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

David Pettinato won a motion to have an appraisal award confirmed yesterday. His case, Nationwide Mutual Fire Insurance Company vs. John Francisco, No. 2:08-cv-277 (Fla. MD March 30, 2010), relied extensively on another case we argued and won at the trial level and Eleventh Circuit Court of Appeal, Three Palms Pointe, Inc. v. State Farm Fire and Casualty Co., 250 F. Supp. 2d 1357 (M.D. Fla. 2003), aff’d 362 F.3d 1316 (11th Cir. 2004). David's recent case and Three Palms Pointe, which I started working on a decade ago, are instructional about many of the appraisal coverage issues which routinely arise.

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David Pettinato and I were having a discussion about our law firm yesterday afternoon. The one thing that I promised him was that change would be constant as we strive to do our jobs better and improve our service. In February, David Pettinato suggested that I contact policyholder attorney Shaun Marker, since I indicated we needed to provide better service to clients and referral sources in the Palm Beach County area. Following a Press Release, I am proud to announce that the Merlin Law Group has opened an office in West Palm Beach with Shaun Marker.

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Following yesterday’s post, Claims Jobs are Disappearing and One Suggestion for Insurance Career Safety, I received a number of private emails concerning my note that insurance adjusting was a “noble” business. I also had a number of public adjusters asking about and reminding me of the certifications offered by NAPIA for public adjusters. These private emails deserve some attention and highlights.

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The economic slowdown has many concerned about job security. This is also happening in the insurance claims business. Bob Hartwig, President of the Insurance Information Institute, gave a speech at the Property Insurance Loss Research Bureau Annual Claims Conference explaining that there has been a sharp decline in the amount of claims positions, as indicated in a published story by Claims Magazine, Claim Adjusters Hit Hardest by P&C Employment Drop:

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

In general, 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. However, business interruption coverage ought not be used to put the insured in a better position than it would have occupied without the interruption. Most policies will therefore typically exclude coverage for any consequential (or remote) losses, delay, loss of use or loss of market, which do not directly flow from a covered loss.

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

I have been getting numerous calls from homeowners and public adjusters regarding supplemental claims from Hurricane Wilma. While many of these claims are getting paid promptly and properly, many are not. There are a variety of reasons that these claims are being denied, but the predominate problem I run across is that the insured does not have a record of the repair expenses for work previously performed.

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Stupidity is what will kill this country. Financed real estate transactions cannot occur in some parts of the country without flood insurance being purchased on the structure. Such insurance is difficult to find in the private market. As a result, the National Flood Program exists. But, it can only exist if Congress allows it, and Congress has left for its Easter vacation without passing legislation allowing the National Flood Program to operate.

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The Florida House of Representatives appears to be following the lead of the Florida Senate regarding public adjusting. As noted last week in Amended Florida Public Adjuster Bill Passes in Florida Senate Banking and Insurance Committee, significant amendments to the original language of proposed legislation regulating public adjusters is moving through the Florida Senate. These amendments and proposed laws appear to be approved by committee action yesterday afternoon in the Florida House of Representatives. In my view, public adjusters should be prepared for these significant changes to become law because similar language is running simultaneously in both chambers of the Florida legislature.

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Peter Thomas is one of those people that have the unique ability to think deeply about a wide variety of subjects, figure out how they interplay and then how that information impacts various people and entities in the future so he can make money in his business. It is no wonder he has been long successful in reinsurance and is a Managing Director of Willis Re. He was our moderator for the panel discussion, "The Legal Threats," I mentioned in my post yesterday, Insurance Insolvency & Reinsurance Roundtable Annual Seminar.

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AAPIA’s lobbying efforts in the Pennsylvania Legislature have been successful. As I mentioned a week ago in AAPIA Defends Rights of Public Insurance Adjusters in Pennsylvania Legislature, AAPIA was lobbying against a proposed amendment that would make certain instances of neglect or incompetence a third degree felony. A new version of the amendment to Pennsylvania HB 1736 criminalizes only willful conduct and involves only certain serious violations of the statute.

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(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell are writing on sinkhole issues). 

Insurance companies have come up with a whole new excuse not to pay covered sinkhole claims. The recent trend has been to deny payment on confirmed sinkhole losses by arguing the damage is not "structural" damage as defined by Florida Statute 627.706.

