Tag Archives: florida hurricane claims

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’s Fourth DCA in Donovan v. Florida Peninsula Finds 2011 Statute of Limitations for Homeowners’ Insurance Claims is Not Retroactive

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

In Donovan v. Florida Peninsula, Florida’s Fourth DCA just issued a very important opinion for anyone unsure of the Florida statute of limitations for homeowners insurance claims.

If you have not seen them yet, you need to check out the two best pages on the site: the Florida Homeowners Insurance Statutes and the Property Insurance Blog Working Index.  Combine them, and they are a guide to handling any Florida homeowners insurance claim.


In Donovan v. Florida Peninsula, Florida’s Fourth DCA recently issued a short but informative decision clarifying the statute of limitations for Florida homeowners insurance claims.  Donovan’s case involved a 2005 insurance claim for hurricane damage.

The question was whether the 2011 version of Fla. Stat. 95.11(2)(e) applied to Donovan’s claim.  The claim occurred and was reported to Florida Peninsula before the statute of limitations was amended. Florida Peninsula asked the Court to retroactively apply the 2011 statute of limitations to Donovan’s lawsuit.  Donovan claimed that the statute was not retroactive and, as a result, she was only required to file the lawsuit within 5 years of Florida Peninsula denying the claim (which would have given her until basically the date of this article to file the lawsuit).

In 2011, Florida’s legislature changed the statute of limitations (or statute of repose) to require the homeowner to file a homeowners insurance-related lawsuit within 5 years of the date of loss.  Prior to this amendment, Florida courts would give the homeowner five years from the date that he alleged the breach of the contract occurred.  In other words, according to the old statute of limitations, the homeowner could presumably wait 10 years to report a claim and it would not be limited because he actually had 5 years from the date the claim was allegedly denied or underpaid (of course, the prompt notice provision would prohibit that claim).

The Fourth DCA determined Fla. Stat. 95.11(2)(e)‘s 2011 statutory amendments did not apply to Donovan’s claim.  Thus, Donovan did not breach the statute of limitations because she did not have to file her lawsuit within 5 years of the date of loss.  Donovan had 5 years from the date Florida Peninsula breached the contract to file the lawsuit.

In addition, the Fourth DCA determined that a trial court should not dismiss a lawsuit for breach of the prompt notice provision.  As you know if you read First Party Property Insurance Blog, the question of late notice cannot be determined at the pleadings stage.

If you want to see my other articles on hurricane claims and homeowners insurance, make sure to check out:

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

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

Remembering the 2004 Hurricane Season and Looking Ahead to 2014

Here is a copy of the Donovan v. Florida Peninsula opinion here:

Download (PDF, 191KB)

Takeaway:

This is not rocket science.  If you are going to pay attorneys millions of dollars to litigate for you, take 5% of the time expended to build simple systems to help you achieve better outcomes while spending the least. There is no reason that every attorney handling a case for a carrier should have to analyze the statute of limitations issue “from scratch.” This is a simple question requiring a simple “check the box” answer for each case.

If you want a copy of a guide that streamlines all routine questions like these, please message me.


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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.


Any questions?

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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.


Any questions?

Please contact us.


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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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.

Hurricane_Wilma_200510212015

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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Another New Florida Homeowners Insurance Late Notice Case: Hope and Cunningham v. Citizens Property Insurance Corporation


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  • the 16 Strategies You Need to Know to Master Florida Homeowners Insurance Claims, including pages of Action Steps and Cases to Know for evaluating each strategy
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*April 30, 2014: There are some other late notice cases that can help you prepare your case.  Check this link to make sure you review all of the late notice cases that have recently came out.*

LATE NOTICE CASE: HOPE & CUNNINGHAM V. CITIZENS

The Third DCA just issued the latest opinion on the late notice defense:

http://www.3dca.flcourts.org/opinions/3D11-3147.pdf

As discussed in Florida Courts on the Prompt Notice Provision and New Late Notice Case, the Florida DCAs have been giving insureds and insurers a lot to work with in terms of evaluating the strengths and weaknesses of a late notice defense.

