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

I am writing this flying back to Tampa from Indianapolis following an arduously long and contentious bad faith case that our firm has been involved in for eight years. It is cold and snowing in Indianapolis as we leave. Our clients, co-counsel, opposing counsel, judge, special master, and opposing insurance claims managers are all smiling despite one side paying more than what could have settled the matter long ago and our side wondering if we settled for far too little. Such is the nature of insurance bad faith lawsuit resolution.

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Dan Luby of the Florida Insurance News forwarded an article to me, "United Property & Casualty Insurance Company Appraisal Clause." Dan does a fantastic job on relevant insurance news events in Florida and his piece today demonstrates the ongoing trend of appraisal clauses being removed from property insurance policies.

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The issue in this case was whether the amended sections of Florida Statute sections 627.7065, 627.7072, and 627.7073 (2005), which affected database information, testing standards, and reporting requirements for sinkhole claims, created a presumption that shifted the burden of proof to the homeowner to disprove an insurer’s expert’s opinion that damage was not caused by a sinkhole or whether it created a presumption that vanished once a homeowner produced evidence that a sinkhole damaged his or her property.

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Miami Herald reporter, Bea Garcia, wrote a very important story, Tackling Contentious Insurance Issues, concerning Insurance Consumer Advocate Sean Shaw. It appears the Roundtable meeting I wrote about in Alternative Resolution Roundtable: Appraisal is the Hot Topic and Is There Any Chance that Appraisal Will Stay the Same in Florida?, is going to be an important last meeting before Shaw takes stances on how Florida legislators should deal with current insurance consumer issues:

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(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the tenth and final part in a series she is writing on valued policy laws).

In general, business interruption coverage is supposed to provide the capital needed to sustain a business while its operations are suspended as a result of damage caused by a covered peril.

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(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the first part of a serieshe is writing on post-loss duties).

When dealing with insurance claims, it is important for there to be ongoing communication and cooperation between the policyholder and the insurer. This relationship is generally to share and obtain information necessary for the insurer to make a fair and prompt determination of whether coverage exists. In the context of a first party claim, the insurer needs information relating to the circumstances of the loss as well as the amount claimed. Similarly, the policyholder needs to know the status of the claim and what he or she could do to help the insurer’s investigation. There are a number of post-loss duties which are necessary to foster this cooperation between the insurer and policyholder.

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Imagine if you were a corporate Risk Manager that selected Liberty Mutual or Safeco and the insurer did not pay fully or promptly on a claim. What would you say to your CEO after that happened? Your job should be at risk if you could not answer that question.

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A governmental entity is fictional in the sense it is a creature created by law. Corporations are similar, but they may act for personal gain, whereas governmental entities are supposed to act "for the people." Citizens Property Insurance Corporation appears to claim in court arguments that it is a governmental entity. Yet, when it comes to acting as an insurer, it certainly wants to be free of governmental constraints.

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In a post last September, State Farm Agents are Fighting State Farm for Economic Survival, I wrote:

"Again, for many different reasons, I hope McCarty and State Farm can work out a deal."

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Over the past several weeks I have had a number of public and private discussions with attorneys and public adjusters about the appraisal process. My post last week, Alternative Resolution Roundtable: Appraisal is the Hot Topic, had a comment from Mike Rump that I thought was worth sharing as this debate rages on:

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(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the ninth in a series she is writing on valued policy laws).

Sometimes, if not most of the time, a covered peril will only cause partial damage to a structure. For example, let’s pretend an insured inadvertently drops an object on his tile floor and the object cracks a single tile. For the sake of argument, let’s assume that the policyholder has continuous tile throughout the house, and that due to the age and style of construction, a matching tile is no longer available on the market.

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(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the twelfth of a twelve part series he is writing on proof of loss).

Over the last twelve weeks I have covered many of the issues regarding Proofs of Loss, and I wanted to end the series by covering some of the common mistakes and thoughts for avoiding them.

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In a blow to policyholders, Florida’s Fifth District Court of Appeals found that Citizens is not subject to bad faith lawsuits. The Court concluded:

In summary, we hold that Citizens is immune from first-party bad faith claims pursuant to section 627.351(6)(r)1. Likewise, we hold that Citizens is not subject to bad faith liability under section 624.155(1)(b)(1), as that statute is not applicable to it.

