Tag Archives: Florida homeowners insurance statutes

Florida’s Citizens Property Insurance Agrees with Thompson Trial Group to Settle 300 Sinkhole Cases

Citizens Property Insurance Corporation

Sinkhole cases are that much closer to being done in Florida. Read this article to get the details on Citizens’s recent settlement with Thompson Trial Group.


According to a press release today, Florida’s Citizens Property Insurance Corporation reached an agreement to resolve 300 litigated sinkhole homeowners insurance cases with Thompson Trial Group.  The press release contains the relevant information, including the terms of the coverage and repairs, as well as the agreed payments to Thompson Trial Group:

Download (PDF, 81KB)

This follows a March, 2014 settlement of another 300 sinkhole cases I discussed here.

Florida is now one step closer to closing the door on the billions of dollars in losses for sinkhole claims over the past decade (or more); however, hundreds, and maybe thousands, of sinkhole claims remain pending in litigation. As always, I will update you when the next mass settlement occurs.


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What You Need to Know About Handling a Florida Homeowners Hurricane Insurance Claim

Florida Homeowners Insurance Claims and Litigation Handbook

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

Overview:

After 2014’s first hurricane, Hurricane Arthur, its important for Florida homeowners insurers, claims adjusters, and attorneys to remember how to handle a hurricane insurance claim. It has been years since we have dealt with the aftermath of a hurricane here in Florida; therefore, I wanted to take this opportunity to recap what everyone will need to know when the next hurricane hits Florida.


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In this article, I will address the issues of (1) trying to promptly handle a hurricane insurance claim; (2) the more common reasons why a Florida hurricane insurance claim may be denied; and (3) why homeowners and insurers may dispute what the proper claim payment should be.

As always, I would love feedback on your experience or if you have any questions.  If you have any questions or comments about hurricane insurance claims, please do not hesitant to click on this page to find out how to contact me, or you send me a confidential message in the form below.

Issue #1: Quickly handling hurricane insurance claims will be tough for the homeowners and the homeowners insurers

First, lets remember how chaotic it will be for Florida homeowners and insurers to start and finish the hurricane claim process.  If a hurricane makes landfall in Miami, Fort Lauderdale, West Palm Beach, or the Tampa-St. Petersburg area, each homeowners insurer could receive tens of thousands of claims.  Even in less populated areas, a hurricane could really tax a homeowners insurer’s ability to promptly evaluate and pay claims.

Homeowners will face challenges as well.  Homeowners may be without power and unable to use their mobile phones for days.  In addition, homeowners may not have the money to stay in a hotel while their homeowners insurers process their claims.  Homeowners will be demanding immediate conclusions; however, they will have to understand that most homeowners insurers will be doing their best to quickly close claims.

Ultimately, homeowners insurers will multiply their staff to respond to these claims, but homeowners will have no choice but to be persistent and patient.  Technology has changed a great deal since Hurricane Wilma made landfall in Florida in 2005, so hopefully Florida homeowners insurers will be less reliant on humans doing routine processing tasks to investigate and close claims.  Although Todd Legal’s software focuses on promptly and efficiently resolving litigated cases (after the claim process fails), Florida homeowners insurers can use less customized software for processing claims quickly and properly.

A hurricane will separate the strong and smart Florida homeowners insurers from the weak and ill-prepared.  It will be interesting to see which homeowners insurers invested in smart processes over the past 8 years, and which insurers are still stuck in 2005 … or even worse.

The Rules: What are the rules on the timing of processing a hurricane insurance claim?

The Florida statutes require homeowners insurers to promptly respond to homeowners’ efforts to communicate.  In addition, unless there is something outside of the insurers’ control stopping them from making payment, the Florida statutes require insurers to pay or deny each claim within 90 days of the date the claim is reported.

