Tag Archives: homeowners claim attorney

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.


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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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Remembering the 2004 Hurricane Season and Looking Ahead to 2014

Florida Homeowners Insurance Claims and Litigation Handbook

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

Any questions? 

Please contact us.


Overview

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


hurricane

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


Remembering 2004

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

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

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

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

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

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

Ten Years Later

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

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

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

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

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

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


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Florida Homeowners Insurance Claims for Hail Damage to the Roof

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

This article about hail damage and insurance claims is the most popular article on First Party Property Insurance Blog for a reason…

What happens when a homeowner has a roof leak?  Was the leak from the eventual wear and tear on the roof?  Or did hail cause the damage to the roof and the roof leak?  Is it covered by insurance, or it is not? How do I find out if it was hail?  What if my roofer is saying hail caused it, but I am not sure? These are some of the toughest questions facing homeowners and homeowners insurers today.

You have heard it in the news whether you are in the insurance industry or not: hail claims are increasing in rapid numbers.  Hail claims raise many insurance issues.  What do you need to know about them?


Understanding the Issue: Could the Actual Roof Be Covered by Homeowners’ Insurance?

Here is the issue: when an aged roof leaks, people understand that the Florida homeowners insurers will not pay to replace the roof. Most people know that the Florida homeowners insurers specifically exclude wear and tear from coverage, and the only time a homeowners insurer will pay for a new roof is if there was a hurricane or some other event. So, when a roof fails, people report a claim for the damage that was caused by the actual water leaking through the roof, but not the roof itself.

Now, however, people are reporting more hail claims than ever, and homeowners insurers are seeing some suspicious hail claims.

Why is this an issue?  Because if someone reports a roof leak as a hail claim instead of from wear and tear, the homeowner may be entitled to insurance coverage for the roof repairs (in addition to the damage from the water leak).

Thus, now you see where the suspicion comes in: when a homeowners insurer responds to dozens to hundreds of homeowners insurance claims where the adjuster cannot find hail damage on the roof … but the homeowners’ roofer is 100% certain that there is hail damage.

So, have homeowners insurers taken the suspicion too far?

Have the homeowners insurers’ attorneys taken the suspicion too far?

That’s what Chip Merlin says.  In that article, he explains his objections to this hail article in Claims Journal from Steve Badger, an attorney who represents homeowners insurance companies.


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.


I am not going to say who is right and who is wrong, but I will take the chance to quickly point out some of homeowners insurers’ biggest mistakes when handling an insurance claim for hail damage, and how to fix them.

The Mistakes in Handling a Hail Claim

In my experience, the worst thing an insurer can do is simply hand a hail damage property insurance claim to an adjuster or attorney and ask them to have an engineer or roofer provide a cause and origin opinion. First, its expensive.  Second, it will become even more expensive if the insurer relies solely on the expert without considering whether there is evidence of a hailstorm in that area.

Easy Ways to Avoid Costly Mistakes

Even if you don’t have your own database to evaluate similar claims in the area, similar claims from that roofer, or similar claims from that attorney, there are plenty of databases that reflect evidence of a hail storm, including online search tools (Hailstrike and StormIntel for example) and public records requests to see if anyone else in the neighborhood replaced their roof.

If there is evidence of hail reports in the area, it will be difficult and costly to defend against coverage, and the insurer should use the available technology to limit its loss adjustment expenses moving forward.  If there were not any hail reports, then a cause and origin expert and attorney might be necessary to solidify a defense (wear and tear, marring, and oftentimes late notice).

As the author of the Claims Journal article noted, the only ways to actually stop suspicious claims would be to amend policies and statutes. Otherwise, insurers’ most likely method of defending this cases requires a costly jury trial on the factual issue of causation.

Takeaway:

Remove the emotion and judgment from these cases and just focus on the facts.  How do you focus on the facts?  First, figure out what those facts are.

Next, once you have decided what you need to know about a claim to make a coverage decision, make a checklist, provide some guidelines, use software, or do anything.  Just don’t leave these determinations up to a subjective decision without any structured evaluation prepared by your top management and top attorneys.

Software can make this issue much simpler.  If you want to know more about how software is doing remarkable things to control hail claim litigation, please message me.




