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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?

If you have any questions, please contact us.

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

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

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

 

Facts

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.

Takeaway

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?

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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

Overview:

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.

Conclusion

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.

Takeaway:

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.

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?

Please contact us.


 

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

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

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.

Takeaway:

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.


Questions?

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