Property Insurance Coverage Law Blog : Florida Insurance Lawyer & Attorney : Merlin Law Group Law Firm : Tampa, Houston, Coral Gables, Gulfport

Why has there been an explosion of contractors specializing in insurance disasters and losses over the past fifteen years? Most would probably say that the motivation to enter that trade is very profitable. My experience from depositions and discussions of those in the business has been that it is. Often, profits range from forty to fifty percent of the total billed. I have been legal counsel to numerous policyholders caught in the middle where the retained insurance contractor is in a dispute with the insurer over the scope and amount of billing for work allegedly performed. I am concerned about situations where an insurance restoration company is hired without competing bids from other contractors; it is often nothing other than a losing proposition for the insurer and the policyholder.

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When somebody starts talking with you over dinner about which part of the brain makes you worry that something bad may happen to you and talks with sentences that seem to have "cognition" interspersed frequently with "cortex," you know to skip cocktails. The person speaking with me was Alaska attorney, Don Bauermeister. He is a person of study and reflective brilliance. We discussed how the techniques of insurance claim settlement and trial presentation can be studied and implemented for the purpose of helping our policyholder clients.

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Insurance defense attorneys argue the exclusionary language of the anti-concurrent causation  clause should be broadly interpreted because they have to get their insurance company clients “off the hook” for making wrong coverage interpretations. It is important for those attorneys representing policyholders to have a full library to combat these arguments. One such source is the FC&S publications. Those clever defense counsel are sometimes out of luck, despite their ingenious arguments, when insurance industry sources indicate that they are wrong.

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Why do insurance companies get to play the float in some jurisdictions? After all, most regulations and good faith duties require prompt payment. Without penalties or awards of prejudgment interest, rules of promptness become meaningless because there is no accountability for claim delay.

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After my presentation this morning at the National Institute of Insurance Bad Faith, some attorneys in the audience asked that I publish the "simple steps" I gave them. Here they are for all policyholder attorneys to consider and use to help their clients:

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Where are our insurance consumer advocates? Are they publicly wanting to appear one way to get their constituents’ votes, but then voting another way behind closed doors? This is my concern, because otherwise the last bill placed before Governor Crist would never have appeared. My powerful, worthy, much richer, and able State Farm lobbyist, Mark Delegal and other similarly powerful interested insurance industry lawyers show how the insurance industry has already set out its agenda on the insurance consumers of Florida in a recent article:

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The longtime spokesperson of the Insurance Information Institute and advocate for the insurance industry, Bill Bailey, recently passed following a fight with cancer. Bill Bailey was a keynote speaker and supporter of the Windstorm Network. He participated in field observations and discussions regarding every major hurricane since Hurricane Andrew. He raised awareness regarding the social importance of insurance and need for better communications between all following major disasters.

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Imagine a situation where a butcher sliced some meat you ordered, weighed your cut, and then told you that you owed $43.79—but refused to tell you how he calculated the price. Would you simply agree and pay the butcher? Of course not. But this is what happens all the time when insurers refuse to turn over engineering reports or honestly explain how evaluations of damage were arrived.

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Insurance defense attorneys will not agree with this post. However, they fear the argument enough to falsely argue in some cases that a hurricane is not a “windstorm,” in order to avoid policy language that may provide coverage for total losses where wind and water combine to destroy a structure. As promised in yesterday morning’s post, The Insurance Industry Recognizes Hurricanes are "Windstorms"--An Important Admission, I am providing legal suggestions to help TWIA policyholders and others “slabbed” to obtain full coverage for their losses. Randy Santa Cruz, William Weatherly, and I came up with this idea while working in Mississippi following the devastation of Hurricane Katrina. I've attached a draft memorandum of law so others may use this argument with their own facts and policy language.

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Zurich Insurance Company has a new web site, Zurich HelpPoint Windstorm. Zurich’s risk engineering and claims groups recently unveiled a micro-web site which provides Zurich customers and distributors with tools and information to help them prepare for, and recover from, “windstorm” events in North America. Some insurance company attorneys have been arguing that a “windstorm” is only the “wind” part of a hurricane and not the entire tropical cyclone that has wind, storm surge, and everything else that causes damage from a tropical windstorm. Their clients know better, but it does not prevent defense attorneys from arguing this unsupported bad faith position.

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Where would I be if insurance companies paid claims fully and promptly or if those smart insurance defense attorneys were not scheming ways to protect their clients when they failed to do so? That answer this Sunday afternoon is probably with my sailing buddies, and not editing a complaint and researching the concept of “materiality” of insurance contract performance. This question and answer also leads to where would Ali be without Frazier? Namath without the Colts? The Yankees without those loathsome Red Sox? The Parks Chastain’s of the insurance defense world without the Chip Merlin’s of the policyholder world???