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Florida’s 5th DCA Enforces Homeowners Insurance Sinkhole Stabilization Contract for Repair Requirement

Florida Homeowners Insurance Claims and Litigation Handbook

The Fifth DCA, in State Farm v. Fred & Carol Phillips, held that the homeowners had to enter into a contract to obtain coverage for sinkhole stabilization repairs determined by the appraisal process.

home 4

The full order is here:

Download (PDF, 72KB)

http://static6.businessinsider.com/image/4fa29707eab8eaf23d000005/sinkhole.jpg

This is a positive order for the insurance industry; however, it may not be broad enough to provide certainty in the trial courts on the main issues being litigated.  Policyholders’ attorneys will argue that this order is limited to appraisal awards where no other breaches exist. They will say that this case does not apply when an insurer chooses its own engineer, refuses the repairs recommended by the insureds’ engineer, and does not resolve damages in the appraisal process.  This is a much more common scenario than the situation in Phillips.

Insurers’ attorneys may argue this is the authority they have been looking for to support a multitude of arguments they have been urging the trial courts to enforce.  To support any statutory sinkhole argument, insurers’ attorneys will urge the trial courts to conduct the same analysis the Fifth DCA did in Phillips on the legislative intent of the sinkhole statutes.  Insurers’ attorneys may also argue that this order shows they could never breach the policy in a sinkhole insurance claim until the insureds entered into a contract for repairs and the insurers refused to pay in accordance with that contract.

From a practical standpoint, the important question is whether this order creates any legal issues that help the parties avoid trying sinkhole cases.  In other words, does this order create any summary judgment potential that was not already present? Probably not.

Ultimately, this case is not broad enough to provide any specific guidance on these issues; however, insurers do have authority to ask the trial courts to genuinely assess the legislative intent of the sinkhole statutes.  Moving forward, it is important to note insurers do have many important sinkhole issues currently pending with the Second DCA, so we should not have to wait too much longer to get answers on the most litigated questions in Sinkhole Alley.

Takeaway:

I have all of the forms and strategies you need to make results like these a reality in any case.  If you are interested in seeing templates, checklists, and guides to assist you with your sinkhole case, please message me.


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A $7M Alleged Insurance Fraud and the Espinosa Arrest Affidavit

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

It’s not too often that suspicions of insurance fraud lead to a lot of evidence, but First Party Property Insurance Blog’s article on this public adjuster’s alleged fraud ring has plenty of details regarding how Miami-Dade police plan to prove their case.  This is a story about arrests, fires, water leaks, public adjusters, and more.  Check this article out to learn more about the Jorge Espinosa case and what you need to know.

And check out our update from May 22, 2015 after the break.


Update

May 22, 2015

31 people have now been arrested. Police raided Espinosa’s house and arrested him for the additional charges of racketeering, arson, and grand theft. As this article explains, police allege Espinosa is responsible for 20 fires and 5 floods.

As discussed below, if this turns out to be true, this is very unfortunate. As I said one year ago on the subject, Florida’s public adjusters can make plenty of money without defrauding insurers. Most public adjusters do practice within the confines of the law, but these bad apples ruin it for everyone – increased scrutiny, increased claim costs, increased policy premiums.

Additionally, this is just more lesson for homeowners insurers. It’s 2015: technology can provides insurers with the ability to know everything about their claims in an instant. Claims professionals armed with technology identify fraud better, faster, and cheaper than professionals using antiquated claims systems.

With the right time and effort, any insurer can have automated reports on all of the key claim factors. Or, without any effort at all, any insurer can use CaseGlide to have vendors populate this data for them, and arm their claims team with actionable analytics on all of their claims.


Original Story

For those of you who missed it, Miami detectives recently concluded a thorough investigation into a potential $7.6M homeowner’s insurance fraud scheme, and arrested 22 people.

from http://4.bp.blogspot.com/-HWm_qXNcim4/TpxrZhFP7EI/AAAAAAAAAPw/SyoyB9ayj7U/s320/20070727_sbcfire_house_fire3.jpg


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.


