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 Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. This is part of a series she is writing on Examinations Under Oath and Public Adjusters).

In my post last week, I explained the new provision in Citizens’ homeowners policy and received many comments that address great issues.

In Part I of this series, I posed several questions for discussion:

1. What happens if the Public Adjuster refuses to sit for an EUO?
2. Is the Public Adjuster always required to give an EUO?
3. Can the Public Adjuster fill the shoes of the policyholder and give the only EUO?
4. How can the statements given by the Public Adjuster during an EUO change a claim decision?

I want continue evaluating these questions and pose a few more. How each of the questions can be answered depends on many factors. Discussing this policy change is important because it can change the way a claim is presented and the obligations of those involved.

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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). 

Keith Turner, a fellow attorney from California, forwarded me a novel and interesting court opinion from his home state that may change the typical business interruption rhetoric.

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The Merlin Law Group has started a legal blog about the insurance issues that arise with Condominiums. Condominium law is an area where a little experience leads to the conclusion that there is a lot more to learn. Condominiums have unique insurance issues which we felt could better be addressed in a separate blog.

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Insurance agents should use two recent events to encourage their clients to purchase flood coverage. The recent Nashville Flood is one example of how quick generally unaffected areas can be swamped from rain. The other is the upcoming 2010 hurricane season, which meteorologists seem to predict as a windstorm Armageddon.

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(Note: This guest blog is by Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. She will be writing a guest blog series on Examinations Under Oath and Public Adjusters).

After taking a look at the new Citizens Property Insurance Corporation policy, which potentially requires a non-party to sit for an examination under oath, lots of discussion has started and some of the same main themes keep coming up.

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The Texas hurricane insurance coverage disputes caused by Hurricane Dolly and Hurricane Ike are fully engaged. Texas’ two year statutes of limitation are approaching. New law suits are being filed, pending lawsuits are being set for trial, settlement conferences are causing great frustration, and the discovery battles between insurance counsel and policyholder counsel are considerable and contentious. Sadly, this is a pretty normal state of affairs on a two year anniversary following a major catastrophe.

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Jay MacDonald, of Bankrate.com, read a number of our posts and interviewed me regarding insurance coverage issues pertaining the BP Oil Spill. In his insurance blog post, Will Homeowners Insurance Absorb Oil?, he noted a number of my observations concerning the major issues facing policyholder insurance claims resulting from the BP Oil Spill:

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On Bloomberg, I gave a television interview regarding the legal and financial aspect of claims and lawsuits which are being generated as a result of the BP Oil Spill. Lost profit and business interruption claims and disputes are not novel to those of us with commercial first party insurance claims experience. Every Sunday, Michelle Claverol, in our Coral Gables office, posts about lost profit cases, which often involve complex accounting and economic issues. The BP Oil Spill is causing an epidemic of these financial loss claims, which will largely be brought as third party claims under the Oil Pollution Act of 1990.

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(Note: This guest blog is by Sergio Leal, an attorney with Merlin Law Group in the Houston, Texas, office).

The appraisal process has been around for a long time, and it is not going anywhere anytime soon. In fact, records indicate that the Texas Supreme Court has enforced appraisal clauses in insurance policies as far back as 1888. Typically, appraisal clauses do not specify a time frame for when a party can invoke the appraisal process. Many of you out there might think that this means that a carrier can invoke the appraisal process whenever it wants. However, that is not necessarily the case.

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Dennis Wall's weekend post, Florida Civil Remedy Notice Insurer Violation Holding: "Sufficiently Specific" Requirement, raises an important issue concerning bad faith cases in Florida. While the Florida Supreme Court ponders common law obligations of good faith in a first party context, as discussed in A Confusing Oral Argument in QBE vs. Chalfonte Baffles the Florida Supreme Court Regarding First Party Bad Faith, a raging legal battle ensues in many statutory bad faith actions because insurance companies complain that civil remedy notice of violation is not sufficient.

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In an editorial, Insurance Bill Needs Improvement, the Miami Herald called on Governor Crist to veto the property insurance bill now sitting on his desk.

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(Note: This guest blog is by Nicole Vinson, an attorney with Merlin Law Group in the Tampa, Florida, office. She will be writing a guest blog series on Examinations Under Oath and Public Adjusters).