For more information on these rules, please check out my list of the Florida homeowners insurance laws here.  If you want to learn about how Todd Legal, P.A. uses project management and automation software to streamline the implementation of these rules, then please contact me using the information on this page or you can submit a confidential message using the contact form at the end of this article.

Issue #2: Is the hurricane insurance claim covered or should it be denied?

Second, Florida homeowners insurers have to determine if the homeowners’ claim is covered.

Why wouldn’t a hurricane insurance claim be covered by a homeowners insurance policy? There are at least four reasons: (1) the damage is caused by flooding not covered by the homeowners insurance policy; (2) the homeowner failed to promptly report the damage to the insurer; (3) the damage pre-existed the hurricane; and (4) the damage was caused by the constant or repeated seepage of water and not a sudden burst of water into the property.  In the subsections below, I provide you with a summary of how each of these issues can arise in a hurricane insurance claim.

1. Wind versus Flood Damage:

The most common issue with homeowners insurance coverage for hurricane claims is whether (1) flood OR (2) wind-driven rain caused the water damage to the house.

Most Florida homeowners insurers do not cover flood damage; therefore, if flooding caused the damage, then homeowners will need to submit that claim to their flood insurer.  As you know, this issue could get tricky.  If a hurricane destroys a roof, water seeps in through the roof, and that water damages the house, then that damage should be covered.  If that roof and rain event happen AND flooding from the street also damages the house, then the homeowner may be faced with one of the most difficult insurance coverage issues there is: what caused the damage – wind versus flood.

Currently, it appears that some Florida areas would apply one standard to determine coverage – the concurrent cause doctrine.  Meanwhile, other Florida areas would use another standard – the efficient proximate cause doctrine.  This means that one Florida court may think your claim is covered if flood and wind-driven rain caused the damage, but another Florida court may not.

If both wind-driven rain and flooding caused the damage, then Florida courts using the concurrent cause doctrine may determine the damage is covered by your homeowners insurance policy. If the same thing happened in an area where courts apply the efficient proximate cause doctrine, then there would be homeowners insurance coverage if the wind-driven rain caused more damage (or was a stronger force) than the flooding.

Ultimately, this is a very complex issue and one that even Florida’s best courts disagree on.  In addition, the insurance policy may have certain terms that change the way these doctrines could apply to your claim. So, if you are brave enough to want to know more about these doctrines, I have a very detailed but easy-to-understand article on it here.

2. Late Notice:

Another reason a homeowners insurer might deny a homeowner’s claim for hurricane damage is that the homeowner failed to quickly report the damage to the insurer.  This type of claim is known as a late notice claim, and is probably the second most likely reason for a hurricane insurance claim denial.

How could this happen?

Believe it or not, as I wrote about here, tens of thousands of homeowners reported Hurricane Wilma damage years after it occurred. How could you not notice a claim or not report it?  Some homeowners might say that they did not notice a roof leak until it the water made its way to a visible area.  In addition, some homeowners may simply not understand homeowners insurance coverage but, years later, someone may explain to them that their old roof leak may have been covered by insurance.  In some circumstances, some homeowners may be lying about newer damage to try to get insurance proceeds for long term damage that may not be covered by insurance.

How late is too late?  There is no 100% clear answer, but there are some things you must know.

According to the prompt notice provision found in all homeowners insurance policies, homeowners must promptly report damage to their homeowners insurer.  “Prompt” does not have a specific definition, so each case will be considered separately.  There are dozens of Florida cases on the prompt notice provision, and I have analyzed several of them here.  In addition, I have written a very detailed article here that discusses how Hurricane Wilma became famous for claims reported years after the damage occurred.

Why is there a prompt notice provision? Homeowners insurers need to investigate any claim (whether it be a hurricane claim, sinkhole claim, hail claim, or a plumbing leak claim) claim as early as possible so that they can:

(1) make sure it is covered;

(2) properly determine the cost to repair; and

(3) have the chance to minimize the damage.