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I have been asked to participate in a roundtable discussion regarding alternative dispute resolution processes by Sean Shaw, the Florida Consumer Advocate.

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(Note: This Guest Blog is by Robert Reynolds, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the thirteenth of a thirteen part series he is writing on examination under oath).

“You know the insurance company is going to cut the estimate in half, so you have to pump it up.”

I can’t tell you how many public adjusters have expounded this philosophy to me. As I tell them all: do not go down that road, as it is a slippery slope. First, if the estimate is significantly higher than the carrier’s evaluation of the claim, SIU (Special Investigative Unit, the fraud division) becomes involved. This will now offer your client the unique opportunity to undergo a fraud investigation. What will this entail? Well, the policyholder is guaranteed to be asked to sit for examination under oath and all of the fun that goes along with that endeavor. So, this begs the question: what may the policyholder expect at the EUO of a suspected inflated claim?

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The Florida Office of Insurance Regulation (OIR) has entered a Consent Order today resolving the attempt by State Farm to leave the Florida property insurance market.

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(Note: This Guest Blog is by Javier Delgado, an attorney with Merlin Law Group in the Houston, Texas, office. This is the third in a series he and fellow attorney Tina Nicholson will be writing on Texas property insurance issues).

In the last blog I posted regarding our litigation against Texas Windstorm Insurance Association (TWIA) and the exchange of documents, Current Status of TWIA Discovery for Hurricane Ike Claims in Galveston County, I briefly explained the discovery process in a first party litigation case. In the usual order of discovery, documents are exchanged and then the attorneys take depositions of each party. Due to the thousands of cases filed against TWIA, it was necessary to coordinate these depositions much in the same way that it was necessary to exchange discovery documents.

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Why should any United States citizen be deprived of the ability to work any where in the Union? Our founding fathers asked the same question and made such state laws unconstitutional.

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(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the eighth in a series she is writing on valued policy laws).

Whether selling a commercial, homeowner, marine or other insurance rider, most insurance agents spend their days advocating the importance of insuring property with replacement cost coverage. Although this type of coverage is at times pricier than its “market value” counter part, replacement cost coverage will protect the property’s value against the dreaded depreciation due to the passage of time. However, sometimes the replacement cost option (new for old) is not the best choice for certain types of property.

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(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the eleventh of a twelve part series he is writing on proof of loss).

Recently, I was handling a case where I felt the insurer had waived its right to a Proof of Loss. In this particular case, the insurer initially demanded a Proof but when the policyholder contacted the adjuster to inquire about the specific requirements, the adjuster specifically told the client the obligation was being waived. Furthermore, the insurer had made a partial payment before the Proof was requested (which can be considered waiver under Florida law), and continued to negotiate the claim after the timeframe for filing the Proof expired.

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Charles Miller is a respected insurance claims expert whom I have retained as a consultant and testifying expert on various matters over the past decade. I enjoy debating and discussing various insurance claims and coverage issues with him.

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Floridians currently have legislators that are in the pockets of and doing business for insurance companies. Virtually all states regulate insurance rates because insurance companies have been historically notorious for over charging customers following losses, as well as for under charging customers before declaring bankruptcy.

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(Note: This Guest Blog is by Robert Reynolds, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the twelfth of a thirteen part series he is writing on examination under oath).

Yesterday I had a meeting with a public adjuster who was referring me a theft loss. As we discussed the claim’s facts and circumstances, I became very skeptical. According to the PA, the policyholder had some health issues and went to the hospital for a few days only to return home to find he had been burglarized. Unfortunately, a good portion of the tale did not make a whole lot of sense. The insured claimed that the thieves stole furniture and power tools, but not the cases for the power tools. This just does not add up. That is, most burglars are petty criminals or drug addicts looking to pilfer items they can fence for quick cash: jewelry, electronics, etc. What is a filch going to do with a table and chairs? Trust me, furniture is not readily pawned; nor, for that matter, is it easily and stealthily removed from a residence. As it turned out, the policyholder did not show up for the meeting, so I did not have the opportunity to ask questions. This begs the questions: what should an attorney or PA ask the potential client about a suspicious theft loss and what should they expect at the examination under oath (EUO), which will inevitably be requested by the insurance company?

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Note: This Guest Blog is by Tina Nicholson, an attorney with Merlin Law Group in the Houston, Texas, office. This is the second in a series she and fellow attorney Javier Delgado will be writing on Texas property insurance issues).

