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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?

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Florida Sinkhole Homeowners Insurance Update Regarding the Second DCA on Sinkhole Burden of Proof

Florida Homeowners Insurance Claims and Litigation Handbook

Brief Summary

In Mejia v. Citizens, Florida’s Second DCA held that Citizens had the burden of proof to show that sinkhole activity was not the cause of the plaintiff’s property damage. Once Mejia proved the property suffered a loss during the policy period, Citizens was required to show that the loss was excluded under this policy. In addition, the Court ruled that the amount of money Citizens paid to its engineer during the previous three years ($9.5M) was admissible.

For a copy of the Mejia opinion, scroll to the bottom of this article.

This is one of several key sinkhole homeowners insurance opinions in the last couple of months. If you missed the last few, you can read them here:

Omega v. Johnson

Contract for Repairs Argument Upheld

2011 Statutory Structural Damage Definition Applies to Policies Issued After Senate Bill 408’s Effective Date

Homeowner Not Required to Produce Sinkhole Report Before Lawsuit


How does CaseGlide Solve This Problem?

To learn more about how our proprietary claims litigation software CaseGlide solves this problem, check out our First Party Property Insurance Blog article on CaseGlide here.


The Mejia Opinion

Download (PDF, 59KB)


Have Any More Questions about Florida Homeowners Insurance Claims?

If you have any questions about this article or anything else, please contact us.

Florida Sinkhole Homeowners Insurance Update Regarding Homeowner Not Required to Produce Competing Sinkhole Report Obtained After Denial

Florida Homeowners Insurance Claims and Litigation Handbook

 Overview:

Florida’s Second DCA recently answered an important question in Florida sinkhole homeowners insurance litigation: if (1) a homeowner has a competing engineering report it obtains after an insurer denies a sinkhole claim and (2) the insurer does not request the report, the homeowner is not required to produce the report before filing a lawsuit.

In a concise opinion embedded at the end of this post, Florida’s Second DCA in Herrera v. Tower Hill determined that the insureds were not required to produce their competing engineering report prior to filing their lawsuit against Tower Hill.  In summary, Tower Hill argued that the insureds’ failure to produce the report constituted a breach of the “concealment or fraud” and the “duties after loss” provisions.

Tower Hill argued that the insureds, before filing the lawsuit, should be required to to produce the report to Tower Hill. If the insureds would have produced the report, Tower Hill could have evaluated the report and the parties could have avoided the litigation altogether. The trial court granted Tower Hill’s motion for summary judgment on these arguments.

The Second DCA reversed the trial court’s finding in favor of Tower Hill. The Second DCA explained that “[t]hese conditions apply where the insurer admits liability but disputes the recovery amount. See Tower Hill Select Ins. Co. v. McKee, 39 Fla. L. Weekly D1756, at *1. The policy did not require the Herreras to give the Geohazards report to Tower Hill unless they had the report at the time of the claim, but before Tower Hill denied it. See Surrett v. First Liberty Ins. Co., No. 8:11-cv-60-T-23MAP, 2011 WL 3879515, at *2 (M.D. Fla. Sept. 2, 2011).”

Takeaway:

This is a very popular argument for insurers; however, the Second DCA did not agree that it applied to this specific set of facts. Interestingly, the Second DCA may have “left the door open” to this argument: if Tower Hill would have requested the report at some point after it was created, the policy may have required the insureds to produce the report before the lawsuit. That’s not exactly what the opinion states; however, you have to assume the Second DCA mentioned that fact for a reason.

In addition, Tower Hill’s arguement may still provide it with a defense to the insureds’ attorney’s fees as discussed here in our analysis of Omega v. Johnson.

This is one of several key sinkhole homeowners insurance opinions in the last couple of months. If you missed the last three, you can read them here:

Omega v. Johnson

Contract for Repairs Argument Upheld

2011 Statutory Structural Damage Definition Applies to Policies Issued After Senate Bill 408’s Effective Date


As a reminder, we have the complete Herrera v. Tower Hill order embedded at the end of this post.

Let me know your thoughts on this opinion and feel free to send me a message.


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The Complete Order in Herrera v. Tower Hill

Download (PDF, 57KB)

Florida’s Fifth DCA Rules that Homeowners Insurer Does Not Have to Pay Attorneys’ Fees When it Flips Sinkhole Coverage Decision After Lawsuit

Florida Homeowners Insurance Claims and Litigation Handbook

 Overview:

According to Florida’s Fifth DCA, a homeowners insurer can reverse its position in a sinkhole case and still not be required to pay attorneys’ fees.  Read more about Omega Insurance Company v. Johnson to find out how Omega perfectly handled a disputed sinkhole claim.


