The Risk and Insurance Management Society (RIMS) has taken a strong stance against contingent agent and brokerage fees. A recent article in the National Underwriter Property and Casualty Online Edition suggests the debate of this topic may be heating up again.
Continue Reading..."Cheaper" insurance rates often mean far less coverage. In this world, you often get what you pay for. If there is ever a lesson to be learned about that, just ask those that live in the "Sinkhole Capital of the World," Pasco County, Florida. They can elect to get "Catastrophic Sinkhole Coverage" as ordinary coverage or get "Sinkhole Coverage" which is every bit as catastrophic where it counts--the ability to get back to where you started from--but covers damage from a slow moving sinkhole. The latter optional coverage is very expensive and covers Floridians from loss caused by most of the sinkholes that occur. The other coverage, which is much less costly, covers only very quick and substantial collapse sinkholes which happen once in a gazillion years to the properties owned by anybody. Guess which form the insurance industry wants to insure? BINGO!
Continue Reading...Imagine if our legislatures had truly knowledgeable insurance consumer advocates. Do you think the insurance industry would have tried to pass laws in Texas and Florida that allowed insurance rates to unfairly rise or allow immunity for wrongful conduct after a loss occurs like TWIA is attempting in Texas?
Continue Reading...State Farm is a tenacious opponent. "If you at first you don't succeed, try, try again" is a motto which must be emblazoned in bold letters somewhere in its Bloomington, Illinois, headquarters. But, down in the Sunshine State, some are criticizing State Farm for its creative methods of raising rates.
Continue Reading...One of the more interesting aspects of my job as an advocate for policyholders is learning from non attorneys what insurance products mean at the point of sale and how they are supposed to work after the loss. This may seem a little curious to many, but if you think about it, why would anybody trust a judge’s ruling on a medical malpractice case to explain how to practice medicine? Judges are not trained in insurance. Attorneys who say they practice insurance recovery law, but learn insurance coverage and practice only by reading legal cases are too arrogant and ignorant to be in it for the policyholder. Maybe those types of attorneys can find their way to the insurer’s employ, so my job is made easier.
Continue Reading...I wonder how concerned some insurance companies would be if they learned that one of their former managers who was responsible for claims conduct lawsuits spoke to a group of policyholder attorneys. After hearing and learning from such an individual yesterday, I have a new appreciation for how sophisticated the litigation management can be in some insurance companies and how important discovery involving improper insurance company conduct can be to success for my clients. I also wondered how much of a disservice some attorneys do to their clients by failing to invest time and money in conferences such as this.
Continue Reading...Most insurance policies contain a liberalization clause. Always look for them because a liberalization clause means that any change in the law broadening coverage would benefit the policyholder, even if the change happened in the middle of a policy period. One Florida court, however, recently took a narrower view on a liberalization clause's applicability.
Continue Reading...Coinsurance penalties are the last thing policyholders worry about following a loss. My experience has been that many field adjusters fortunately do not go through the costly calculations to accurately determine if a structure is underinsured. Thus, the penalties from being underinsured do not arise as often as they could.
Continue Reading...I was going to write on the fascinating topic of errors and omissions aspects of 100 percent coinsurance penalties, but the response to yesterday’s Post, Should the Rust Family Stay in State Farm's Power and Ownership Given the Recent Record of Policyholder and Corporate Citizen Ethics, requires some follow up.
Continue Reading...State Farm lost its most significant claims case while Ed Rust Jr. was the "owner/manager" of State Farm. Ed Rust Jr. was the person who ultimately decided that thousands of State Farm policyholders would be underpaid or denied benefits in Mississippi. He is the chief corporate leader of State Farm Mutual, the corporation that allows its wholly owned subsidiary, State Farm Florida, to essentially lie about its financial situation. Everybody—especially Rust--knows that State Farm Florida is paying millions that would otherwise be profits to State Farm Mutual. I suspect a number of highly qualified agents and claims adjusters wonder why there has been no change in the top management for two generations. After all, in the United States, we believe in earning leadership rather than being born into it.