If a homeowner fails to promptly report a claim and the insurer is prevented from doing any of these three things, the insurer may deny the claim for the homeowner’s failure to comply with the prompt notice provision.

In addition to the prompt notice provision’s unclear deadline, Florida homeowners insurers also have a law that provides a strict deadline for reporting hurricane insurance claims.  Years after 2005’s Hurricane Wilma, in 2011, Florida passed this law that requires homeowners to report hurricane claims to their insurers within three years of the hurricane making landfall or the damage occuring.  This means that, if a hurricane made landfall in August of 2014, homeowners would not be able to report a claim for that hurricane in September of 2017.

Importantly, this 3 year deadline does not mean that homeowners no longer need to abide by the prompt notice provision.  After a hurricane, smart Florida homeowners should promptly hire a professional contractor or other professional to inspect their house.  If they find damage, then they should immediately report that claim to their homeowners insurer.  If years pass before a homeowner discovers the damage, then the homeowner should not be surprised if the homeowners insurer denies the claim.

3. Pre-Existing Damage

This is a simple issue.  A homeowner may report damage that occurred prior to the hurricane.  They may do so because they did not notice the damage, or they may intentionally try to defraud the homeowners insurer.

How can a Florida homeowners insurer know if damage pre-existed the hurricane?  The insurer may have photographs of the house from before the hurricane.  The insurer may also review records from the purchase and sale of the house.  In addition, the insurer could send a records request to local building agencies with information regarding the home’s damage history.  If a homeowner reports pre-existing damage to an insurer, then the insurer may deny the claim using the pre-existing damage exclusion, the policy period provisions, and, potentially, the concealment or fraud provisions.

4. Constant or Repeated Seepage:

If the hurricane causes a long term water leak that occurs for weeks or months (instead of a sudden burst of water that immediately damages the house), then a homeowners insurer may deny the claim using the constant or repeated seepage exclusion found in almost all homeowners insurance policies.  The constant or repeated seepage exclusion is a very complex issue – there are few cases on it, and there are dozens of different variations of the exclusion depending on the policy’s year and the homeowners insurer that wrote the policy.

If you want to know more about how a homeowners insurer may deny a claim for long term water damage, then please check out my article on the constant or repeated seepage exclusion here.  I also have many articles on water damage claims in general, and you can check these articles out here.

5. Conclusion on Coverage Issues:

Claims adjusters and management should not wait until the hurricane hits to make sure that they are ready to handle the onslaught of claims and cases that will follow a hurricane in Florida.  Todd Legal, P.A. offers project management and automation software that will make claims and case decisions smarter, cheaper, and quicker.  Todd Legal, P.A. embeds the recent legal changes into your case handling software so that you do not need to repeatedly educate your staff about top-down best practices.  In addition, Todd Legal, P.A. substitutes software for people when routine processes can be done faster, better, and cheaper.

If you want to know more about how Todd Legal, P.A.’s claims and litigation software can make the difference between your insurance company failing or prevailing after the next hurricane, please contact me using the information on this page or send me a confidential message in the form at the end of this article.

Issue #3: How much should the homeowners insurer pay the homeowner for the damage?

Third, if the Florida homeowners insurer determines the claim is covered, then what does the insurer have to pay the homeowner?  If a Florida homeowner disagrees with the homeowners insurer’s payment amount, how do you know who will end up being right?

As you know, after a homeowner reports a claim, the insurer will have an adjuster or contractor inspect the home, determine what is damaged, and prepare a repair estimate.  For example, if the hurricane damaged the roof and rain seeped through to the living room ceiling only, then the homeowners insurer may only provide coverage for the cost to repair the ceiling.  Usually, the adjuster or contractor will submit his or her estimate to someone at the homeowners insurance company, and the homeowners insurance company will use that estimate to determine how much it will pay the homeowner.

