a matter of law under these policies; and what types shouldn’t be.

Unfortunately, the Second DCA did not take that opportunity. Moving forward, this leaves many unanswered questions, and a lot of room for interpretation for trial court judges. I wouldn’t be surprised if there were tens of thousands of pending claims with this issue. The parties and lawyers handling those cases don’t seem to have much to work with from that case, unless they are to assume every insurance policy is ambiguous.


In trial court hearings, this Price opinion will give homeowners’ attorneys stronger arguments, but only if the homeowners insurer tries to obtain summary judgment.  Most of these cases don’t go that route.

I would not be surprised to see other DCAs take a different approach than the Second DCA did in Price.  I doubt all courts will be willing to find that every insurance policy is ambiguous as to long term water losses. A case like this is the perfect example of a case where insurers could be granted summary judgment.

We will see how this changes the strategies. Hopefully, we will get some more opinions on this issue soon.

Have Any More Questions about Florida Homeowners Insurance Claims?

Please contact us.

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

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

Before we go on, 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.

Here is a full copy of the order:

Download (PDF, 51KB)


Florida Homeowners Insurance Analysis: Problems and Solutions for Assignments of Benefits and Water Remediation Companies

Florida Homeowners Insurance Claims and Litigation Handbook


As we have said several times in the past here at First Party Property Insurance Blog, water damage claims are the most common type of Florida homeowners insurance claim.

Johnson Strategies once again delivered a fantastic post on the Florida Homeowners Insurance Industry.  This one is titled “Water Extraction: Florida’s Biggest Cost Driver?”

To summarize, Johnson delivers some terrific insight on how seemingly slight “tweaks” to an average water damage insurance claim payout can lead to hundreds of millions of additional homeowners insurer liability. In this article, Johnson also focused on how prevalent these “tweaks” are when the water damage claim involves a restoration contractor with an assignment of benefits.

As you know, in this article on Water Damage Claims, First Party Property Insurance Blog discussed various coverage issues with water damage claims. We also looked into Hail Claims, which make up a small but increasing share of water damage claims (not all hail claims involve ensuing water damage).  These two First Party Property Insurance Blog articles focused on coverage for these types of claims; however, Johnson’s article urges us to focus on the actual claim payouts when the claims are covered.

A Typical AOB Claim

As Johnson discussed, the Florida water remediation/restoration/extraction/assignment of benefits industry (yes, people use any and all of these terms to describe this industry) involves thousands, and probably tens of thousands, of fact patterns similar to this:

  • Plumber Repair: a homeowner calls a plumber to repair a water leak;
  • Referral: the plumber repairs the leak and recommends the homeowner contact a restoration company to make the repairs;
  • Assignment of Benefits (AOB): in exchange for doing the repairs at little or no cost to the homeowner, the restoration company requests the homeowner to assign the company the right to pursue the insurance claim against the insurance company (as assignment of benefits);
  • Damages Dispute: the restoration company and the insurance company disagree regarding the cost to repair the homeowner’s property, and the difference can be as little as $500 or as much as $50,000.00;
  • Lawsuit: the restoration company files a lawsuit against the insurance company and demands “proper” payment (as the restoration company sees it), and thousands of dollars in attorney’s fees and costs at the outset.

Although it may sound like a reasonable process, no one can deny that over the past few years these claims have skyrocketed without any objective justification.

If you are not familiar with how big of a role these claims play in Florida homeowners insurance, don’t worry, we got you.  Here is one of the most detailed reports on water damage claims from Citizens in 2012.  This will help you understand the sheer number of water damage claims Florida’s homeowners insurers face.

Download (PDF, 757KB)

The AOB Problem

A Few Hundred Dollars Here and There Adds Up

So why is this such an important problem?

Johnson Strategies estimates that this industry’s excessive charges for bursting pipe cases alone could cost insurers $150M per year. That does not include the actual extra repair payouts, public adjuster fees, plaintiffs’ attorneys’ fees, defense attorneys’ fees, and vendor fees. These amounts probably dwarf that $150M annual figure.

In addition, if you compare certain parts of Florida to other parts of Florida, this AOB process noted above is closely associated with an approximately $5,000.00 increase in costs per claim, and don’t compare Florida to any other state, because there is no comparison. In other words, this is a problem because for some reason Tampa and South Florida are the only targets.  The other areas must be doing something right.

Lastly, the article reminds us about what we learned from this video about AOB insurance fraud and how much insurance fraud could pervade this assignment of benefit process.

All of this suggests Florida homeowners insurers are losing control of their ability to efficiently resolve these claims.

Ultimately, the article concluded by urging the legislature to focus on fixing this problem.  As you may recall, the Homeowners Insurance Bill of Rights Working Group tried, but failed, to place strong prohibitions on assignment of benefits for insurance claims.

