Enforceability of Large Hurricane Deductibles in Florida
As discussed in, According To Florida Statute An Insurer Cannot Apply A Policy Hurricane Deductible More Than Once During A Calendar Year For Personal Lines Residential Claims, in Florida, the hurricane deductible can be 2%, 5%, or even 10% of the dwelling policy limit. These percentage deductibles can be very large on personal lines residential claims, and even larger on condominium and commercial hurricane claims. Condominium and commercial hurricane deductibles can be well over a million dollars per loss.
The enforceability of these hurricane deductibles and the penalty for failure to comply with Florida’s statutory requirements is currently pending before the Florida Supreme Court. Florida Statute §627.701(4)(a) states:
Any policy that contains a separate hurricane deductible must on its face include in boldfaced type no smaller than 18 points the following statement: ‘THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.’
In Chalfonte Condo. Apartment Assoc., Inc. v. QBE Insurance Corp., 561 F.3d 1267 (11th Cir. 2009), the Eleventh Circuit Court of Appeals certified two questions to the Florida Supreme Court concerning the statute. The questions certified are:
- May an insured bring a claim against an insurer for failure to comply with the language and type-size requirements established by Florida Statute §627.701(4)(a)?
- Does an insurer's failure to comply with the language and type-size requirements established by Florida Statute §627.701(4)(a) render a noncompliant hurricane deductible provision in an insurance policy void and unenforceable?
The Eleventh Circuit Court of Appeals noted in Chalfonte that resolution of both of these issues requires a determination of how the Florida Legislature intended courts to handle violations of §627.701(4)(a) in the absence of a specific remedy within the Statute’s plain language. The Statute does not contain a penalty or remedy for an insurance carrier’s failure to comply with the hurricane deductible boldfaced type and font requirements.
The Florida Supreme Court has not yet answered these questions, among others in the case. The appropriate penalty for an insurer’s failure to comply with §627.701(4)(a) will be very important since condominium association and commercial policyholders with large hurricane deductibles may have been required to sustain and pay millions of dollars in damages before being entitled to any payment. Would they be entitled to the money withheld for the very large hurricane deductible, or a portion of it, as the penalty? We will keep you posted when the Supreme Court answers these questions.
So does Chalfonte contend they were paying the commensurate premium for the lower deductible? Or did that point get lost in the fine "less than 18 point, non-boldfaced type" print? If you walk out of the mall claiming to have paid for your purchase while knowingly having only paid for a portion of what you put in your shopping bag, you should go to jail. I doubt if there are many legit policyholder advocates and public adjusters that condone shoplifting. How then is it right to knowingly claim more insurance benefits than you paid for? Try that 18 point, boldfaced type argument in the mall parking lot and see if it works in court against a shoplifting charge. Citizens of the State of Florida wake up before all the legit carriers, public adjusters and policyholder advocates have left the state. There will be another Andrew and there will be another 4 hurricane season.