Here is where a dispute may arise: the homeowner may hire a public adjuster or contractor who determines that a roof leak also reached the walls in the living room, even if the damage is not visible.  The public adjuster or contractor may claim that, to repair the walls, the baseboards will need to be removed.  The public adjuster may claim that, if the baseboards are removed, then the flooring needs to be replaced, too.

Meanwhile, the homeowners’ insurer may not know why its adjuster or contractor did not include the walls in its estimate.  Was it because there is no damage?  Was it because the adjuster missed it?

Even if the homeowners insurer’s adjuster or contractor identified the wall damage, they may disagree that the baseboards and floors need to be replaced.

Some other examples of common hurricane insurance claim payment disputes include:

(1) if a tile is damaged by the hurricane, does all of the tile in the entire house need to be replaced? (see my articles on tile damage here);

(2) if the kitchen cabinets are damaged, can the homeowner repair the cabinets by refacing them or does the homeowner need to completely replace them?; and

(3) even if the hurricane leads to covered damage inside the house, was the roof already damaged from a prior event and not by the hurricane … and, therefore, is the cost to repair the roof not covered?

As you can see, reasonable minds might differ regarding how hurricane insurance damages should be repaired.  Using the homeowners insurance policy’s Loss Settlement provision (click here to read a helpful article on this provision), the homeowners insurer may ask the homeowner to try to repair the property with the funds paid and then notify them if those amounts are not sufficient.

Although there is no definitive Florida law on what is the proper cost of repair under all of the different circumstances above, it will be important for both the homeowner and the homeowners insurer to work together to try to make the repairs.  Otherwise, one party may use the other’s lack of cooperation as a basis for a lawsuit or a defense.

As a side note on hurricane insurance claim payments, homeowners should also be aware of their deductible.  For hurricane claims, the deductible could be much higher than they expect.

Conclusion

That’s a lot of information to learn or remember about hurricane insurance claims.

Some of you may remember all of these issues from when you were an adjuster, claims manager, or homeowner handling hurricane damage claims and cases.  For those people, I hope this refreshed your memory on some of the common issues and led you to ask yourself how you can be more prepared when the next hurricane makes landfall in Florida.  As you might recall, there were many twists and turns, and everyone should be more prepared to handle the next hurricane.  For those of you experienced with hurricane homeowners insurance claims, you will probably know that the issues I talk about in this article are merely the tip of the iceberg.

Adjusters and claims management, I welcome you to reach out to me to discuss how we can use software, project management, and automation to make sure that the next hurricane goes as smoothly as possible. There have been several changes in the law and several changes in your policy.  You are reading First Party Property Insurance Blog, so you probably know about the laws and provisions that apply to a hurricane insurance claim; however, not everyone at your company may be ready.

Todd Legal, P.A. is here – not to simply assist you, but to lead the way in making sure you and your homeowners insurance staff are not stuck in 2005.

Some of you, however, may be new to the Florida homeowners insurance world and have no experience handling a homeowners insurance claim.  After all, if my math is correct, it has been nine years and eight hurricane seasons since the last hurricane – Hurricane Wilma – made landfall in Florida.  For those people, you better educate yourself on the Florida hurricane cases, laws, and insurance policy provisions.

If you are an adjuster, attorney, or homeowner and you have not taken a few hours (homeowners) or days (adjusters and attorneys) to make sure you understand how the new laws and policy provisions should be used for the next hurricane, then you will be in for a big and costly surprise.

As I have mentioned throughout this article, if you have any questions about hurricane insurance claims, litigation, or anything else related to homeowners insurance, I would love to hear from you.  You can contact me by clicking on this page and using the information there, or you can send me a confidential form submission using the box at the end of this article.

Takeaway:

Like any claim, a hurricane claim can be broken down into a scope of work. You can supervise/adjust these claims the old fashioned way, or you can supervise claims and cases using software that automates the checklist nature of a cases like these. Don’t just hand claims and cases off without a structured system for evaluating and communicating the key information.  If you are interested in learning more about checklists and software for supervising hurricane claims, please message me.