Continue Reading...Amy Bach of United Policyholders commented on yesterday's post, The Obligation of Good Faith Claims Handling and Policyholders' Perceptions of Why it Does Not Happen, She wrote:
Continue Reading..."As usual, great point Chip. I helped write and pass a law in California that allows claimants to obtain claim related documents during the adjustment process. We tried to get a similar law passed in Louisiana after Katrina - and I've been thinking this would be a good concept to work on exporting nationwide...."
"How did you come up with that amount for my (or my client's) claim?" I was thinking of that question while taking the deposition of an Allstate corporate representative in an Indiana claims practice case, and how an insurance adjuster should honestly answer it. It is the same question millions of other policyholders, public adjusters, and attorneys ask insurance company representatives every day.
Continue Reading...In the last week, two Florida cases have been released which discuss prejudgment interest.
In Sunshine State Insurance Co. v. Davide, 34 Fla. L. Weekly D1422a (Fla. 3d DCA 2009), Florida’s Third District Court of Appeal held that when an insurer erroneously withholds a portion of a payment due, the insured is entitled to prejudgment interest on the amount not timely paid from the date the payment became due under the policy, not from the date the property was damaged. As I will explain at the end of the case summary, this case applies only to pre-2007 claims. On July 11, 2007, consumer friendly legislation took effect which would have provided Davide with a statutory right to interest from the date Sunshine received notice of the claim.
Continue Reading...As we have seen with the Katrina and Wilma litigation, courts will enforce the anticoncurrent causation clause, standard in most all risk and wind insurance policies. Many who suffered total losses could not fully recover because they did not have adequate flood insurance. Generally, policyholders with insufficient flood coverage limits fall into three categories:
We all enter into contracts everyday. Every time we buy a product, get a gym membership, or even renew a home insurance policy we sign and enter into contracts. What we usually don't do, however, is read the fine print. More often than not, these contracts we enter into everyday are what we like to call "form contracts." Form contracts contain standard terms of legal mumbo jumbo that most people think nothing about and proceed to sign without reading. Often the legal mumbo jumbo includes forum selection clauses. Forum selection clauses dictate where any litigation surrounding the contract will take place. Not only can this clause shlep any old person across the country to litigate a contract dispute, but this clause can be mandatory and dictate which jurisdiction's law will be controlling in the suit and consequently whether or not a court has jurisdiction to hear the case. Recently, one court stressed a forum selection clause's importance.
Continue Reading...The Florida legislature passed a law prohibiting Public Insurance Adjusters from soliciting business within 48 hours of a loss. Obviously, the lobbyists for the insurance industry were overjoyed with this law’s passage because it effectively allows the insurance companies and the insurance restoration industry to set the tone of the adjustment, without the typical policyholder having access to professional help.
Continue Reading...Coastal Mississippi policyholders are well served by the daily and in depth reporting by Slabbed. Writing daily for this blog is time consuming; posting two to five in-depth discussions each day must border on a full time job. Lately, Slabbed’s posts have highlighted two important issues regarding insurance coverage and insurance coverage litigation in Mississippi. One, if insurance companies want to pay nothing under the all-risk policy because of the anti-concurrent causation clause, a new form policy is needed--even if the government has to sponsor it. Two, the insurance industry is winning the lawsuits in Southern Mississippi because they are winning the discovery battle over key information.
Continue Reading...Last week I gave a speech entitled "How the Changing Insurance Market in Florida Affects Your Business" at a meeting of the Boca Raton Chamber of Commerce.
In order to make the most important point of my speech memorable, I started the speech by asking all the insurance agents in attendance to stand up. About a dozen or so did, and I am certain they were wondering what kind of lawyer trick I was up to.
