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

(Note: This Guest Blog is by Michelle Claverol, an attorney with Merlin Law Group in the Coral Gables, Florida, office. This is the sixth part in a series she is writing on business interruption claims).

A very insightful reader posted this comment to my blog last week, Understanding Business Interruption Claims, Part 5:

I'd guess that many small businesses, such as mom and pop stores, independent contractors, sales agents etc might not be able to benefit from this ruling if they don't project forward. Many small business owners are not trained in business management, and might not be aware of techniques they can use to plan their business success. 

Could the small business owner therefore have difficulty making a claim for projected earnings and expenses if they don't have a business plan?

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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 sixth part in a series he is writing on post-loss duties).

In Florida, as in other states, failure to give an insurer timely notice of a loss can provide an insurer with a potential basis for denying a valid claim. Ideal Mut. Ins. Co. v. Waldrep, 400 So.2d 782, 785 (Fla. 3d DCA 1981). This can be a harsh result for policyholders, but, as I mentioned last week, some jurisdictions such as Florida hold that the late notice must prejudice the insurer as well.

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Risk & Insurance^® recently ran an article, Paving the Potholes of Big Property Claims (updated), about large losses indicating that the claims process is anything other than perfect. Harvey Goodman, a public adjuster I mentioned in this morning's post, was quoted in that article. I first met Harvey Goodman at the Annual Convention of the National Association of Public Insurance Adjusters (NAPIA) at Carmel, California in 1985. I gave a speech about Proofs of Loss and Examinations Under Oath. Harvey is one of those people in the audience who raises his hand, often. He asks the tough questions with unique facts that are often situations he faces. Harvey is a past president of NAPIA and one of the finest public adjusters.

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My post, Appraiser Disinterest and Impartiality California Style, lead to a number of comments and opinions about the topic. Yesterday morning Terry Butler, Senior Legal Counsel to the Florida Insurance Consumer Advocate, reported on the various views concerning appraisal at the final session of the Windstorm Conference. Butler sat next to me at the January 6 Alternative Dispute Resolution Roundtable. I previously posted on that meeting in Impressions Following the Alternative Dispute Resolution Roundtable.

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Adjusters hate to listen to lawyers pontificate about case law. I know because of surveys we have done asking adjusters what they want to get out of presentations and how they best can learn. Instead, adjusters want lawyers that are making presentations to explain the practical implications of how they can better do their job.

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The Windstorm Conference is in full swing. I was introduced to an engineer, Bruce Holmes. He told me that he was very upset with his colleagues and others in the insurance industry. He asked if I could refer others to his website where he has a proposal for change and action.

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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 sixth in a series he and fellow attorney Tina Nicholson will be writing on Texas property insurance issues).

Insurance adjusters will never tell you that

[p]roperty damage estimates may look very rigorous, systematic, and scientific, yet these estimates reflect assumptions about how much labor time and expense is required to do certain work and how much material will cost. These assumptions can be wrong or inappropriate in any given case.

James J. Markham, Kevin M. Quinley & Layne S. Thompson, The Claims Environment, 1st ed. (Insurance institute of America, 1993) p. 176.

However, adjusters are trained to acknowledge this and are encouraged to work with the homeowner or homeowner’s representative to adjust the loss.

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(*Chip Merlin's Note:  This guest blog is by John Nixon, President and founder of Asperta, Ltd., an independent consulting firm focused on improving the quality of property insurance decisions by policy holders, agents, brokers, underwriters, reinsurers and investors.)

I’d like to offer your audience my perspective on Citizens’ proposed changes to their appraisal standards, which were released last week. These important changes are intended to address an increase in quality issues identified when appraisals are submitted as supporting documentation in underwriting applications. These proposed changes are in the consumers’ best interest.

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Winter and early spring storms often bring violent tornadoes into the south. A recent article highlighted how even insurance company adjusters know that many damages from tornadoes are often overlooked.

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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 fifth part in a series she is writing on business interruption claims).

As a matter of general practice in business interruption claims, the insured's books and records are admissible and its accounting practices are to be considered in determining the actual loss sustained. However, the “books” are not necessarily controlling in the valuation determination. The valuation should be determined in a practical way, with regard to the nature of the business and the methods employed in its operation, giving practical effect to the intentions of the parties and the purpose of the insurance as evidenced by the terms, conditions, and provisions of the policy. AmJur Insurance, § 1533 (2010).