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The 17th Annual Insurance Insolvency & Reinsurance Roundtable invited me to participate on a panel discussion today in Scottsdale, Arizona. The panel is advertised to discuss "The Legal Threats." I suppose I am on the panel, which usually consists of insurance company attorneys, because somebody has to be the token policyholder attorney who actually files the lawsuits that may impose reinsurance demands or insolvency. While I am hopeful that the clients who trust their insurance disputes to the Merlin Law Group may have claims against carriers that have reinsurance, insolvency is the last thing we ever wish for an insurer. It's bad for everybody's business.

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A recent order from Galveston County regarding the TWIA litigation specifically names the TWIA representatives who will be deposed and the manner in which the depositions will take place. Suffice it to say that it is no easy challenge preparing for these depositions (see attached order). As members of the Plaintiff’s Ike committee, the members of our firm have read and catalogued thousands of TWIA documents, emails, correspondence and forms in preparation for these depositions. We are expecting more as the depositions start.

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The Texas policyholder bar representing Texas "Slabbers" met yesterday in Galveston. The bottom line for those with the most significantly destroyed buildings is that these cases and the litigation discovery is being coordinated and will be moving much quicker.

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I have long found it odd that insurance companies, especially policyholder owned companies such as State Farm, allow their lobbyists to lobby against the interests of their policyholders. A recent article, Does Industry Lobbying Pose Ethical Challenges?, by Dr. Peter R. Kensicki, CPCU, raises this issue. Kensicki is an insurance professor and has been in a leadership position on the ethics committee of the Society of CPCU and has written many insurance ethics articles.

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With the unfortunate increase in foreclosures that have occurred because of the poor economy, it is important to understand the two basic clauses protecting lienholders. It is also important to appreciate the significant protections provided to those lienholders holding the loss payable clause known as the "standard" or "New York" loss payable clause.

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

In this business, everyone has their own style of “working a claim.” There are, however, healthy techniques of claim presentation that practitioners should follow to effectively present a business interruption claim.

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

Over the past few weeks I have written about the necessity of mitigation and the potential consequences of not doing so. Two weeks ago in Consequences of a Policyholder's Faiiure to Mitigate, I wrote that it was important for policyholders to obtain help from experienced professionals in the event of a large loss. While my list of potential professionals was not intended to be all-inclusive, a comment reminded me that I failed to mention that policyholders could call their agent or carrier directly if they had any questions about what was required under the policy.

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There are two great things about making fifty-one. First, I do not think I am any longer going to hear, "so, you made it to the BIG FIVE-O!" Second, it beats the alternative.

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The Florida Senate Banking and Insurance Committee passed an amended bill regarding public adjusters yesterday. It is different than the legislation previously proposed and noted Monday in Public Adjuster Senate Bill on Banking and Insurance Committee Agenda.

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The American Association of Public Insurance Adjusters (AAPIA) testified and presented an amendment to a proposed bill before the Pennsylvania House Insurance Committee yesterday. The bill was tabled to consider the proposed amendment. Gene Veno President of AAPIA made the presentation before the committee and reported that he:

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Amy Boggs wrote a post yesterday, Sinkhole Repairs: Where's the Grout?, that was followed by a story, Florida Sinkhole Reappears after Rain, which demonstrates that she is right--grout is not the proper method to fix most sinkholes:

A 20-foot sinkhole in Clermont, Fla., opened up this Monday between two homes, and the recent heavy rains could be to blame.

In 2001, a sinkhole appeared in the same spot and was filled with cement. It has now reopened and is causing some concern.

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(Note: this Guest Blog is part of a series on sinkhole issues).

We are seeing an increasing number of cases involving the ineffective repair of sinkholes. I had a recent case where the homeowner repaired the property pursuant to the carrier’s recommended repair method, which called for grouting only. When the grouting failed to correct the problem, the carrier re-tested the property at our request. After drilling 65 feet below the surface, they found no evidence of the 270 cubic yards (27 truck-loads) of grout that they had previously pumped under the house. The homeowner and I were left asking: Where’s the grout? After the testing, the carrier re-thought its initial position that the repairs had been effective.

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Many in my office laugh at my collection of insurance company memorabilia. We have old insurance advertising records, magazine advertisements dating back to the 1920's, shirts, hats, coffee mugs, decks of cards, and a long hallway covered with old insurance advertising signs. Our library has insurance books written by and about insurance companies and the insurance industry. Many of these are a century old.

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The Sarasota Herald-Tribune conducted a year long investigation into the manner Florida insurance companies diverted premiums and monies as expenses and losses to hide actual profits. This revelation is probably shocking to many who have been told repeatedly that the Florida insurance industry is losing money as a result of "unfair" rates and for other claims related reasons.