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Florida Sinkhole Homeowners Insurance Update on Lobello v. State Farm

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

Once Senate Bill 408 began limiting Florida insurance sinkhole claims under newer policies, homeowners insurers started to see more “back-dated” claims.  “Back-dated claims” involve homeowners reporting claims with dates of loss two, three and four years old.  Many homeowners insurers reacted by denying the claims with the late notice defense.

Florida’s Second DCA recently issued an opinion that touches on the subject, but does not answer the most important questions.  Regardless, if you handle homeowners insurance claims, you must read the article to see what the Second DCA had to say about the late notice defense for sinkhole claims.


In LoBello v. State Farm, Florida’s Second DCA teases us with a ruling on the late notice defense for a homeowners sinkhole claim, but if you read closely, you will notice that the Second DCA left the door open for a homeowners insurer to use the right arguments and evidence to prevail on this issue.

What do I mean by that?

The Second DCA determined that the Circuit Court failed to apply the two-prong test for late notice claims in Florida homeowners insurance cases:

  1. Was the notice late? and
  2. If so, can the homeowner overcome the presumption that the late notice prejudiced the homeowners insurer?

If you already read First Party Property Insurance Blog’s articles on late notice, then I know you would never allow the Court to miss the two prong late notice test.

Unfortunately, in LoBello, there is no indication that State Farm had evidence to support either of the prongs.

Late Notice

First, although the homeowners reported the claim four years after first noticing the damage to their property, State Farm failed to tie that together with the required proof that the homeowners should have known they had a claim at that time.  I could go on for days about how tricky of an issue this is considering most engineers will attribute most cracking to excluded causes; however, that is for another post.

What you do need to realize is that the Second DCA wanted State Farm to prove why the homeowners should have known to report the claim at that time.  Some examples of this could have been asking the homeowners under oath whether their neighbors had any claims, whether they knew about them, whether they knew about sinkhole activity and sinkhole claims, and whether they had consulted with anyone.

In fairness, State Farm’s attorneys could have asked these questions, but the Second DCA’s opinion suggests that State Farm’s attorneys solely relied on the time that passed – 4 years – without discussing why the homeowners should have known to report the claim when they saw the cracks.

Prejudice

Next, the Second DCA also dismissed the Circuit Court’s reasoning because it never went on to the second prong of the late notice analysis – prejudice.

When the Circuit Court determined the notice was late, then it was required to consider the evidence and make a ruling as to whether the homeowner could overcome the presumption that the late notice prejudiced State Farm. There is no mention of an affidavit from an engineer stating that it could not determine the timing of the damages due to the late notice, which I have been recommending to homeowners insurers since my first late notice sinkhole case.  That would have been the evidence necessary to support the prejudice, and the homeowner would have had to produce some expert testimony stating that cause and timing still could be determined four years later.

Essentially, by failing to go through this two prong analysis, the Circuit Court gave the Second DCA no choice but to reverse the ruling.

Although there were some other issues in this case that you should read, this late notice discussion was the main focus.

Importantly, the Second DCA did not remand the case for a further review of the evidence by the Circuit Court Judge; instead, the Court determined that the jury would have to decide whether the homeowners failed to timely report the claim by reporting 4 years after noticing the cracks and, if so, whether they could overcome the presumption of prejudice.

Another issue that homeowners insurers need to address for these late notice sinkhole cases – new policy language may give the homeowners a 2 year “safe harbor” to report sinkhole claims, depending on how the Courts interpret it.  If you are familiar with the new policies, then you know what I am talking about.  If you are not, then I encourage you to quickly contact me to discuss this issue.  (This was not relevant to the LoBello case because the policy was written well before Senate Bill 408’s amendments took effect.)