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Last week’s post, What does a Property Insurance Coverage Policyholder Lawyer Think About the Day After a Def Leppard Concert?, should have had this title. But while writing that blog, I was not focusing as completely as a I should have been on this exciting area of insurance coverage law. Slabbed paid me some compliments in its post, We will not now allow defendant to raise as a defense plaintiff’s failure to perform an act which defendant itself greatly hindered plaintiff from performing…, and suggested that others in Mississippi cite to the cases noted in my post. So, to prove that there is a little more legal support than just two cases and that maybe Mississippi jurists have been a little too lenient letting State Farm and other insurers escape replacement cost obligations through their failure to fully or timely pay actual cash value benefits, I am following up with this post.

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Imagine a government could make arbitrary decisions about your rights without question. Do you think that would happen in China or the United States? Well, if it involves your national flood insurance policy, it has been happening in the United States for a long time. One federal judge has seen through the unfairness and called a halt to this practice in the recent case of Thomas L. Moffett v. Computer Sciences Corp., et al,. Civil No. 05-1547 (Md. D. Ct., July 6, 2009).

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Why do insurance company attorneys tell their insurance company clients that they can abuse their policyholders with legal immunity? In my opinion, that is exactly what Parks Chastain has done in his post, Advances - Common Misconceptions. In his post, Chastain claims the following:

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A recent consumer interest article written by Elizabeth O’Brien in SmartMoney, Could Insurance Reform Lower Your Premium?  highlights another insurance crisis involving the disappearing availability of insurance in disaster prone areas. I recall a lengthy interview with O’Brien. I do not recall the following highlighted quote noted in the article, although I do not deny saying it:

“Although rates have leveled somewhat in recent years, it hasn’t gotten much easier to insure a home in the hurricane zones from Florida to New Jersey. New this year, Florida’s state-owned insurer Citizens is telling some policyholders to make costly repairs to their roofs or to add storm shutters or risk losing coverage. The insurance issues aren’t unique to hurricane-prone states. Homeowners who live along the New Madrid fault that runs through parts of Missouri, Tennessee and other states have trouble securing affordable coverage because of their perceived earthquake risk. “Insurance companies are a strange breed,” says Chip Merlin, an attorney who represents policyholders in Tampa, Fla. “It’s amazing how they try to avoid writing insurance in places where the risk could happen.”

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Following yesterday’s post, What is a Bad Faith Claim? Or, When Does an Insurance Claim Wrongfully Handled Become a Bad Faith Claim?, there were a couple of posts suggesting that class action lawsuits were the answer to wrongful claims practices. Frankly, most policyholders are more successful financially with individual cases than through class action cases in insurance matters. Many class settlements are nothing other than the insurer buying its way out of a bigger mess and paying off attorneys looking for a big payday. Our firm is very selective about class matters because of the “good for the attorney’s pocket versus bad for the client’s pocket” conflict.

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I was asked this question by a public insurance adjuster after a "top secret" settlement conference with a major insurer in Houston last night. It is an excellent question, and I will give some general guidance.

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Merlin Law Group will host a seminar in Houston, Texas, for public insurance adjusters close to the anniversary of Hurricane Ike. I promise that this will be dedicated to a "lay of the land" regarding tips and strategies for public insurance adjusters to service policyholders with quicker and fuller resolutions. Appraisal and the processes and techniques to obtain a better recovery will be taught and a special analysis regarding TWIA practices will be provided.

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One of the more successful professional organizations that I have been involved with over the past decade is the Windstorm Network. Insurance defense attorney, Janet Brown, conceived the idea. It has an Umpire Program that provides classes for certification for the appraisal of property insurance disputes, an Umpire Directory, and a Code of Ethics, which has been approved by the general membership of the Windstorm Network.

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Michael Jackson’s event cancellation policy has a bit of history and is still very much in play according to a couple of news articles that have been forwarded to me. Last March, The UK Guardian ran a story, Michael Jackson Promoters Struggle to Find Farewell Tour Insurance, depicting problems with Jackson and his promoters finding event cancellation coverage:

AEG Live, the promoters behind the concerts, are "still negotiating" with insurers, they said this week. While AEG were able to insure the initial 10-day run – worth about £80m – insurers are less enthusiastic about covering seven months of dates stretching from July 2009 to February 2010. Fifty concerts would require around £300m in cover.