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Gaps in coverage and uninsured losses occur for a number of reasons. Most policyholders are not in the insurance business. They have a very limited understanding of the product they are buying and how risks they face may be insured. In Property Insurance Resolutions for 2010, which follows Concerns and Resolutions for Property Risk Management in 2009, published in the IRMI.com, William Austin makes the following observations:

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Florida Senate Bill 2264 has been set on the agenda of the Banking and Insurance Committee Agenda this Wednesday. This is the same legislation that was filed in the Florida House of Representatives as HB 1181.

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

In these tough economic times, many businesses are looking to cut expenses and trim their budgets. While it is tempting to reduce insurance coverage to minimize operating costs, business owners should not skimp on insurance protection to trim budgets, particularly when it comes to additional coverages like Extra Expense Coverage.

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

I recently took the deposition of an independent adjuster who worked on behalf of one of the larger insurers in the state. While most of the deposition was pretty standard, I was shocked when the adjuster said that he had advised the homeowners to stop making temporary repairs to their home. When I asked him to explain why he did not think it was a good idea for temporary repairs to the roof and exterior of the building to be completed, he answered that coverage had not been established yet and he did not think the repairs should be made until it was.

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In Louisiana, the answer is probably “yes.” The FC&S pondered this question in its March 2010 Dec Page report titled, “Recovery Under Flood Policy and Homeowners Policy?” The highlighted case was Lightell v. State Farm Fire & Cas. Co., 2009 WL 4505942 (E.D.La. 2009). The article noted the significant facts and issues as follows:

The insured suffered property damage due to the wind and flood caused by Hurricane Katrina. They collected partial payment of their policy limits from both the homeowners and flood insurance policies. Believing that the payments were not indicative of the extent of the actual damage to the home, the insured filed a lawsuit against the insurers. State Farm, the homeowners insurer, filed a motion for summary judgment.

State Farm asserted that the insured is estopped from recovery related to wind claims because he previously alleged that he was entitled to flood policy limits due to the total destruction of the property. And, the insurer said that the insured has the burden of proving the damage was caused by wind (a covered loss) as opposed to flood (not covered).

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An Order by the Office of Insurance Regulation shows one method some Florida insurers may use to “poor mouth” losses to the public and our legislators in Tallahassee while taking millions home through shell accounting techniques. Many of the smaller insurers operate as three corporations--the insurer, a managing general agent, and a holding company. It does not take a financial genius to figure out that investors and managers can siphon off profits by simply charging excessive fees through the managing general agent. The insurance part of the jointly owned enterprise then claims it cannot make any money for various reasons which we have been hearing about in the press and from some insurance lobbyists looking to raise rates and reduce benefits to policyholders.

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(Note: This Guest Blog is by Kristin Demers-Crowell, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series that she and fellow attorney Donna DeVaney are writing on sinkhole issues).

Two weeks ago I wrote on the three ring circus that Florida’s statutory neutral evaluation of sinkhole claims has become. Fla. Stat. 627.7074. This follow up blog focuses on the “down and dirty” reasons why the process is unfair to policyholders.

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The Florida legislature is a difficult place to navigate. The place is an adult maze, and it takes effort to find the right room. Possibly, the logistics are a warning to novice citizens such as me that actually try to have some small input regarding the laws we agree to abide.

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"You gotta be kidding me" is probably being repeated by many after reading the title to this post. I wrongfully wrote about Representative Janet Long without giving her an opportunity to explain her concerns and longstanding advocacy for policyholders when she worked as a Deputy Insurance Commissioner in a Florida Department of Insurance Branch office. Before the spotlight of politics and public life subjected her to criticism without an ability to fully explain the purpose of the laws she proposes, her job in the Florida Department of Insurance required her to talk with and help policyholders upset about every imaginable wrong that could possibly befall an insurance consumer. I should have been more diligent in my research of her before jumping to conclusions about the framework for her views in this very public blog.

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In this case, the Shoopmans’ home was substantially damaged by fire. After they filed a claim, Allstate investigated the causes of the fire and suspected the fire was the result of arson and that an “insured person” was involved in the arson and/or concealed or misrepresented material facts relating to the loss. Allstate filed an action, asking the Court to declare that the Shoopmans are not entitled to coverage under their homeowners policy. The Shoopmans filed a counterclaim, alleging violations of the Unfair Claims Settlement Practices Act (“UCSPA”) and the Kentucky Consumer Protection Act (“KCPA”), for bad faith in handling their claim. At issue in this opinion was Allstate’s motion for summary judgment. 

