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

Florida Homeowners Insurance Claims and Litigation Handbook

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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.

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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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