Yesterday, we filed an amicus curiae brief on behalf of United Policyholders in the Florida Supreme Court. This type of legal argument is often called a “Friend of the Court” brief because it is not filed by a party to the lawsuit, but it is filed by a person or entity with an interest in the outcome of the case. In theory, amicus briefs provide courts with information needed to reach the right decision. Usually, amicus briefs address the public policy or state or nation wide effects of a legal decision, while the parties to the case focus solely on how the outcome will affect them.
Continue Reading...Policyholder attorneys should make a point to attend the day-long meeting of the Bad Faith Insurance Litigation Group which will be held on July 27, during the American Association for Justice Annual Convention in San Francisco. I Chaired this Litigation Group over a decade ago and regularly return to the meetings and learn information from colleagues helpful for my clients’ cases. If you represent policyholders and take your professional development seriously, this is a group you have to join--it makes you a better advocate for your client.
Continue Reading...An attorney from another law firm asked me whether an insurer is obligated to investigate facts supporting coverage in a property insurance coverage dispute. It is common for colleagues to share information and help when they can. It seems that the more one shares, the more one receives --usually with compound interest.
Continue Reading...(The recent State Farm Lloyds v Johnson decision from the Texas Supreme Court has generated a lot of debate within our firm. It is an important case, but it is important to remember that the Court warned that the record was not developed sufficiently to rule upon State Farm's arguments. Courts do not generally provide advisory opinions, and this opinion is particularly interesting because it addresses several hypothetical scenarios and how the law should be applied to each).
The facts involve a hailstorm that moved through Plano, Texas, in April of 2003, damaging the roof of Becky Ann Johnson's home. She filed a claim under her homeowners insurance policy with State Farm. State Farm's inspector concluded that hail damaged only the ridgeline of the roof, and estimated repair costs at $499.50 (less than the policy's $ 1,477 deductible). Johnson's roofing contractor concluded that the entire roof needed to be replaced at a cost exceeding $13,000. (These facts and degree of disagreement seem typical even for the losses we have encountered following Hurricane Ike).
Johnson demanded appraisal of the "amount of loss" pursuant to the appraisal provision in her standard-form policy, but State Farm refused to participate in an appraisal. State Farm argued that the parties' dispute concerned causation and not "amount of loss," so that appraisal was not appropriate. Johnson filed suit, seeking to compel appraisal. On cross-motions for summary judgment, the trial court agreed with State Farm that no appraisal was warranted. The court of appeals reversed. The Texas Supreme Court affirmed the court of appeals.
Continue Reading...On August 27, 2005, the Rocks' home and two vehicles were destroyed by a fire. The Rocks had a homeowner's and auto insurance policy with Guideone Mutual Insurance Company. Following the Rocks' loss, the Rocks filed claims with their insurer for damage to their home, damage to the contents of their home, and vehicle damage.
On July 31, 2006 Guideone denied the Rocks' insurance claims. Guideone denied the claims based on alleged material misrepresentations regarding Mr. Rock's criminal history on the homeowner's insurance policy application, and the Rocks' failure to comply with their contractual duties throughout the claim investigations, such as concealment regarding their claims, intentional acts, and failure to produce their children for examinations under oath.
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In April 2005, thieves climbed onto the roof of the Laws' building in Houston, Texas, tore off the exterior panels that housed each of seventeen air-condition units, and stole the copper condenser coils. Though the salvage value of the copper coils was only $2,000, the total damage to the air-conditioning units approximated $200,000.00. Underwriters denied coverage for the Laws' claim based on commercial policy's theft exclusion.
Continue Reading..."Should I Stay or Should I Go?" I imagine the State Farm claims employees and agents must be playing these classic lines from The Clash over and over. According to an article in yesterday's South Florida Sun-Sentinel, there is some speculation State Farm wants to stay and may try to politically strong-arm Florida into allowing it.
Continue Reading...We will be participating in a brand new Property Insurance Claims Conference this fall. The inaugural First Party Claims Conference (FPCC) takes place October 26-27, 2009, at the Crowne Plaza Hotel in Warwick (Providence), Rhode Island. A series of presentations, panel discussions, and interactive seminars will address significant issues regarding first party claims.