Lawyers and Courts are No Help

Lawyers and Courts have not systematically defeated this issue, but from what I hear, they are all going to keep trying.

Up until now, it has been tough for Florida’s homeowners insurers to commit to paying tens to hundreds of thousands of dollars to try a case when they can settle it for less than $10,000.00.  As Johnson Strategies points out, this willingness to compromise has added up to millions upon millions in additional recovery for the restoration industry and its attorneys.

Why settle?  The better question today, in this current legal climate, is “why not?” If a Florida homeowners’ insurer has a good case it wants to try, it will have to spend at least $50,000.00 to try the case unless it is using our proprietary software CaseGlide, and even the best cases may not be enough to convince a jury more than 70% of the time.  If the jury finds that the homeowners insurer undervalued the claim by $1.00, the Court could have to award the restoration company’s attorney hundreds of thousands of dollars in legal fees.

In summary, you have two main contributors

1. the lack of any meaningful legislation,

2. the cost to defend these cases with routine and manual legal work, on a case-by-case basis, exceeds the cost to resolve them.


As Johnson Strategies said, until the legislation comes (if ever), Florida homeowners insurers must use their power to take control today.

Insurers should not lie and convince themselves that powerful global defenses suddenly exist. Insurers should not continue paying millions of dollars to create arguments that have no statistically-justifiable results. So long as the law and insurance policies are the way they are (as I understand them), most of these cases are going to have to go to a jury trial if the insurer wants to prove its case.

What can insurers control?  Their costs to get these results.  No matter what you hear, these claims and cases aren’t going away.  The only way to address them will be from the top.  Insurers must use their power to take control of this process by demanding efficient legal services that produce better results at a fraction of the costs.  Otherwise, their own attorneys – the people that should be on their side – become a contributor to their inability to resolve these cases.   Continually charging insurers more than the cost to settle a case will never be an effective legal solution, especially when the results aren’t even very good.

But even if the attorneys can come up with legal defenses to efficiently litigate these cases, homeowners insurers still need to use their power to take control of the legal process. Insurers, when that attorney comes down from the heavens with the perfect legal strategy to control these claims, don’t pay for that same motion 1,000 times, pay for it once … and automate it.  Again, use your power and take control.

Once Florida homeowners insurers (and not attorneys) take the power and control over these AOB claims and litigation, they will be able obtain the best possible results in every case while spending the least amount of money to do so.  Until then, things will remain messy and continue to get messier.


Let’s share strategies on the assignment of benefits claims.  If you share your strategies, I will share mine and those that I have received. Together, we can break this process down to the critical path for our clients.

Have Any More Questions about Florida Homeowners Insurance Claims?

If so, please contact us.

The Florida Policyholders Bill of Rights Working Group Issues its Final Report

Florida Homeowners Insurance Claims and Litigation Handbook

ins a

As discussed this summer, Florida’s Insurance Consumer Advocate Robin Westcott organized a Bill of Rights Working Group to create a Bill of Rights for Florida’s insureds.  They addressed the following issues in great detail:

  • education, transparency, and monitoring the insurance marketplace;
  • improvements to the claim process;
  • assignment of benefits and emergency remediation companies;
  • examinations under oath;
  • alternative dispute resolution;
  • post-claim underwriting; and
  • coverage provided by repair rather than indemnity payments.

The final report is here:

Download (PDF, 2.16MB)

The Group wants the Bill of Rights to have a lasting impact.  For the parts of the Bill that reflect existing case law, they want the Bill to codify the existing case law into statutory law.  For the parts of the Bill that are not yet law, they want the Bill to make new law. Lastly, there is an educational component.  To help insureds navigate claims, they want insurers to provide insureds with a copy of the Bill when they file a claim.

The report is a great snapshot of today’s insurance industry concerns.  I think the Group did a great job of addressing the current landscape.  My only criticism is that I would have liked the Group to disclose, in the Bill, some of the data on these claims.  To get the new recommendations turned into law, the Group should disclose the data that proves these concerns are justified.  In all fairness, the Group might not have needed the data.  The Group was comprised of several insurance professionals with decades of experience.  Thus, they likely used their private data to form their conclusions and recommendations, even if they did not disclose it.

I think the Bill of Rights will be very helpful for insureds when navigating a claim; however, the Bill’s primary impact on insurers appears to be focused on the assignment of benefit-water extraction claims.  If the legislature adopted all the recommendations, AOB contractors will have some new obstacles to deal with, including licensing requirements; limitations to the scope of their AOB contracts; and compliance with certain standards for water extraction.