If you haven’t heard about this fraud ring, here is the complete arrest affidavit. It’s a must read:

Download (PDF, 3.96MB)

Although I recommend reading the affidavit front to back, here is my summary:

The fraud investigation centers on Jorge Espinosa of Nationwide Adjusters, LLC.  In short, the arrest affidavit alleges that Espinosa and dozens more had a relatively complex ring involving several parties and a referral network. They allegedly had “runners” recruiting homeowners, remediation companies creating exorbitant bills, and fire and water leak creators.  Further, the arrest affidavit details that certain attorneys allegedly knew that the claims were fraudulent, not covered, yet allegedly continued to represent the homeowners.  The alleged fraud amounts to over $7M.

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Frankly, if the allegations are true, there is no place for this.  There are hundreds of Florida public adjusters and policyholders’ attorneys that make plenty of money without filing any fraudulent claims. Furthermore, claims personnel will never forget this, and now they must to increase their claim scrutiny moving forward to make sure they are doing their job, whether it means conducting more examinations under oath or enforcing other conditions precedent.  This slows the claim process for innocent homeowners. In addition, instead of helping resolve new claims, insurers must assign personnel to investigate their old claims to see if they may have been defrauded.

Ultimately, this investigation is in its very early stages.  We will see whether there is more cooperation that could result in revelations about additional schemes.

Disclaimer: All of the people in the arrest affidavit are innocent until proven guilty.  Charges are often dropped or reduced.


Takeaway:

How can something like this happen? It’s easy when homeowners insurers have hundreds of people handling claims and cases without any ability to easily share and retrieve information. Although most insurers probably had personnel talk about these things at the water cooler at lunch, only one carrier had the wherewithal to take the time to stop this alleged fraud.  What does this say about the way homeowners insurers do business?  Shouldn’t every insurer set up their staff to have the opportunity, time, and resources to conduct this investigation when they need to.

If you want to be able to have all of your claim and case information searchable, reportable, easily retrievable, and usable for the next case, please message me.


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Florida’s Second DCA Finds Sinkhole Insurance Claim Neutral Evaluation is Mandatory … All the Time

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

Want to read about the definitive appellate decision on sinkhole coverage and neutral evaluation? You have come to the right place.


In Trapeo v. Citizens, the Second DCA recently reminded us that neutral evaluation for sinkhole claims is mandatory regardless of when requested. 

Here is a copy of the order:

Download (PDF, 63KB)

In 2009, Citizens issued the insurance policy at issue to the Plaintiff, Gary Trapeo.  In 2010, he reported a sinkhole claim.  In 2012, he filed a lawsuit against Citizens alleging its repair recommendation was not sufficient to stabilize the property.  In December of 2012 and after the parties engaged in discovery, Citizens requested neutral evaluation.  In addition, Citizens filed a “Notice of Automatic Stay” with the trial court requesting the case be stayed until after the parties participated in neutral evaluation.  Mr. Trapeo objected to the Notice and argued that Citizens, by participating in the litigation for approximately 10 months, waived its right to stay the case and demand neutral evaluation.  The trial court agreed with him and denied Citizens the opportunity to submit the claim to neutral evaluation.

ins c

The Second DCA first addressed whether the 2009 or 2011 version of Fla. Stat. 627.7074 (the neutral evaluation statute) applied by the trial court.  The main difference between the two statutes is that the 2011 version mandates stay of the case and participation in the neutral evaluation process “regardless of when noticed.”  The Second DCA determined the stay portion of the 2011 statute was “procedural” rather than “substantive;” therefore, the 2011 statute must be applied to a lawsuit filed after its effective date.

The Court explained why Citizens could not waive its right to request neutral evaluation:

Citizens correctly argues that neutral evaluation, once requested, is mandatory. The trial court’s determination that neutral evaluation was waived conflicts with the express language of the statute. “Neutral evaluation is available to either party,” “supersedes the alternative dispute resolution process under s. 627.7015,” and is “mandatory if requested by either party.” § 627.7074(2), (3), (4). The statute’s language is compulsory; it repeatedly and almost exclusively directs that acts “shall” occur. There is no waiver provision and no timeframe for requesting neutral evaluation.2 It is an optional but statutorily guaranteed process. That is, once the request for neutral evaluation has been filed with the Department, participation in neutral evaluation is mandatory and guaranteed. See § 627.7074(4); cf.Williams, 62 So. 3d at 1135-36. Certiorari relief is appropriate because the trial court’s order purports to deprive Citizens of a statutory process to which it is entitled resulting in material harm. Cf.Williams, 62 So. 3d at 1136-37. This conclusion is supported by language of the statute applicable at the time the lawsuit was filed. The 2012 statute specifically provides, “Regardless of when noticed, any court proceeding related to the subject matter of the neutral evaluation shall be stayed pending completion of the neutral evaluation and for 5 days after the filing of the neutral evaluator’s report with the court.” § 627.7074(10) (emphasis added); cf. Cruz, 76 So. 3d at 398 n.1 (“We also note that section 627.7074 does not impose a waiver or other penalty when a neutral evaluation is not completed within forty-five days. Its proviso that ‘[n]eutral evaluation shall be conducted as an informal process in which formal rules of evidence and procedure need not be observed,’ § 627.7074(5), suggests that the legislature intended no sanction for failure to strictly adhere to the time period.”). The statute provides neutral evaluation as both a potential precursor to litigation and as a parallel, contemporaneous process. It is not an “either or” or “opt out of litigation” procedure, unlike contractual arbitration provisions. Cf. ch. 682, Fla. Stat. (2011) (applying to those instances where the parties have an arbitration agreement). It is also not a process that occurs as part of a civil proceeding, unlike court-ordered mediation, nor is it a presuit requirement.

In addition, the Second DCA held “the circuit court does not have authority over the neutral evaluation process.  The Department [of Financial Services] does.”  Accordingly, the court determined that only the Department has the power to decide whether a party has waived its right to neutral evaluation.

In addition, the court determined that Citizens correctly invoked the process simply by filing the Notice of Automatic Stay.

In a footnote, the court acknowledged the trial court’s concern that this ruling allows a party to request neutral evaluation on the eve of trial; however, the court responded that “the current language of the statute is clear.”

Thankfully, this issue is now resolved.  By my count, this is now the third time the Second DCA has ruled in an insurer’s favor requiring the parties to participate in neutral evaluation.  I would assume this will be the last.  To summarize, when a party requests neutral evaluation, the case is stayed and the parties must attend neutral evaluation.  There do not appear to be any exceptions.  In addition, if a party thinks there may be an exception, the trial court is not the forum, the Department of Financial Services is.

For more information on sinkhole claims and insurance litigation, feel free to contact me at (813) 513-5440 or email me at [email protected] You can also find several articles addressing the legal issues arising from sinkhole claims here.

Takeaway:

Here is one of the few occasions when plaintiffs’ attorneys failed to properly use litigation project management.  Although they might argue that they had an obligation to fight this issue, the statutes were pretty clear (and the majority of plaintiffs’ attorneys agreed) that neutral evaluation is required when requested.  Plaintiffs’ attorneys are usually the best at making efficient and effective decisions using project management; however, they failed here.

If you want to know more about the remarkable things that are being done to control homeowners insurance litigation, including checklists and guides for sinkhole claims, please message me.


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

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

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

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


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

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

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

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

Download (PDF, 273KB)

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

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

Takeaway:

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

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


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Ten Reforms to Fix Florida’s Homeowners Insurance Market

Florida Homeowners Insurance Claims and Litigation Handbook


Average Home Insurance Cost

photo from http://www.insuranceproviders.com/

The James Madison Institute and the R Street Institute issued a detailed report outlining ten ways to help Florida’s property insurance market without raising rates.  The full report is here:

Download (PDF, 1.08MB)

In this comprehensive report, the institutes suggest ten critical changes to allow insurers to succeed in Florida.  PropertyCasualty360’s article provides the following breakdown:

1.     Implement the Hager incremental Cat Fund reduction plan

2.     Establish requirements for “assignment of benefits” provisions

3.     Implement incremental Citizens eligibility reform with a “circuit breaker”

4.     Allow excess and surplus lines carriers to do voluntary take-outs from Citizens

5.     Remove non-primary residences from Citizens and continue reduction of Citizens’ maximum coverage

6.     Expand 2013’s coastal preservation concept to bar other state programs from providing coastal subsidizes

7.     Implement tough, new Citizens and Cat Fund conflict-of-interest policies and make protecting taxpayers a focus of both entities