The new language in Citizens Property Insurance Corporation’s 2010 policy has spurred debate and questions about the obligations of both policyholders and public adjusters in Florida.

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The Destin beach’s white sugar sand was in full glory yesterday. While flying back to Tampa and looking down on the crystal blue water and the most gorgeous stretch of beach in the United States, I told Corey Harris that such beauty and fun is being wasted because of fear caused by the oil spill. A funny YouTube video about the current threat of oil and dragons makes the point:
 

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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).

Most extra expense provisions state that coverage will be extended for necessary expenses that the insured incurs during the “period of restoration.”

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Religion sure brings out some strong and sometimes bitter feelings among friends. A number of adjusters, after hotly debating the topic with emails copied to me, have inquired whether the pending property insurance bill is unconstitutional because of the exemption to the required examination given to the members of the National Association of Christian Catastrophe Insurance Adjusters. Since I am scheduled to take the California Bar Examination this July, some may think that my First Amendment Constitutional Law expertise has been refreshed with recent study and that I am able to address this question. My friends know better and often wonder how I passed any bar examination.

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Governor Charlie Crist will certainly be asking himself the question whether the property insurance legislation before him is bad for average Florida insurance consumers. Yesterday’s afternoon post, Pay Higher Premiums and Get Less Coverage Legislation -- Can Anybody Explain Why This is Good for Floridians? provided a simple explanation of why many are calling for Governor Crist to veto this legislation. The analysis is not easy because the proposed law was rolled into one massive piece of legislation, some very bad and some good. The media is starting to pick up the overall aspects of the proposed law.

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Governor Charlie Crist should veto the property insurance legislation which passed (SB 2044) and has been presented to the Governor. He made a promise not to raise rates when he became governor. Many other politicians made similar claims about standing up to insurance companies, but they seem to have forgotten. These proposed laws not only raise rates, they take away coverage and benefits Floridians have enjoyed for a long time.

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Sergio Leal has joined the Merlin Law Group in Houston. As he is a proud University of Texas graduate, football seasons will be more debatable in our office. Texans do not concede that the best football is played in states a little further east.

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Social Media investigation can lead to fascinating results. In this case, Twitter led me to a television report regarding State Farm's testing of hail damage. Many policyholder attorneys should probably consider discovery from State Farm on this topic if they have a dispute involving hail damage. I wonder what other tests State Farm and other insurers conduct.

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I receive a fair amount of private emails regarding certain posts. Yesterday, I received about fifty saying that this Blog was “down.” Thanks. This blog is hosted by LexBlog and this was their explanation:

The issue, arising out of the software interfacing with our cloud server environment was identified, and repaired. We do not expect any continuing service disruptions. Your blog content was not at risk during this down time nor is it at risk at anytime. All of your work is completely backed up.

Your blogs on the LexBlog Network are hosted in a cloud environment developed and operated by LexBlog on the Amazon Elastic Compute Cloud (Amazon EC2). Amazon EC2 is widely recognized as a highly reliable environment and allows LexBlog to provide you with 99.99% uptime.

Every “cloud” has a little rain, and LexBlog has been an excellent service for us and our readers. So, I do not expect this to happen with any frequency. Sorry for the frustration.

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(Note from Chip Merlin: This guest blog is by Shaun Marker, an attorney with Merlin Law Group in our West Palm Beach office)

As many homeowners, condominium owners, directors, property managers, and public adjusters are aware, the Florida statutes of limitation are approaching for Hurricanes Katrina and Wilma. There has been much litigation in Florida related to these catastrophic events, however, we are not out of the woods yet…and we may not be even once the limitation periods pass. The scope of this post relates to the fiduciary duties that condominium and homeowner associations and their boards of director have to maintain and repair damages to the common areas of these communities.  

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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).

Many business owners consider “pulling the plug” after a loss. Whether emotionally based or a strict numbers decision, business owners want to know if they can sell their business and assign their business loss claim as part of the package.