The insurers' reluctance is easy to understand. The longest O2 arena residency has been taken out by a 50-year-old who has not toured in 12 years, was rumoured to be dying last year, and is nicknamed, well, Wacko Jacko.

But Randy Phillips, chief executive at AEG Live, reassured sceptics. "He's in great shape," Phillips told the Telegraph. "The insurance brokers sent doctors and they spent five hours with him, taking blood tests."

AEG Live are prepared "to self-insure to make up the dates", Phillips emphasised. "It's a risk we're willing to take to bring the King of Pop to his fans."

"He's a vegetarian," Phillips said. "They're healthy, right?"

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Following up on yesterday’s post, What does a Property Insurance Coverage Policyholder Lawyer Think About the Day After a Def Leppard Concert?, there has been some debate in the insurance press regarding the 2009 Michael Jackson Tour. Phil Gusman has three articles in the National Underwriter Property & Casualty on the topic: Will Insurers Pay For Jackson’s Concerts?; Michael Jackson’s Death Raises Event Cancellation Issues; and Insurers Could Question Jackson Pre-Concert Physical Results. Based on the articles, Jackson would have had a physical examination as a requirement of the insurance.

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How about, “Where’s the Advil?” My wife commented Friday night that all my “edgy” friends must also enjoy this genre of rock because the concert was sold out. Just as she made that remark, a thunderstorm struck. Being the nerdy insurance coverage lawyer that I am, and even though my thoughts were straying just a little at the time with the rather bizarre visuals that accompany a Def Leppard concert, I thought, “if the power cut off and the concert cancelled, would there somehow be coverage afforded under an insurance policy?”

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I was forwarded a lawsuit by Art Newman, who is the current president of the Windstorm Network. The suit is regarding activities that Newman conducted as an Umpire to an appraisal. A policyholder that was not pleased with the appraisal award sued Citizens Property Insurance Corporation and Art Newman.

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I once told an Allstate Insurance Company adjuster that if forced, I was going to sue over a very small matter, less than a thousand dollars, because it simply was not right that Allstate was taking “betterment” deductions on the adjustment of an automobile comprehensive coverage loss to a friend of mine. This small county court case eventually resulted in a significant class action settlement in Florida in excess of $20 million dollars. I have no idea why some insurance companies do not try to settle earlier and would rather wait until the information uncovered results in a bad situation getting worse. Unfortunately, unless the litigation fortunes of one public adjusting company changes dramatically on appeal, a seven thousand dollar fee dispute could cost many public adjusters millions in class action lawsuits.

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As this is being posted, I am providing an ethics seminar to Florida public adjusters along with Merlin attorneys Bob Reynolds and Michelle Claverol. This follows my earlier posts on the topic, Public Adjusters Sued in Class Action for Wrongful Conduct--Are Unauthorized Practice of Law Class Action Suits Next? and Public Adjusters Targeted by Lawyers for Overcharging Policyholders.

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I just finished a two day settlement conference of a commercial insurance claim dispute held on the 51st floor of Fulbright & Jaworski in Houston. The view from the conference room was beautiful and in juxtaposition to the manner my client felt the insurance claim was handled. As is becoming customary for many of my cases, the terms of the settlement are confidential. The resolution ended very amicably, although the process was somewhat frustrating. The significant aspect to others is this was a matter whose facts are similar to, and seem repeated in, thousands of other Texas losses, no matter if the loss is small or a complex middle eight figure claim. Insurance claim denials and delays seem commonplace in Texas.

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Dan Luby of the Florida Insurance News forwarded a Blog, Alex Sink's Cold War with the Insurance Commissioner, by Gary Fine regarding a possible “riff” between Alex Sink and Kevin McCarty. I find this curious because the two of them are leading consumer advocates for policyholders. I have never found Bill McCollum, Sink’s opponent for Florida Governor next year to be a supporter of policyholders. He is clearly the insurance industry’s candidate. Yet, the Blog noted:

“Interestingly enough, Attorney General Bill McCollum - and Sink's likely rival for the governor's office in 2010 - praised McCarty's report, saying that Floridians should be "very pleased" with the amount of surplus lines coverage since it has helped decrease the need to have commercial coverage picked up by state-created insurers.”

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A South Florida law firm is apparently looking for cases where a number of public adjusting firms have allegedly overcharged policyholders. I was forwarded an email over the weekend and was then provided a copy of the legal advertisement that literally named a number of public adjusting firms.