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Matt Gaetz is running for a seat in the Florida House of Representatives. His chances of getting elected have become better since former Governor Jeb Bush provided his endorsement to Gaetz. Here is Gaetz commenting on the endorsement:

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Florida Supreme Court justices seemed as bewildered as I when policyholder's counsel explained last Thursday that he was not arguing a "bad faith" case. I will be the first to say that a "bad faith" case is really a lack of "good faith" case since the standard is whether the insurance company breached the obligation of good faith and fair dealing. While I understand what the very accomplished appellate attorney, Bruce Rogow, was trying to argue, I wish his argument had been more simple and to the point because he confused me. I am afraid he may have alienated the Court with his very esoteric argument about a good faith breach of contract issue in a first party insurance situation.

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

Last weekend, I took a little break from blogging to spend time with my parents and siblings to reconnect and reinforce bonds that sometimes get loosened in the life of a dedicated young attorney, who perhaps wants to accomplish too much, too soon in life. While I learned that family bonds are unbreakable and that I can accomplish anything I want in life, Chip, who I am convinced has a clone, blogged about an interesting topic in business interruption claims that generated some debate.

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

Think about this for a moment. A homeowner accidentally leaves something in the oven before heading off to the mall for an afternoon of shopping. Unfortunately for our hypothetical insured, that once tasty treat has caused a substantial fire which destroyed part of the house. Under almost all homeowner’s insurance policies, these damages would be covered despite the fact that the fire was caused by the insured’s negligence.

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The poor policyholders whose homes cracked, popped, and dipped as a result of sinkholes induced by citrus farmers spraying their crops to prevent freezing damage should be happy it happened to them this year. Newly proposed anti-consumer sinkhole legislation would limit policyholders to 25% of their coverage limits for the most common sinkhole problems.

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The Florida Senate Banking and Insurance Committee has a number of very intelligent and very well meaning members. Two of them, Senator Rhonda Storms and Mike Fasano stood up yesterday to the insurance lobbyists who know little about insurance, but a lot about propaganda and politics. Full time and professional insurance lobbyists have one agenda--achieve their clients agenda. They have an army of lawyers, a ton of money, and their message is "spin" at its finest. No wonder so many public servants can get snowed by the misinformation and insurance industry proposed laws.

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(Note: this Guest Blog is by Donna DeVaney, an attorney with Merlin Law Group in the Tampa, Florida, office. This is a series that she and fellow attorney Kristin Demers-Crowell are writing on sinkhole issues). 

The last time I wrote, I stressed the importance of maintaining sinkhole coverage on property located in Florida and I explained the very restrictive application of catastrophic ground cover collapse coverage. Now, I want to stress the importance of properly completing the insurance application.

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Texas is where "the game" is being played regarding insurance coverage disputes in 2010. The Windstorm Insurance Network will hold its second Texas Insurance Symposium on May 11, 2010, in Dallas, Texas, where many of the issues related to windstorm coverage will be discussed. Certainly, the coverage issues raised by Hurricane Ike litigation will be highlighted.

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If you are a policyholder, don’t expect prompt payment of replacement cost benefits and payments for damage to older roofs if Florida Senate proposed legislation passes. A proposed bill filed as a substitute that will be heard in the Florida Senate and Banking & Insurance this Wednesday was just released this afternoon. I have not had an opportunity to review it in detail, but a number of anti-consumer provisions are contained within this proposed legislation.

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Departments of Insurance throughout the United States regularly conduct examinations of insurance company claim files. These are known as Market Conduct Examinations. The Claims Spot recently noted in 5 Claims Issues Cited for Non-compliance on Market Conduct Exams & 3 Tools to Avoid Them, recurrent wrongful claims practices by insurance companies since 2006 that are not being corrected by the insurance industry. Those highlighted wrongful practices were listed and then explained to be correctable with "basic" action:

1. Failure to acknowledge, pay or deny claims within specified time frames
2. Failure to pay claims properly (sales, tax, loss of use)
3. Improper documentation of claim files
4. Failure to communicate a delay in the settlement of claims in writing
5. Use of unlicensed claims adjusters or appraisers

All of these findings could have been avoided with enforcement of best practices and an internal review process. With some basic actions, a company can minimize or eliminate their risk of being out of compliance.

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