Aside from the AOB-related recommendations, the rest of the Bill codifies/creates obligations and limitations for insurers, including more standards for communicating during the claim and examination under oath process; prohibitions on post-claim underwriting; and expectations for insurers when they elect to repair.  Ultimately, some of these obligations are already existing law, and I bet most insurers already comply with the majority of the recommendations.

Only time will tell the impact of the Group and its recommendations. There is no doubt that they discussed a lot of major concerns.  We will wait and see what the legislature does with these recommendations. When that time arises, I will keep you posted.


The assignment of benefits issue is not going way, and its up to insurers to not let this be the next attorney-driven trend.

How can insurers deal with the assignment of benefits issue?  First, get the best management and attorneys together and decide exactly what to do on these cases. Second, pay for routine documents and evaluations only once, then automate any documents or processes that will occur in all of these cases.  Third, enter all of the case information into software (instead of Word documents and emails) so that you can use data to help guide you towards settlement.  Fourth, as failures and successes arise, continue to optimize your system to ensure you achieve the best possible outcomes while spending the least.

If you have any questions or would like to see checklists or guides for handling assignment of benefits cases, please message me.

Any Questions?

If so, please contact us.

Assignment of Benefit Homeowner Insurance Claims and Bill of Rights Working Group (Video)

Florida AOB & Industry Litigation Trend Report Image

First Party Property Insurance Blog is Proud to Announce our New E-Book: the Florida Homeowners Insurance Claims and Litigation Handbook.

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

We’re so confident in this E-Book that we offer you a money-back guarantee if it does not have the information you and your insurance claims business needed to improve. Click the link below to buy copies for you, your colleagues, and your partners.

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At the Bill of Rights Working Group recent meeting, Mr. Dry Out‘s Matthew Jerabek explained his concerns with the AOB contractors in the water damage claim industry.  Below is the video of his statements to the Working Group.  To be safe, I cannot promise that his statements are true because I have zero personal knowledge regarding the allegations; however, I think anyone who handles these claims would want to have the opportunity to hear his statements.

The Video

Embedly Powered

Although this may lead some carriers to take approaches based on emotion, assignment of benefits cases are the perfect type of case for statistical data evaluations to drive decision making.  They are also the perfect type of case to use document automation and litigation project management to achieve better outcomes at a fraction of the costs.

Don’t hire attorneys to have junior associates get you nowhere on these files for thousands of dollars.  If you want checklists, guides, or legal document templates for handling claims like this one, please message me.


Contact us.

Florida Homeowners Insurance Claims for Water Leaks and Damage, and the Constant or Repeated Seepage Exclusion

Florida Homeowners Insurance Claims and Litigation Handbook


What happens when a homeowners insurance company denies a claim for constant or repeated seepage or leakage?

Generally, homeowners insurers’ personnel will look at the damage and, based on (1) experience or (2) an expert opinion, the insurer will determine that it is long term damage that is not covered.

If a person has a roof leak, pipe break, supply line burst, or something else that she thought happened quickly, then she might think the constant or repeated seepage exclusion is unfair.  Depending on (1) the way that the exclusion is written in the policy and (2) the investigation the homeowners insurer conducted, the homeowner might be right.

In this article, you will see what homeowners insurers need to prove that a water leak and its damage are excluded using the constant or repeated seepage exclusion for long term water damage.

So don’t forget to read all the way to the end, contact me, and subscribe.

Florida Homeowners Insurance Claims and Litigation Handbook

Florida Homeowners Insurance Claims and Litigation Handbook

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

Before we go on, 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.

Do you think you need to understand this subject? I’d say you should be an expert on it.  

The most common dispute in the Florida homeowners insurance industry is whether water damage is covered or excluded by homeowners insurance.  Florida is a rainy and humid place, so there is plenty of water damage.  The question is whether the damage is sudden or long-term.  You better know the difference.

How do you find out the difference? Read this article to find out how homeowners insurers must prove that damage was excluded by the constant or repeated seepage exclusion.

The Policy

The exclusion has many variations; however, in general, it excludes long term water damage. With respect to the variations, some of these exclusions expressly provide that the seepage must come from within a plumbing, heating, or air system. Others contain language that excludes the leakage “whether hidden or not.” In addition, some describe the exclude time period as “weeks” or “months” whereas others specifically exclude damage that occurs over a period of more than 14 days.

Hoey v. State Farm

The main case on the issue is the Fourth DCA’s 2008 decision in Hoey v. State Farm, 988 So. 2d 99 (Fla. 4th DCA 2008). In Hoey, the Fourth DCA determined that the evidence in the record was enough to show that the insurer was entitled to a judgment that the damage was long term and, therefore, excluded from insurance coverage. By analyzing the steady increase in the water bills for roughly three months, the insurer was able to show that there was a failure in the nylon of the toilet supply line. Contrary to many of the litigated cases on this provision, this case had enough evidence in the insurer’s favor to allow the trial court to determine the insurance company clearly did not cover the damage.