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I will be attending and speaking at a very interesting seminar for attorneys regarding wrongful insurance claims practice at the Wynn Las Vegas on August 26-28. The 360 Advocacy Institute is sponsoring the "Insurance Bad Faith and Settlement Institute." I agreed to attend after speaking with Richard Slawson about having nationally recognized presenters who will talk about their perceptions of what cutting edge "bad faith" really means to attorneys who deal with insurance companies.

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Claim delay and failure to timely pay undisputed benefits are the most frequent complaints of policyholders. Many understand when an insurer cannot pay legitimately disputed amounts following an honest, prompt and thorough good faith investigation. But what happens when portions of a loss can be paid but are not for reasons that are not based on good faith?

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Two significant pieces of information show a continued trend in the property insurance business and suggests that insurance customers should not rely on the loyalty of their insurance companies. An article by Bea Garcia in the Miami Herald, Florida May Gut Discounts for Hurricane Shutters highlights the industry wide issues raised by State Farm’s requests to eliminate discounts and “recalibrate” the terms of previously granted discounts for measures taken to protect structures from hurricane damage.

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Yesterday’s post, Appraisals Better Be Won Because They are Difficult to Overturn--Even if Unfair in Result or Procedure, generated a comment which I spent considerable time thinking about and responding to last night. I appreciate everyone that takes time to post comments to this blog. Many regular readers are from insurance companies, independent adjusting firms, insurance defense counsel, and those with interests and opinions often opposed to mine . The free exchange of ideas is important. True learning often results from the difficulty of understanding and respecting different views and philosophies.

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Imagine entering into a contract to build a structure to specifications with your fee, the fair value, to be determined at the completion of the project. If a disagreement over the value could not be resolved, each side selected a “competent” person to determine the fair value. If the chosen persons could not agree, a third person enters the evaluation, and an agreement of any two of the three bound you as to the amount you would receive. You have no right to depositions, to testify, to critically analyze the opposing experts or even have experts appear live to explain to the three why you are right and the other side wrong. Sounds crazy, but this is the binding process of appraisal common in the property insurance disputes. Many Courts uphold it as a fair process to resolve differences. My advice to policyholders: WIN THE APPRAISAL ANY LEGAL WAY YOU CAN BECAUSE THERE IS LITTLE LIKELIHOOD OF OVERTURNING A BAD APPRAISAL AWARD.

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I appreciate the kind comments and suggestions many readers express regarding the educational nature of this Blog. Our new law firm website also has many reference materials and some funny news videos of yours truly trying to comment on a variety of legal issues.

If you have any comments or suggestions regarding our new website, please direct them to Kendra Kenney. We are always looking to improve.

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As a follow up to Sunday’s blog, Is Property Insurance Propaganda and its Impact on Public Policy Similar to What the Health Insurance Industry Does?, I have linked to an interview Wendell Potter gave to Democracy Now!, that aired on July, 16, 2009. In this fascinating and engaging interview, Potter explains why he decided to become a whistleblower, and he details the media strategies behind some of the health insurance industry’s biggest embarrassments and most publicized tragedies. He also talks about how the health insurance industry is now consolidated in just a few companies, how it rids itself of risky (sick) policyholders, and the scare tactics they use to influence public opinion and maximize profits.

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Just a reminder, my post, FEMA Grants An Additional 60 Day Extension For Ike And Gustav Victims To File Flood Proofs Of Loss, indicated that the deadline for having Flood Proofs of Loss in the hands of the flood insurers is on Friday, August 7, 2009. Please check for any changes and bulletins. In another prior post, A Warning Regarding Federal Flood Proofs Of Loss, I indicated:

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We are preparing for the August 13 Public Insurance Adjusters Ethics Seminar that I announced in Merlin Law Group Hosting Public Adjuster Ethics Seminar Followed by a Political Fundraiser for a Public Adjuster Running for Public Office. A draft of the presentation makes for some fairly informative reading regarding the limitations and ethical considerations of adjusting in Florida.

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I was thinking about the question of property insurance trade associations and lobbying while reading today’s St. Petersburg Times article, At what Cost Care? The article was a question and answer discussion with Wendell Potter, who was a public relations executive for two major health insurers. Potter has given an inside view into the political and social power of the health insurance industry in a manner most Americans probably deplore. I wonder if property insurers are different? I doubt it.

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Every now and then, Courts follow the rule of law that insurance policies are supposed to be interpreted as a regular person would do so—not as a trained insurance law expert would interpret them. In DEB Associates v. Greater New York Mutual Insurance Company, 407 N.J. Super. 287, 970 A.2d 1074 (N.J.Super. A.D. June 1, 2009), the court granted coverage for the increased costs of construction caused by pre-existing building codes. The court followed this rule.

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