The Third DCA’s opinion in Hope & Cunningham v. Citizens changes nothing in the current late notice law, but helps to maintain the status quo. The case involved a October, 2005 Hurricane Wilma claim reported to Citizens in 2009.

The Third DCA used the “tipsy coachmen doctrine,”which allows an appellate court to affirm a trial court’s order even if the trial court made the decision for the wrong reason. The trial court granted summary judgment pursuant to the Fourth DCA’s finding in Kroener v. FIGA that the passage of two years alone was sufficient for summary judgment on the defense, without consideration of the facts that might have overcome the presumption of prejudice.

The Third DCA said the trial court should have reviewed the plaintiff’s affidavit, the public adjuster’s report, and the roofer’s estimate to assess whether those could be sufficient to create a question of fact as to whether the plaintiffs could overcome the presumption of prejudice. The Third DCA took up that task and said that, because the evidence was merely conclusory, it did nothing to create a question of fact as to the prejudice. Accordingly, the Third DCA found that the trial court was right for the wrong reasons and Citizens was entitled to summary judgment.

This fits right in the prior analysis. Insureds must produce sufficient evidence to overcome the presumption of prejudice and the people presenting that evidence must stick to their stories. If an insured does not present evidence with specific (not conclusory), unwavering reasons as to why the insurer was not prejudiced, then summary judgment is proper.


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Florida Courts on the Prompt Notice Provision in Homeowners Hurricane Insurance Claims

Overview:

When is it too late to submit an insurance claim for damage to your property?  What examples have homeowners and homeowners insurers learned from?  Where can we look to for guidance when a complicated set of facts leads to some confusion about when a hurricane insurance claim (or other claims) needs to be reported to the insurance company?  Find out these answers and more by reading this article.

First Party Property Insurance Blog is Proud to Announce our New E-Book: the 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 image of the E-Book now to buy it for your friends and clients today.


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*April 30, 2014 Update: this has been one of the most popular posts on the blog and for good reason.  

I have heard about many carriers having success with this defense, and I have been happy to help them obtain these results.  

Click here to see all of the late notice cases that came out since this post.  

Make sure to read all the way to the end of this post to learn how I propose making sure carriers cheaply guarantee they do not fail to use this defense in any case they have.*

In the past year, the “prompt notice” provision has been the subject of many detailed Florida decisions. As mentioned in yesterday’s post, in Yacht Club v. Lexington the federal court out of Florida’s Southern District made a strong statement by recently holding that, as a matter of law, an insured could not overcome the presumption of prejudice if the accuracy of the insurer’s investigation was jeopardized in any way by the late notice.

As discussed below, after determining the notice was late, the Florida courts spend most of their energy evaluating the evidence to assess whether the insured has anyone willing to say that the delay did not inhibit the insurer in any way from determining the cause of the damage. The common theme is that if that insured’s witness “sticks to his or her story,” Florida courts could hold that a jury issue exists. If the witness shows any doubt during his or her deposition or in the affidavit, then the courts are willing to grant summary judgment.

Below I have outlined the key facts from some of the more recent, relevant holdings.

July 18, 2012

Kramer v. State Farm, 95 So. 3d 303 (Fla. 4th DCA 2012)

Holding: there was no issue of fact as to whether the insurer was prejudiced by the timing of the notice given by the insureds.

Delay: almost 5 years; the dates of loss were the dates of Hurricanes Frances and Jeanne in September of 2004, and a roof leak in 2008, and the insureds did not report the claim until May of 2009.

Evidence failing to overcome summary judgment: an affidavit from the insureds’ engineer stating that the insurer’s expert could determine the cause of the damage, that wind damage and foot traffic were “equally likely” to have caused the damage, and that resetting of tiles prior to the engineer’s inspection did not allow the engineer to assess the full extent of the damages. The Court found that the engineer’s affidavits actually bolstered the insurer’s prejudice argument.