Key Evidence

In cases where summary judgment is not appropriate, juries must decide whether the evidence shows that the leakage occurred for an excluded time period. Naturally, insureds’ and insurers’ attorneys should pay attention to the following factors to assess what the jury will think of the damage:

1. The Photographs

The photographs tell the story and are typically the most important evidence. Do they show staining and warping? For an insurer, it is going to be hard to convince a jury that the water loss was long term if there is no staining or warping of particle board cabinets. For an insured, if the particle board has rings and rings of deep brown stains and appears to be falling apart, then how can he or she convince a jury that the damage happened from a single leak?

The most important photographs will come from the field adjuster and, if the insurer promptly hired an engineer who quickly visited the property, then the engineer should have good photographs. Because these losses often occur in obscure areas of the property (kitchen cabinets, wall space), an insured generally does not have prior photographs of the damaged areas. Ultimately, the photographs will be the most critical evidence in the case.

2. The Water Bills

The water bills also can help guide the parties’ understanding of what happened. If there was a sudden and extreme toilet leak or pipe burst, then, depending on where the burst was, there may be a huge surge in the water bills. If the bills constantly crept up for a few months, however, that might suggest there was a pinhole leak that allowed water to seep out over a long period of time. According to the Fourth DCA, the water bills in Hoey were sufficient to allow the trial court’s finding that the damage was excluded.

3. The Experts

The experts in this field are very skilled and can provide the parties with highly detailed evaluations of an infinite amount of different types of water losses. Many of the experts I deal with rely on the studies done by Dr. Ralph Moon from HSA Engineers.I have worked with Dr. Moon a great deal. He has published volumes of studies showing what each housing material looks like after it has been exposed to water for days or months. The studies are very intricate and detailed, and, in some cases, can even tell you what temperature the water was in your case. There are several other outstanding experts that rely on Mr. Moon’s studies. I find that a lot of these experts are very good at explaining why a particular type of damage had to have been caused by long term seepage.

Despite having handled well over 100 of these types of cases, I have not had the chance to meet any experts in this area that are hired by insureds and their attorneys. I would like to hear their counterarguments to the very well reasoned theories laid out in the water duration studies I mentioned above.

If you would like a copy of any of Dr. Moon’s articles or the names of any of the other highly qualified experts, please feel free to email me. If you handle these types of cases, I highly recommend reading Dr. Moon’s articles and sharing them with your team as soon as possible. As you know, the experts will be responsible for explaining the issue to the jury.

4. The Nature of the Source

To determine whether the damage was long term, the parties have to understand the nature of the event. Was the leak coming from the roof? If so (and so long as there was not a wind event), the only seepage that could have entered must have been rain and other moisture over a period of time. If a slight “leak” caused a substantial amount of damage, that is a strong example of a long term water loss. Was the leak coming from a deficiency in the shower stall or tub surround? One might logically expect that the damage occurred each time the person showered or took a bath. Understanding the exact source of each portion of the loss is crucial to determining whether the source, by its nature, is something that would happen over time or all at once.

5. The Policy

To evaluate the claim, insurers and insureds must also go to the heart of the issue – the insurance policy. Interestingly, and as mentioned above, these policies have many variations. Not only are the excluded durations different, but the sources of the loss can often be different. For example, some policies’ constant or repeated seepage exclusions may exclude long term seepage coming only from within a plumbing, heating, or air conditioning system. If the loss was long term but not from one of those systems (for example, through the roof), then insureds and insurers might need to reevaluate whether the loss was “sudden” or not, which is also required by virtually every homeowners insurance policy. As also noted above, some policies contain language that excludes the damage “whether hidden or not.” This is arguably the first place to look when evaluating one of these claims.

If you are an insured, a claims handler, or an attorney in this field, then you certainly need to understand the significance of these issues. This exclusion is as litigated as any other exclusion in any type of insurance policy. Although this was not meant to be an exhaustive review of the issues, I hope that it helped you in some way. As noted above, if you want any of the materials from Dr. Moon or you want to discuss any of the other experts in the field, please email me.


At least 60% of your claims and lawsuits are probably water damage claims. It’s time to approach these on a more global level.

  • What if I told you that you could use a system to search your old claims and cases to determine how much the next case will settle for?
  • What if I told you that you could pay for the legal documents for these claims only once?

Well, its no longer 2001, and these systems are freely available.  If you want to know more about the systems we use, or you want free checklists and guides for handling water damage claims, please message me.


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