“You have to learn the rules of the game. Then you have to play better than anyone else.”
--- Albert Einstein

There are, obviously, many more than five rules for achieving success when representing a policyholder on an insurance claim. Dedicated insurance professionals, such as the lawyers in our firm, can spend their entire careers learning this area of the law.

Sometimes, however, people become consumed in the details and neglect essential principles. It is a good idea, from time to time, to check that we have touched all the bases. Accordingly, here is a quick review of five important principles.

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I am always looking for "an edge." Just something to get a better chance of winning for my client--like all good litigators. This morning's post, Chinese Drywall Losses Covered Under First Party Property Insurance Policy, mentioned how going to a NAPIA Conference can give a policyholder's advocate that type of "edge." Let me explain how a few lessons by Ed Eshoo's lecture can help everybody making arguments for disputed coverage claims.

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A guest lecturer at the National Association of Public Insurance Adjusters Mid-Year Meeting last Friday predicted that courts will find at least some of the damage caused by Chinese drywall to be covered under a first party property insurance policy. Ed Eshoo gave the lecture, "First Party Property Insurance--Chinese Drywall Claims."

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(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the seventh in a series she is writing on valued policy laws).

When a building has been damaged or destroyed by a covered peril, a policyholder may face an additional loss because building laws and ordinances governing the repair, reconstruction, or demolition of the insured property can significantly increase the costs. In most instances, these laws and ordinances will require that the repairs or reconstruction of a damaged structure comply with current building codes.

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(Note: This Guest Blog is by Corey Harris, an attorney with Merlin Law Group in the Tampa, Florida, office. This is the tenth of a twelve part series he is writing on proof of loss).

As discussed briefly in my previous blog, (What Happens if a Proof of Loss is not Submitted, is Incomplete, or is Inadequate?), when an insurer receives a Proof of Loss it must either accept or reject the Proof. Initially, the insurer has the right to review a submitted Proof of Loss and make its own determination as to the submission’s sufficiency under the policy. However if the sufficiency is disputed, the final determination will be a question for the court to decide. It is important to note, however, that the insurer should only reject a Proof of Loss for technical reasons and not simply because it disagrees with the amounts being claimed. These technical errors usually include failing to sign or notarize the Proof and/or failing to provide proper supporting documentation.

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Our firm is currently running a survey of all Liberty Mutual advertising in Texas since Hurricane Ike struck as part of litigation we have against it and Safeco. Modern insurance companies compete for customers through advertising. Many make some pretty bold statements in the advertisements to win our hearts and minds.

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(Note: This Guest Blog is by Robert Reynolds, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the eleventh of a thirteen part series he is writing on examination under oath).

Back in the days of yore when, in true Gunga Din fashion, I hauled the man’s water defending insurance companies I was a fraud specialist. Every claim I handled had some indicia of fraud. And, believe me, if you or your client walked into the room for an examination under oath and I was conducting that day’s EUO, you were in for a long, difficult ordeal. I would move heaven and Earth to prove the fraud. But on the occasion when the facts bore out that there either was no fraud or there was no evidence to prove the fraud by clear and convincing evidence (the burden the carrier must establish in court to uphold a fraud denial, which is a higher standard than the normal preponderance of the evidence in civil court) I would actually tell the carrier to –please be seated before reading this next line— PAY THE CLAIM. Imagine that. Unfortunately, in today’s climate all too often when a claim comes across the inside examiner’s desk it seems the only tool provided by the carrier to evaluate the claim is a rubber stamp with the word “DENIED” and a red ink pad. With that being said, what should public adjusters expect when a claim is being investigated for fraud? Specifically, carriers love to shake the fraud stick at fire claims. What questions may be anticipated at an examination under oath of a suspicious fire claim?

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(Note: This Guest Blog is by Javier Delgado, an attorney with Merlin Law Group in the Houston, Texas, office. This is the first in a series he and fellow attorney Tina Nicholson will be writing on Texas property insurance issues).

“WHAT DO YOU MEAN YOU CAN’T TELL ME EVERYTHING THAT YOU HAVE LEARNED ABOUT TWIA?”

No, this is not a typographical error. There are many things that we have learned about Texas Windstorm Insurance Association (TWIA) and many things that we cannot openly discuss.

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