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The tragedy of loss of human life and damage to the environment when discussing the BP Oil Spill cannot be overstated. The important role that accountants and business interruption experts will play helping prove financial loss cannot be overstated either. Experienced professionals like Bob Glasser, noted in yesterday’s Are Lawyers Pandering for BP Oil Spill Clients Going to Get Sued for Malpractice in Follow-up Class Actions? A Guest Blog Regarding Business Claims By Bob Glasser Explains and Guest Blogger Bruce Smith, who wrote The Forensic Accountant's Role In Business Interruption And Business Income Claims, should be in high demand from businesses and entities that lose revenue and income as a result of this oil spill. Attorneys presenting these lost income claims should consider hiring such individuals as consultants and financial expert witnesses.

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There has been a disgraceful amount of pandering by potentially incompetent lawyers to sign up BP Spill Victims. Many of these lawyers are experienced only in personal injury cases, and many are not licensed in the affected states and are using the internet to lure clients. One attorney from California, who is not licensed in Florida, gave a seminar this week in Destin, Florida, about his services. Many of these attorneys have no intention of providing sound disaster recovery advice that accountants and other experienced attorneys can provide. The "elephant in the room" is that they do not have the experience or resources to give competent legal advice but are banking on contingent percentage contracts that obligate clients to sums far in excess of what is reasonable. These attorneys do not have the competence or experience to discuss business interruption concepts because they have never practiced in this area of the law. Many attorneys are advertising and signing up clients without then doing anything that is reasonably required under the circumstances.

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During the Congressional hearings, Senator Jeff Bingaman, Chairman of the Energy and Natural Resources Committee, said:

If this is like other catastrophic failures of technological systems in modern history, whether it was the sinking of the Titanic, Three Mile Island, or the loss of the Challenger, we will likely discover that there was a cascade of failures and technical and human and regulatory errors.

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Several public adjusters with Global Adjusters were arrested in a broken tile fraud claim scheme. Wrong is wrong. Everybody is entitled to a presumption of innocence. Yet, the statement in the arrest warrant alleges what so many others have been complaining privately to me, and then publicly in the past legislative session---there are far too many broken tile claims occurring with the same public adjusters in South Florida for all to be legitimate.
 

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Vivian Persand is making headway against Safeco and Liberty Mutual Insurance Company. Sharing information and networking with similarly situated policyholders who are litigating issues involving the companies’ claims management practices and underpayment of claims is important. Attorneys who do share information reduce the cost of litigation for their clients, show that the insurance defense attorneys generally are not truthful in their disclosures of incriminating information, and generally win more cases. As a result of a Hurricane Ike insurance dispute involving a medical complex insured by Safeco and problems involved with opposing counsel and Safeco in that matter, I have become involved in organizing the policyholder's bar so that we can more effectively litigate the claims practices of Safeco and Liberty Mutual.

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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).

Although infrequent, yesterday’s tragedy in Saint-Jude, Quebec, is a startling reminder that catastrophic sinkholes do happen.

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This morning I am in Dallas at the Windstorm Symposium. Steve Pate and I will be giving a presentation about the most significant property insurance cases from the states of Alabama, Mississippi, Lousiana and Texas over the past year.

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Florida public adjusters have been served a huge loss in their ability to solicit and aid policyholders within 48 hours of a loss. A final judgment in Frederick Kortum vs. Alex Sink was issued on May 7, 2010. The ruling, in favor of the Department of Financial Services and upholding Florida Statute Section 626.854(6), reached my desk this morning.

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This morning's edition of Business Insurance has an article, Claims Could Get Messy After Huge, Costly Oil Spill, which explains that insurance claims are going to be complex and that the cost will certainly be in the billions. My reading of a FC&S discussion on the issue of "pollution" exclusions in homeowners policies indicates the same thing. Indeed, given the definition of a "pollutant" in the standard form policies, one may question whether oil escaping in a natural form would be a "pollutant."

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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).

Complying with code upgrades often extends the period of time it takes to repair or replace the property after a loss. Depending on the type and nature of the code requirements, repairs could be extended for several months and depending on the type of policy this time delay may not be covered. Depending on the size of the business, this could translate into significant unrecoverable losses.

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Nashville is a mess. My wife asked me to turn on the news and we watched a tractor trailer floating down a street. "Oh, my God!" was my response as I watched.

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First party property coverage may exist under some common form property insurance policies for losses caused by the oil spill. While I have been rather pessimistic regarding the possibility of first party insurance companies sending legions of claims adjusters to help oil catastrophe policyholders, there appears to be some coverage available, and possibly, a lot more, depending on what the cause of the loss is eventually determined to be. These facts are important. Each coverage form is important as well and must be reviewed in detail.