Continue Reading...Career insurance adjusters are important to society. The adjuster's job is difficult because it requires the ability to work well with other people, knowledge, and technical skills. It is a trade where experience can teach much more than any book or course. Most well meaning and experienced insurance claim adjusters get their customers’ claims paid without hassle and in a spirit of cooperation--sometimes well beyond the actual policy terms and conditions.
Continue Reading...Insuring to value is an important aspect of insurance. Most policyholders, especially condominiums, face significant penalties for not purchasing full replacement value insurance coverage. If a policy has a coinsurance penalty, any loss benefit will be reduced if property is not insured to full value. The reduction can be significant.
Continue Reading...After yesterday's post, “Leading Insurance Academic Proves State Farm Accepts "Reasonable Expectations" of Insurance Coverage,” I received an email from Jim Fortson, a marketing consultant who is married to our firm's Managing Attorney, Mary Fortson. Jim is always reviewing ads and marketing information to keep informed of current trends. I get many ideas for my blogs from readers like Jim, and thought I would share his with you.
Continue Reading...Professor Jeffrey Stempel is among the best legal writers of matters pertaining to insurance. When reading his work, I often think "why can't I explain my thoughts so clearly and eloquently?" Maybe that is why he is the insurance law professor, and I am in the middle of legal muck and controversies.
Continue Reading...I anticipate significant discussion and controversy regarding Citizens plan to remove the appraisal clause from its policies. Currently, many claims under Citizens policies go to appraisal because policyholders and Citizens disagree over the value of a loss. I suspect that many of these cases going to appraisal are those where policyholders hired public adjusters. Appraisals have become so common in Florida that the Windstorm Conference has classes on appraisal and a certification for umpires. An Insurance Appraisal and Umpire Association formed over the past couple of years.
Continue Reading...Suppose you were not such a good person and tried to pay less than you owed on several debts. There was a process to resolve those debts, and you repeatedly lost and eventually had to pay the debts. What would you do? Well, if you are Citizens Property Insurance Corporation and its Board of Governors, you change the rules, looking for a different resolution process to avoid paying the debt and the publicity of underpaying claims.
Continue Reading...Fire was the major peril insured by the insurance industry over a hundred years ago. In the tradition that is still commonplace today, insurers wrote specific exclusions into the insurance contracts which limited when they had to pay for loss caused by fire. I guess my friends along the coasts of Mississippi and Texas could relate when they found their all-risk insurance policies which cover hurricanes excluded damage from the waters that came with the hurricane.
Continue Reading...The insurance process works pretty well most of the time, with most claims resolved in a more or less acceptable manner. Most insurance company adjusters want to get the full amount of benefits to customers as quickly as possible, have the claim closed, and get a fair paycheck for their work. Most insurance company adjusters are initially taught good faith obligations of claims performance. There are a number of insurers and insurance company attorneys who truly seem to be engaged in good faith claims teaching, discussion, and review of problem cases. They try to get even bad faith claims resolved fairly and quietly.
Continue Reading...There is no place for fraud by a policyholder or public insurance adjuster when reporting a loss to an insurance company. At this week's Florida Association of Public Insurance Adjusters (FAPIA) summer conference, our law firm emphasized this message. Like insurance company and independent adjusters, public adjusters are bound by ethical standards. I was happy to see that the FAPIA leadership made ethical and professional behavior a prominent theme of discussion at the conference. Both policyholders and the insurance industry can benefit greatly from increased emphasis and enforcement of public adjuster professional and ethical standards.
Continue Reading...Don't you think Madoff would agree that society should throw a financial swindler in jail? I imagine most insurance executives think there should be consequences if they do the same thing. Shouldn't they agree that claims management practices which intentionally underpay must be punished by law as a matter of public policy? Who would not agree--unless you were part of a system that wanted cheating of policyholders to be "business as usual?"
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