Here is the complete LoBello v. State Farm order:

Download (PDF, 152KB)

The Second DCA in LoBello discussed several of the recent Florida late notice cases, and I have very comprehensive articles on these cases here.

Homeowners insurers need to get a firm grasp on the late notice law. Not only do they need to make sure they have the right arguments and evidence for these “back-dated” sinkhole claims; more importantly, they need to be prepared if another hurricane hits.

Takeaway:

Like any claim, a late notice sinkhole claim can be broken down into a scope of work. Homeowners insurers have groups of very skilled attorneys that, together, could have solved this issue years ago. There are key questions and evaluations insurers must ask their counsel every time, and State Farm missed them in this case.  Why?  Because it is clear that State Farm did not automate the process of gathering claim and case information that it needs.  Otherwise, it would have been forced to make sure that all of its attorneys agreed with the strategy, and it would have built a system around the best combined strategy from all of its attorneys.  Its unlikely this strategy would have included the mistake discussed in Lobello.

You can supervise/adjust these claims the old fashioned way, or you can supervise claims and cases using software that automates the checklist nature of a cases like these. Don’t just hand claims and cases off without a structured system for evaluating and communicating the key information.  If you are interested in learning more about checklists and software for supervising sinkhole claims, especially late notice sinkhole claims, please message me.


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Remembering the 2004 Hurricane Season and Looking Ahead to 2014

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

Let’s not only think about what the 2014 Hurricane season may bring. Let’s also remember that this is the ten year anniversary of the most memorable hurricane season ever.


hurricane

This photograph is from this fantastic Palm Beach Post story that inspired this article.


Remembering 2004

Before we talk about what could happen in 2014, can you believe it is the 10 year anniversary of the most notable hurricane season ever?

Ten years ago, in 2004, Floridians experienced these four powerful hurricanes and their landfall windspeeds and locations:

  • Hurricane Charley: 145 mph, landfall in Fort Myers
  • Hurricane Frances: 105 mph, landfall in Stuart, Port St. Lucie, and Jensen Beach
  • Hurricane Ivan: 130 mph, landfall in the Panhandle
  • Hurricane Jeanne: 120 mph, landfall in Stuart, Port St. Lucie, and Jensen Beach

The hurricanes ravaged Florida, from Key West to Pensacola.  As a former Stuart, Florida resident, I can remember what it was like to clean up after not one, but two hurricanes in a few weeks.  Never in Florida’s history have we seen that many punishing hurricanes in one season. Sadly, 125 Floridians reportedly passed away because of the four storms.

And the economic damages from these storms were earth-shattering:

  • Hurricane Charley: $14 billion
  • Hurricane Frances: $4 billion
  • Hurricane Ivan: $5-$15 billion
  • Hurricane Jeanne: $6-$8 billion

Ten Years Later

Ten years later, the 2014 hurricane season started June 1st.  The last hurricane to make landfall in Florida was Hurricane Wilma in 2005.  Who would have ever predicted we would go another eight years without a hurricane?

Since 2005, resinsurance rates have dropped.  As a result, Florida homeowners insurers are more financially prepared for this hurricane season than any before.  Florida’s Hurricane Catastrophe Fund has accumulated $13 billion, and Citizens has a $7.6 billion surplus.

As First Party Property Insurance Blog discussed last month, the Weather Channel forecasters predict 11 named storms this season.  Of the 11 named storms, Weather Channel predicts that five will become hurricanes and two will shape into major hurricanes.

According to forecasters, Floridians should stand to benefit from an El Nino pattern that will hold the number of storms below average.  Nevertheless, 80% of Florida’s residential and commercial property lies in vulnerable coastal areas.  These properties are valued at $3 trillion.

Ultimately, as the Tallahassee Democrat points out, hurricane predictions are more “guesses” than “predictions.”  As we all found out from Hurricane Sandy, all it takes is one major storm to cause nightmares and cost billions.

One thing we can all agree on: nobody wants another 2004 Hurricane Season.


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