 

In Johnson v. Omega Insurance Company, Florida’s Fifth DCA held that it is possible for a homeowners insurer to make a mistake in a sinkhole case and still not have to pay hundreds of thousands of dollars in attorneys’ fees.  I include a full copy of the opinion at the end of this post.

Facts

Omega, a Tower Hill company, followed the statutes from the beginning to end. Relying on a report from a professional engineering and geology firm, Omega initially denied the sinkhole claim. The homeowner hired an attorney, and that attorney hired an engineer to contradict Omega’s decision. According to the homeowner’s engineer, Omega’s engineer may have been wrong – there may have been sinkhole activity causing damage.

Instead of providing this report to Omega and allowing Omega to make a decision based on the new information, the homeowner’s attorney sued Omega, and then provided the report to Omega in discovery. As discussed below, Omega was entitled to rely on its engineering and geology firm’s report.

In response to the homeowner’s lawsuit, Omega submitted the case to neutral evaluation (which we know is mandatory), and the neutral evaluator sided with the homeowner – sinkhole activity may be the cause of the damage. In response to the neutral evaluator’s opinion, Omega agreed to comply with the neutral evaluator, accepted coverage, and tendered the policy benefits to the homeowner.

Now that there was no dispute, the homeowner made her next move: a motion for confession of judgment and attorneys’ fees.

Holding

The Fifth DCA determined Omega did everything right. By complying with every Florida statute for sinkhole claims, Omega did not do anything that wrongfully led the homeowner to resort to litigation. Accordingly, Omega did not have to pay the homeowner’s attorneys’ fees.

Takeaway

As you know, the homeowners insurers that are still litigating sinkhole cases rely very heavily on these arguments. In short, the argument is that the insurer is entitled to rely on its expert absent any competing reports.  When you combine that presumption with the confession of judgment doctrine, insurers believe that they should never have to pay attorneys’ fees when a homeowner’s attorney hides a report that could have led to no lawsuit in the first place.

You can bet these insurers are relieved that their hard work paid off in this case. With hundreds of thousands of dollars per case looming over every adjuster’s head on every case, a decision the other way would have been tough for these insurers to endure.

Of course, this outcome could have been different for a number of reasons- what if the homeowner did not have the report before filing the lawsuit?  Most homeowners’ attorneys would not make this same mistake today.

The Second DCA in Colella v. State Farm has a similar holding for insurers to rely on.  In Johnson, the Fifth DCA called Colella and Johnson “strikingly similar.”

For those remaining sinkhole cases (many have settled), homeowners insurers’ attorneys will have another tool in their arsenal.

The Big Takeaways

With sinkhole claims dwindling, the big takeaway here is that this logic can be applied to other types of insurance claims.  Johnson stands for the longstanding Florida proposition that homeowners need to give insurers a chance to fully evaluate the claim instead of “hiding the ball.” The sinkhole statutes may provide an added level of protection – the presumption of correctness – but the arguments in this case are undoubtedly applicable to any other case where the homeowner withholds information in her possession before she files the lawsuit.

Additionally, if you have been following along, you may have noticed that this is the third big sinkhole case in favor of homeowners insurers in the last two weeks. If you missed the first two, you better read them here:

Contract for Repairs Argument Upheld

2011 Statutory Structural Damage Definition Applies to Policies Issued After Senate Bill 408’s Effective Date


Did this Article Answer Your Homeowners Insurance Question?

If not, please contact us.


And here is the complete copy of the order:

Download (PDF, 78KB)

Florida Sinkhole Homeowners Insurance Update re Eleventh Circuit Rules that 2011 Structural Damage Statutory Definition Applies to Policies Issued After Senate Bill 408’s Effective Date

Florida Homeowners Insurance Claims and Litigation Handbook

Overview

Another hundred million dollar sinkhole insurance question has finally been answered: to deny a sinkhole claim, homeowners insurers can apply the 2011 statutory definition of “structural damage” to a policy issued after May 17, 2011 even if the insurance policy did not include the statutory definition.


(For a full copy of the order, scroll to the end of this post.)

In Shelton v. Liberty Mutual, the Eleventh Circuit issued a ruling that is extremely important for sinkhole claims reported for insurance policies that were issued after May 17, 2011, the effective date of Senate Bill 408.  Although Liberty Mutual’s policy did not have the statutory definition for “structural damage” written in the policy, the Eleventh Circuit held that Liberty Mutual properly denied a sinkhole claim by relying on the “structural damage” definition in the statute – Fla. Stat. 627.706(2)(k).