July 25, 2012

Soronson v. State Farm, 96 So. 3d 949 (Fla. 4th DCA 2012)

Holding: there was no issue of fact as to whether the insurer was prejudiced by the timing of the notice given by the insureds.

Delay: approximately 3.5 years; the date of loss was the date of Hurricane Wilma on October 24, 2005, and the insureds did not report the claim until February of 2009.

Evidence failing to overcome summary judgment: an affidavit from the insureds with attached, unsworn engineer reports arguing that they did not make repairs and there have not been any windstorm events since Hurricane Wilma; therefore, the damage had to be caused by Wilma and the roof needed to be repaired in 2005 regardless of what occurred after.

September 7, 2012

Stark v. State Farm Florida Ins. Co., 95 So. 3d 285 (Fla. 4th DCA 2012)

Holding: there was no issue of fact as to whether the insurer was prejudiced by the timing of the notice given by the insureds.

Delay: approximately 3.5 years; the date of loss was the date of Hurricane Wilma on October 24, 2005, and the insureds did not report the claim until March 9, 2009.

Evidence overcoming summary judgment: an affidavit from the insureds’ engineer identifying the ability to, after the report date, determine the cause of loss, and an affidavit from the insureds’ public adjuster stating that the insurer’s adjuster commented that he could identify the cause of the damage.

October 3, 2012

Slominski v. Citizens Property Insurance Corporation, 99 So. 3d 973 (Fla. 4th DCA 2012)

Holding: there was no issue of fact as to whether the insurer was prejudiced by the timing of the notice given by the insureds.

Delay: approximately 3.5 years; the date of loss was the date of Hurricane Wilma on October 24, 2005.

Evidence failing to overcome summary judgment: an affidavit and deposition testimony from the insureds’ contractor stating that he could not be “100% sure” that the wind damage was caused by Wilma as opposed to Hurricane Frances in 2004, and that there was no way to differentiate water damage from one hurricane versus the other. Additionally, the insureds’ engineer had contradictory statements in his testimony versus his affidavit regarding whether he could determine when the staining and roof damage occurred. Ultimately, although the affidavits were similar to the Stark affidavits that supported the 4th DCA’s finding of a question of fact, the deposition testimony by the contractor and engineer contradicted the affidavits and, therefore, could not provide an evidentiary basis to overcome summary judgment.

April 3, 2013

1500 Coral Towers v. Citizens Property Insurance Corporation, 2013 WL 1316416 (Fla. 3d DCA 2013)

Holding: there was no issue of fact as to whether the insurer was prejudiced by the timing of the notice given by the insureds.

Delay: approximately 5 years; the date of loss was the date of Hurricane Wilma on October 24, 2005, and the insured reported the claim on June 29, 2010.

Evidence failing to overcome summary judgment: according to the Court, the closest the insured came to presenting supporting evidence was one of its engineer’s conclusory statements that the late notice did not prejudice the insurer.

Conclusion

With the hurricane claims gone for now, one question is how this applies to other types of claims. I am particularly interested in how these cases apply to claims for sinkhole damage. If an insured reports a sinkhole claim with a date of loss of two years prior to the report date and does not provide any photographs or corroborating witnesses, is there any way for an insurer to hire an expert to make an independent determination as to whether the damage existed during the claimed policy period? The answer is no, and I think this is one of the biggest issues facing Florida insurers today. If the policy coverages have changed since the date of loss (as they often have as a result of the changes to the sinkhole statutes), then isn’t the insurer prejudiced because it could not independently verify which type of coverage applied? The insurer might have had to offer coverage for cracking if the date of loss occurred, say, in 2010, but in 2012 the insurer’s policy might only provide coverage for substantial impairment of the load bearing portions of the property.

Takeaway:

If you want legal forms, templates, guides, and checklists to ensure you “check the box” on properly handling a late notice claim (and save money along the way), please message me.

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