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The Windstorm Conference starts tomorrow in Jacksonville. If you represent policyholders or insurers with hurricane claims, you have to be there, since hurricanes are the largest windstorms. It provides an opportunity to learn from those actively engaged in all aspects of the hurricane insurance claim experience.

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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 fifth part in a series he is writing on post-loss duties).

With the prevalence of supplemental claims, especially in Florida, one issue that has been coming up recently is the requirement that the insurer receive timely notice of a loss. Many times, these supplemental claims are made years after the occurrence (Hurricane Wilma for instance), and some insurers are denying coverage for the damages and refusing to participate in the appraisal process. Their argument is that they did not receive timely notice of the damages and the length of time has substantially prejudiced their investigation of the claim.

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The FC&S Bulletins should be subscribed to by all insurance adjusters and agents. It recently issued a strong suggestion that insurance agents, brokers and risk managers review Earth Movement and Earthquake insurance clauses.

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Water pipe breaks arise from all kinds of situations. Following Hurricane Hugo in South Carolina, I represented a number of hotels that were being repaired and then had significant water damage caused by a freeze before the heat could be restored. This winter's cold weather reminded me of these losses, and I came across a couple of articles explaining the severity of them and suggestions to prevent the occurrence.

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The Merlin Law Group will host a fundraising event next Tuesday night to help Frank Artiles in his campaign for a seat in Florida’s House of Representatives. The fundraising reception will be held at the Hyatt Regency Jacksonville Riverfront Presidential Suite 1830 from 10:30 P.M. to 1:30 A.M. It is intended to be after the Windstorm Conference events and dinner, when some may be looking for late night fun.

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A Hurricane Ivan claim that involved flood and sewer back up was not excluded because of the anticoncurrent causation clause in Bishops, Inc. v. Penn National Ins., Case Nos. 2275 WDA 2007, 35 WDA 2008 (Pa. Super. Nov. 24, 2009). The important aspect of this case is how an endorsement purchased to cover sewer back up rendered the anticoncurrent cause clause ineffective for sewer back up as well as income and extra expense coverage. Some decisions are quite easy to analyze, while others make you read portions of a court's reasoning two or three times. This case is the latter. My tip for policyholders from this case is to always review your endorsements to see if additional coverage is provided.

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Bill Berk called me yesterday regarding the upcoming Windstorm Conference next week. During our discussion, he mentioned that his partner, Evelyn Mercahant, won a trial for QBE against a condominium association represented by a very good trial attorney, Daniel Rosenbaum. The Association was seeking millions, but the jury awarded zero.

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QBE Insurance Company is becoming quite prevalent in the news and legal case decisions in Florida. While reviewing other blogs, I came across Dennis Wall’s two blogs, Insurance Claims Issues and Insurance Claims Bad Faith, to which I suggest that many readers of my blog subscribe. While my feeling is that much of what he writes is a viewpoint of insurance that slightly favors excuses for denials and delay of claims, it is an excellent source worthy of reflection. His recent post, Collateral Source Rule Held No Bar to "Other Insurance" Policy Evidence, helps demonstrate both points.

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Dr. Martin Luther King, Jr., is one of my modern-day heroes. I can still remember the night of his death when we lived outside of Washington, D.C. My father returned home early from Coast Guard headquarters and remarked that the burning and riots in downtown were exactly the opposite of what Dr. King stood for. His leadership of significant social change in such a courageous manner is why, in part, we celebrate today.

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Imagine the same magnitude earthquake that pummeled Haiti striking greater Los Angeles, San Francisco, Portland or Seattle. Are enough people insured for this event? Are there enough skilled adjusters ready for the valuation issues specific to earthquake damage? While there is almost no private insurance in Haiti providing a financial buffer from its earthquake disaster, many along our Western coast do not appear willing to insure for this peril.

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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 fourth part in a series she is writing on business interruption claims).

Assume you own a hotel at a fabulous location on South Beach. The hotel has two suite-towers and a swanky three-star Michelin restaurant in the hotel lobby. One day, the fine restaurant was consumed in flames and the hotel sustained a significant decrease in room occupancy after the fire. Can the hotel claim business interruption benefits as a result of the fire in the restaurant? Maybe.