Liberty Mutual’s Arguments

Liberty Mutual argued that the statutory definition controlled, even though it was not in their policy.  Liberty Mutual argued that the statutory definition is incorporated into the insurance policy, regardless of whether it is an extreme departure from the simple definition in its policy.  As you know, this is the 2011 statutory definition of “structural damage;”

(k) “Structural damage” means a covered building, regardless of the date of its construction, has experienced the following:

1. Interior floor displacement or deflection in excess of acceptable variances as defined in ACI 117-90 or the Florida Building Code, which results in settlement-related damage to the interior such that the interior building structure or members become unfit for service or represents a safety hazard as defined within the Florida Building Code;

2. Foundation displacement or deflection in excess of acceptable variances as defined in ACI 318-95 or the Florida Building Code, which results in settlement-related damage to the primary structural members or primary structural systems that prevents those members or systems from supporting the loads and forces they were designed to support to the extent that stresses in those primary structural members or primary structural systems exceeds one and one-third the nominal strength allowed under the Florida Building Code for new buildings of similar structure, purpose, or location;

3. Damage that results in listing, leaning, or buckling of the exterior load-bearing walls or other vertical primary structural members to such an extent that a plumb line passing through the center of gravity does not fall inside the middle one-third of the base as defined within the Florida Building Code;

4. Damage that results in the building, or any portion of the building containing primary structural members or primary structural systems, being significantly likely to imminently collapse because of the movement or instability of the ground within the influence zone of the supporting ground within the sheer plane necessary for the purpose of supporting such building as defined within the Florida Building Code; or

5. Damage occurring on or after October 15, 2005, that qualifies as “substantial structural damage” as defined in the Florida Building Code.

The Homeowner’s Counterarguments

The homeowner made at least two arguments:

  • because Liberty Mutual’s policy did not include the statutory definition, Liberty Mutual could not rely on the statutory definition and, therefore, had to cover sinkhole claims if there was any damage to the structure.
  • this change in the “structural definition” was a change that required heightened notice to the policyholder.

The Eleventh Circuit’s Opinion

The Eleventh Circuit rejected both arguments.

The Definition is Incorporated

The court held that the statute is a part of the insurance policy and Liberty Mutual’s policy and should be read as if it were part of it. Unfortunately for the homeowner, the court does not go into great detail regarding why this can’t be considered a situation where the insurer offers more coverage than the statute allows. This argument – that the statute provides a baseline for the coverage required but not necessarily all of it – is usually homeowners’ attorneys’ favorite argument in situations like these. Interestingly, although the Court rejected the argument, the court did not go into great detail regarding why this did not apply here.

This Change in Policy Terms Did Not Require Heightened Notice

Second, there is an entire body of case law that can make insurers’ new policy provisions invalid if they failed to provide proper notice of material changes to the policy.  In other words, if an insurer drastically changes an insurance policy, it can’t call it a renewal because the homeowner might not ever notice the change.  Usually, if that happens, the insurer will be forced to apply the old parts of the policy if it failed to provide notice of the new terms.

  • Here, in Shelton, we had what most could consider to be a material change – a change in coverage from all sinkhole damage to only the worst forms of sinkhole damage.
  • However, the court used Fla. Stat. 627.43121 to state that this was a change in policy terms that was mandated by the legislature; therefore, it was not a “change in policy terms” as defined by the law, and it did not require heightened notice procedures.

Conclusion

So … all of those sinkhole claims may not be covered … and we are just finding this out now?

Of course, the Eleventh Circuit does not bind Florida state courts, and Florida’s appellate courts could take a completely different position. However, like yesterday’s post about the contract for repairs ruling, we are finding out this information a little late.

Unlike with the contract for repairs decision we discussed yesterday, this delay was outside of everyone’s control.  The statutory definition came into effect in 2011, yet the contract for repairs requirement arose years and years before that. For homeowners insurers to get a ruling on the statutory definition issue, they had to wait this long for it to go up the ladder to the Eleventh Circuit.

The vast majority of these claims – hundreds of millions of dollars worth of claims – are resolved. Thus, the impact is very limited.

Nevertheless, thousands of claims and lawsuits remain pending, and this case should give homeowners insurers and their attorneys a big boost in their arguments to resolve these cases.

Takeaway

Like the opinion in yesterday’s post, homeowners insurers would have been much better served if they had this opinion a couple of years ago. Unfortunately, homeowners insurers and attorneys had no choice but to let this issue linger in the federal system until now.