8.     Create an expert panel to advise the state on the use of RESTORE Act funds

9.     Establish fair settlement procedures

10.   Require an annual report on the combined post-storm bonding capacity of Citizens, the Cat Fund and the Florida Insurance Guaranty Association

You will need quite a bit of time to review the report.  I found two of the recommendations intriguing and worth mentioning:

First, once again you see a group identifying the assignment of benefits claims as a main concern for property insurers.  As you might recall, the Policyholders Bill of Rights Working Group also made several recommendations for addressing the concerns posed by the assignment of benefits/ water damage claims and the associated litigation.  Similarly, the institutes recommend requiring assignment of benefits contractors to comply with the insurance policy conditions that homeowners have to comply with, rather than being shielded by the general rule that policy conditions do not flow to the contractors.  In addition, the institutes suggest allowing homeowners a brief window to opt out of the assignment of benefits agreements to protect the homeowners’ interests.  Overall, it seems that everyone is seriously trying to resolve the substantial burdens imposed by these claims.  I am sure insurers anxiously await to see how and when these efforts will materialize into solutions.

The institutes also recommend Citizens continue to limit its overall exposure, and they single out vacation homes as a coverage risk Citizens should avoid.  There are arguments on both sides here because Floridians obviously welcome the economic benefits of temporary residents; however, if Floridians have the burden associated with a catastrophe, the legislature should pay close attention to the overall economic impact of assuming these risks.  Ultimately, this issue is up for debate and I would love to hear feedback on the benefits of Citizens ensuring these secondary residences.  This recommendation was part of the larger conclusion that we have all heard: Citizens should continue to reduce its inventory.  We all know Citizens is vehemently trying to achieve that result.

The institutes’ report is a highly detailed perspective on the Florida property insurance industry and one certainly worth reading.  It is good to know that, despite the absence of any catastrophes, Floridians are still working on hard on trying to improve this market and prepare it for the worst.


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

Florida Homeowners Insurance Claims and Litigation Handbook


ins a

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

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

The final report is here:

Download (PDF, 2.16MB)

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

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

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

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

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

Takeaway:

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

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

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


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The Death of the Concurrent Cause Doctrine in Florida Homeowners Insurance Claims under Sebo v. American Home Assurance

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In a monumental September 18, 2013 holding, Florida’s Second DCA in Sebo v. American Home Assurance ruled that there should have never been a concurrent cause doctrine in Florida, and that the other DCAs have been mistaken for years.  Here is the full opinion:

Download (PDF, 58KB)

As background, many cases involve damage being caused by a combination of excluded and covered perils.  For years, when this occurred, courts would look at the facts and the policy to determine if the combination was dependent or independent of each other and whether the policy terms disposed of the concurrent cause doctrine.  If courts determined that the causes were independent and the policy did not “write out” the concurrent cause doctrine, then it wouldn’t matter if the excluded peril caused 99% of the damage, the damage was still covered so long as the covered peril caused at least 1%.  If the causes were dependent or if the policy had an anti-concurrent cause clause, then the question would be which peril was the efficient proximate cause of the damage – the excluded peril or the covered peril.  (I think I got that right … ).

This gave lawyers and drafters a lot to think about, but the Second DCA says that those exercises were a waste of time.  In any cases involving an excluded and covered peril causing damage together, the efficient proximate cause doctrine should apply.  This not only marks a major swing in the law; it is also at least a major swing in this case. The jury awarded Sebo roughly $7.7M.

Here is the verdict form from the trial court:

Download (PDF, 109KB)

Here is a photograph of this unbelievably amazing house:

 photo from http://www.naplesnews.com/photos/2007/jul/01/38552/

There’s something to think about this weekend.  I am going to think about what this means for sinkhole claims.  Feel free to email me your thoughts.  I hope you have a good weekend.

Takeaway:

This is such an important issue; however, I don’t think most insurers have implemented processes and procedures to take advantage of their rights under this holding.

The Sebo case calls for a whole new set of checklists and guides for handling cases in the Second DCA, and maybe even in Florida.  If you want to know more, please message me.


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