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The Gulf Coast has hot and calm days that are merciless for those on the water. I recall my teenage years in Mississippi, stripping to briefs and jumping off a sailboat that was going nowhere fast on a calm morning race in Mobile Bay. I was thinking about that while attending a deposition of Chris McIntosh in Gulfport yesterday and after reading emails from marine engineers who suggest that it will take several months, rather than weeks, for the worst of the oil spill onslaught to reach Florida.

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It appears that BP and others involved in the current oil spill may be taking their cues from insurance carriers. Insurers have always hedged their bets by saying that they would pay “legitimate claims” after disasters such as Hurricane Katrina and the Northridge Earthquake. This is a brilliant public relations strategy. It allows top executives to go on television and tell the world that the company cares and will do whatever it can to make people whole again. It leaves the general public with a warm and fuzzy feeling of security, even when the insurer has absolutely no intention of promptly and fully paying the full amount of damages owed.

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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). 

Senate Bill No. 742 was approved by the Governor on June 16, 2009, and took effect on January 1, 2010, as an amendment to Florida Statute 627.706. This amendment is important to note because it allows an insurer to non-renew an insurance policy which contains sinkhole coverage in Pasco County or Hernando County and instead offer coverage which only includes catastrophic ground cover collapse coverage. In other words, it is now the insurer’s option to remove the coverage in Pasco and Hernando counties.

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I have seen this look before. Panic and loss have a certain emotional face where people need compassion and then a plan. Over my only meal of the day late last night, I told my client, Dewey Destin and his wife that I felt proud to be an American and part of the Gulf Coast community because of the way people were responding to very dire circumstances. Fishermen were volunteering and politely demanding that their knowledge of local waters be used to help mitigate the impact of oil. Engineers were suggesting ingenious methods of oil prevention and clean up. Local leaders such as State Senator Don Gaetz and Florida DEP Secretary Mike Sole were candid and helpful with these requests.

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The Honorable Governor Crist:

I respectfully request that you veto the insurance legislation recently passed in SB 2044. While there are many good provisions in this bill including some of the Public Adjusting proposed changes, other provisions will cause great harm to Florida policyholders particularly when the next big storm or other perils impact already struggling Floridians.

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Our firm has been receiving calls from a large number of Florida condominium associations over the past few days regarding the increasing problems associated with the oil spill that is plaguing the gulf coast. I have a personal connection to this growing crisis. I spent a large portion of my life in Destin, Florida, and part of my family still lives and works in the area. Late last night, I flew to the panhandle to see what our firm could do to help.

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The estimates of oil escaping were far too low. At first it was, "we dodged a bullet." Then, it was 1,000 barrels a day. Then, 5,000. And now, 25,000 barrels a day are flowing from the ocean floor. The Wall Street Journal has been excellent in its reporting:

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The Merlin Law Group has been responding to inquiries from potential, current and former clients who have contacted its offices with concerns about the effect of the Gulf of Mexico Oil Spill on their properties and businesses. These inquiries are wide ranging. Most are asking about preparation issues to prevent damage as well as legal help documenting damage and the law firm’s representation of them for those 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 part of a series she is writing on business interruption claims).

Many policyholders are not familiar with the documents or income accounting records required to present a business interruption claim. To comply with the requests from an insurance carrier, policyholders are often forced to retain accountants to accumulate the data and provide a report to the company, but such services are rarely free.

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I hate to make doomsday predictions, but there is a possibility that the BP Oil Spill could be worse than any hurricane or catastrophe that I have been involved with. I spent yesterday speaking with others about the current situation. Indeed, my father teaches those in the oil industry how to recover and react to oil spills. Unless the source of the oil is stopped or slows down soon, oil is going to be all over the northern Gulf Coast and Florida. If the spill cannot be contained or slowed in the near future, it will significantly impact our economy.

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A number of former and current clients have called our offices about the recent oil spill in the Gulf of Mexico. They have expressed fear about damages to their business and property, as well as actions that they can take take to protect themselves from the consequences of this disaster. We have already been retained for business losses as customers of clients are cancelling plans for travel to the Gulf Coast. If something does not change soon, this disaster will likely be much worse than most hurricanes. It has the potential to be worse than any of them.

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