It will be interesting to see if Florida courts side with the Eleventh Circuit, or if they focus more on the argument that insurers are free to provide more coverage than the statutes.  For the good of the industry, hopefully that Florida appellate opinion comes out soon.


For More Information on Sinkhole Claims Updates …

For more information on some of the extremely important sinkhole claim updates, please read these articles:


Did this Article Answer Your Homeowners Insurance Question?

If not, please contact us.


And here is the complete copy of the order:

Download (PDF, 56KB)

Florida Sinkhole Homeowners Insurance Update Regarding the Contract for Repairs Argument Being Upheld

Florida Homeowners Insurance Claims and Litigation Handbook

Overview

One of the hundred million dollar sinkhole insurance questions has finally been answered by Florida’s Second DCA: even if the insurer denies a claim, homeowners are not entitled to coverage for the cost of subsurface stabilization repairs until they enter into a contract for those repairs.


McKee v. Tower Hill: the Rulings

In Andrew McKee v. Tower Hill, Florida’s Second DCA determined the following:

(For a full copy of the order, scroll to the end of this post.)

Subsurface Stabilization Repairs

  • The homeowner was not entitled to the cost of subsurface stabilization repairs because he failed to enter into a contract for those repairs.
    • Note #1: the Second DCA did not specify whether the homeowner could have entered into a contract during litigation or before the judgment.
    • Note #2: this is an important victory for Tower Hill because the homeowner likely argued that Tower Hill’s denial prevented it from entering into a contract for repairs.
      • The homeowner probably argued that it did not want to enter into a very large contract without assurances from Tower Hill that it would cover the cost. The homeowner probably also argued that Tower Hill’s denial was a breach that made the contract for repairs provision unenforceable.
      • Importantly, Tower Hill avoided these prior breach arguments and remained entitled to rely on the contract for repairs requirement.

Breach of Contract

  • Despite Tower Hill’s argument that the homeowner prematurely filed suit without complying with policy conditions, the Second DCA appeared to uphold a finding that Tower Hill breached the contract.  This is not 100% clear from the order.
    • Note #1: the Second DCA held that the sinkhole loss settlement provision and post loss conditions were conditions to the amount of coverage provided, not coverage itself.
    • Note #2: I have not had the opportunity to review the briefs, but based on the opinion, this leads me to believe that the homeowner may still be entitled to his attorney’s fees.
      • Why? Because he may have prevailed on the underlying breach of contract action, and he likely will be able to obtain a judgment for the coverage to repair the above ground, cosmetic damages.
      • If Tower Hill filed a valid Proposal for Settlement, though, then it may not be required to pay the homeowner’s attorney’s fees.
      • If the Court finds Tower Hill breached the contract, the attorneys fees at this stage could exceed $200,000.00.

Prejudgment Interest

  • Lastly, the Second DCA determined Tower Hill was not required to pay prejudgment interest for the subsurface repairs because, as noted above, the homeowner is not entitled to the cost of those repairs, and this was outside of Tower Hill’s control.

Conclusions

The Good News

This case clarifies the issues on a common set of circumstances in Florida sinkhole claims.

The Bad News

  • Too little, too late?: This ruling comes a bit late – tens of thousands of sinkhole claims have been resolved without any insurer taking this common, specific issue through the appellate process.
  • Expensive Unanswered Questions: The Second DCA is required to focus on the specific issue it is asked, and it will not give advisory opinions. This leaves a few important questions unanswered:
    • This ruling does not answer the question of whether a homeowner can enter into a contract during litigation.
  • Attorney’s Fees: Depending on some other issues outside of this ruling, Tower Hill may have “won the battle but lost the war” because they may be required to pay the homeowner hundreds of thousands of dollars in attorney’s fees … despite this favorable ruling.

Takeaway

You have to applaud Tower Hill and the homeowner’s attorneys for finally taking this issue this far up the judicial chain, and finally giving the the Florida homeowners insurance industry some guidance on this set of facts.  This ruling, however, would have had 100x the impact if it was issued 5 years ago, and comes with several limitations that make it hard to determine its overall impact on the remaining cases.


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And here is the complete copy of the order:

Download (PDF, 48KB)

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.


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Please contact us.


Florida Sinkhole Homeowners Insurance Update on Lobello v. State Farm

Florida Homeowners Insurance Claims and Litigation Handbook

Overview:

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

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


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

What do I mean by that?

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

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

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

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

Late Notice

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

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

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

Prejudice

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

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

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

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

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

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

Here is the complete LoBello v. State Farm order:

Download (PDF, 152KB)

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

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

Takeaway:

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

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


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