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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 fourth part in a series he is writing on post-loss duties).

Last week, I received a great question regarding my post, Who Can Accept My Notice of Loss. The entire question and my response are rather long to re-post, but the gist of the question was:

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I appreciate all the comments to posts from readers with various perspectives on insurance coverage and the insurance claims industry. I read them all, try to respond when I can, and honestly consider the viewpoint of those writing. This morning, I came across a comment worthy of consideration by all of us regarding mediation and alternative approaches to insurance claims dispute resolution.

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I love insurance agents. In my view, along with a good banker, lawyer, accountant and doctor, the next trusted person for business and personal matters that one should have a long term relationship with is an insurance agent. Unfortunately, many insurance company cost cutters, probably the types I mentioned yesterday in Don't Forget Visa at the Winter Olympics and Expect it, Rather Than Cash, From Your Insurer, want to save on agent costs and now suggest customers shop and learn about insurance purely online. This method of insurance selection is akin to representing yourself in court or self diagnosis of major medical symptoms with just as devastating financial and personal consequences. Learn about insurance on the internet, but buy through a knowledgeable and reputable insurance agent is my strong advice.

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I wonder whether the water fountains at some insurance companies are spiked. Certainly, it must be some pretty potent stuff where the employees who came up with this cost saving gimmick work. I mention this because of a story, P&C Insurers Can Pay Claims With Prepaid Visa, N.Y. Rules, in the National Underwriter which noted:

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The 2010 Windstorm Conference is quickly approaching. I noted in my earlier post, The 2010 Windstorm Insurance Conference, the following:

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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 fifth in a series he and fellow attorney Tina Nicholson will be writing on Texas property insurance issues).

Yesterday, Michelle Claverol and I had the honor and privilege to speak before a large crowd of public adjusters at the Florida Association of Public Insurance Adjusters (FAPIA) Winter Conference. As Michelle and I were preparing for the presentation, “Tales From the Dark Side,” it occurred to me how difficult and challenging the job of an insurance adjuster is, whether representing the insurance company or the insured. I had felt this way before, about 15 years ago, while sitting in my cubicle working as an adjuster for Crawford & Company out of the Miami office. It’s been nine years now that I have been practicing law as both a defense and plaintiffs attorney, and in those nine years, I had not taken the time to reflect on my life as an adjuster until three days ago.

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Why do so many of our politicians play to the lobbyists and support laws that harm the average person and voter? This is exactly what has happened with important laws sponsored by the insurance industry lobbyists and then proposed by Florida Senator Mike Bennett of Bradenton and Representative Bill Proctor of St. Augustine. These politicians and other Florida political leaders have sponsored a law that would allow insurance companies to raise the rates of Florida policyholders as much as they want. Indeed, the law they support allows for insurance companies to collude with each other, since it calls for the complete deregulation of rates. As the insurance industry is exempt from anti-trust regulation, based on a bargain it made with the federal government in which it agreed to state regulation of rates, the insurers would be legally exempt from all regulation. Is this stupid or what? Do the Florida political leaders supporting this law think people will be happy when their rates go up 100% in a couple of years, or is this just a payback to the insurance industry and their lobbyists funding certain political action committee dollars? Or, giving them the benefit of the doubt, do they really understand the issue?

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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 third part in a series she is writing on business interruption claims).

In simple terms, business interruption insurance is intended to return to the insured's business the amount of profit it would have earned, had there been no interruption of the business or suspension of its operations as a result of a covered loss. However, as with all property insurance claims, causation is a crucial element of the claim and all coverage issues should be addressed at the outset.

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The Florida Association of Public Insurance Adjusters’ (FAPIA) winter conference starts today. On its website is a link to a summary judgment motion filed in a lawsuit I noted in Second Public Adjuster Constitutional Solicitation Ban Challenge Filed. In the summary judgment was an amazing statistic that, if true, would certainly indicate that policyholders need professional help when dealing with their insurance claims:

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The editors of Slabbed deserve some type of honor. What do they get for all the education about events of the day they provide? My hat is off to them. All of us are the better for it.

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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 third part in a series he is writing on post-loss duties).

While speaking to a potential client about a agent negligence claim, she told me that the individual she believed to be her agent for the past three years had turned out to be the real agent’s secretary. This struck me as extremely odd, especially since the woman had referred to the secretary as her agent in the secretary’s presence and had never been corrected. While this situation likely seldom arises, it does highlight a very important point, mainly, that most individuals are not very familiar with their insurance company and the hierarchy of employees and agents.

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Barry Zalma writes some interesting and worthwhile property insurance coverage articles. While most of his work centers on insurance fraud, his recent article, "When is An Appraiser Disinterested?" has implications for consideration in Florida as well.

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The Fire Casualty, & Surety Bulletins (FC&S Bulletins) had a simple vandalism claim that highlights a major difference between all risk coverage versus named peril coverage. Here is the coverage question posted with the significant language of the question bolded:

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There are times when I am troubled about what I write on this blog. This is one of them. I know that many people are going to read this who have very different viewpoints. When a number of people tell you in advance that they look forward to what you are going to write, there is some tendency to write for the readers rather than having the courage to just place what is in your heart on paper. There is no way I can write about all my thoughts, but I will share points.

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In a widely read previous post, Florida Public Adjusters File Lawsuit to Overturn 48 Hour Solicitation Ban and Fee Caps, I noted how a lawsuit in Miami-Dade County challenged the fee cap and solicitation ban on public adjusters. The State challenged venue, and in a recent order, the trial court denied the change of venue.

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The appraisal clause should not be removed from Florida insurance policies. The concerns of insurers and policyholders can be addressed if we simply do two things:

1.  Mandate that the appraisal clause remain in all property insurance policies.

2.  Pass legislation which provides the safeguards for a fair procedure while allowing the parties to make the process as formal as they need to insure due process and still reflect the desire to avoid the time and expense of litigation.

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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 fourth in a series she and fellow attorney Javier Delgado will be writing on Texas property insurance issues).

Most Texas policyholders do not know what the law requires of insurance companies in regard to responding to a claim. The “Prompt Payment of Insurance Claims” statute in Chapter 542 of the Texas Insurance Code imposes certain deadlines on insurers for responding to, investigating, and accepting or rejecting claims. An insurer that violates the statute must pay, in addition to the amount owed on the claim, the insured’s attorney fees as well as “damages” of 18% per annum. In order to recover attorney fees and the 18% interest, the policyholder must show that (1) the policyholder had a claim under the policy; (2) the insurer is liable for the claim; and (3) the insurer failed to comply with a requirement of the statute. The purpose of the statute is to “promote the prompt payment of insurance claims pursuant to policies of insurance.” Tex. Ins. Code Ann. §542.054.

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This Wednesday will be the Roundtable discussion regarding appraisal. It will be significant and I urge anybody with an opinion or interest to write to Sean Shaw, the Insurance Consumer Advocate. You can also watch the roundtable at WFSU Florida Channel and call into the conference at 1-888-808-6959 Code: 4132880.

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Gary Rowland made a comment to my post, The End of a Year, an Eight Year Bad Faith Case and People Whose Lives We Touch, which made me appreciate that some of what we write is helpful to others. Frankly, I am fairly certain that we get a lot more out of what we learn from writing than what you may gain from reading. I am often in awe of the number of very bright and very capable people in this business that have unique expertise on some very isolated issues. The learning never stops.

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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 second part in a series she is writing on business interruption claims).

If you are reading this entry, you are probably familiar with the loss adjustment process of a claim. It is the period of time an insurance carrier has to investigate a claim, make a coverage determination, set its reserves and value the claim that was presented by its policyholder. The loss adjustment process is a necessary evil. The world would certainly be a happier place if insurance companies wrote checks for the full amount claimed immediately after a loss. However, I would not be writing this entry today, and insurance companies would not be executing their fiduciary and statutory duty of investigating claims to prevent wasteful spending of their premiums.

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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 second part in a series he is writing on post-loss duties).

Normally, the first post-loss obligation that a policyholder encounters is the duty to provide an insurer with notice that a loss has occurred. While policies and the statutes of the particular jurisdiction vary, both tend to spell out the procedure by which notice should be delivered. Both are important sources of information and it is necessary to read and understand them.

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Insurance advertisements have never been more entertaining. While perusing the net for information regarding Safeco and Liberty Mutual, I came across a number of insurance company television advertisements. We often use ad firms to find and pull the ads of some of our opponent insurers. It can be done cheaply through YouTube.

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