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

Insurance companies guard claims files more closely than almost anything else. Generally, an insurer claims that the contents of its claim file are protected from disclosure by the work product privilege. While this position has found some support in appellate rulings, many insurers misunderstand these rulings and believe that anything they wish to call part of the claim file does not have to be disclosed to the policyholder.

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The Chinese Drywall coverage litigation involving first party property insurance policies has been discussed in the past. Are Chinese Drywall Problems Covered Under Property Insurance Policies? discussed the complex issues involved and warned that these losses may not be covered. FC&S Says Ensuing Loss Coverage Applies to Chinese Drywall Claims and Chinese Drywall Claims May Be Covered Under Homeowners Policy--Favorable Developments in Louisiana gave hope to the policyholders suffering form this unexpected property loss. Unfortunately, a recent opinion, In re: Chinese Manufactured Drywall: Products Liability Litigation, issued December 16, 2010, did not rule in favor of the first party policyholders.

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Adjustment before appraisal occurs in three typical scenarios. The most common is that the insurance company completes an investigation and the policyholder disagrees with the amounts, creating a demand for appraisal by one party or the other after good faith negotiations fail. Two other adjustment scenarios are becoming much more common and the trend is towards more litigation, as indicated in yesterday's ruling in Citizens Property Insurance Corporation v.Maytin, No. 3D10-693 (Fla. 3rd DCA December 29, 2010).

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Florida public adjusters won a constitutional argument that Florida Statute 626.854(6) wrongly banned all solicitation for 48 hours in violation of the Florida Constitution. The opinion is clear in its finding and conclusion:

We reject the argument of the Department of Financial Services, appellee, accepted by the trial court, that the statute is ambiguous and, as a result, the agency’s interpretation that the statute constitutionally regulates only the time, place, and manner of commercial solicitation should be accepted. We hold that the statute unambiguously bans all solicitation for 48 hours and that this restriction on commercial speech violates Article I, § 4 of the Florida Constitution under the standards of Central Hudson Gas & Electric Corp. v. Public Service Commission of New York, 447 U.S. 557 (1980).

…

In sum, we are persuaded that the Department has failed to prove that section 626.854(6) is narrowly tailored to meet the state’s objectives. “While a statute regulating commercial speech need not be the least restrictive means of achieving the state’s asserted goal objective, it must be narrowly tailored to achieve the desired objective.” Cronin, 774 So. 2d at 875. The Department has not demonstrated that prohibiting property owners from receiving any information from public adjusters for a period of 48 hours is justified by the possibility that some public adjuster may unduly pressure traumatized victims or otherwise engage in unethical or unprofessional behavior. Nor has the Department demonstrated that the other provisions of section 626.854 and the Rules of Professional Conduct and Ethics governing the Florida Association of Public Insurance Adjusters governing public adjusters are insufficient to regulate unduly coercive or misleading solicitation by public adjusters.”

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As mentioned in some of my prior posts, Business Interruption coverage protects an insured against a loss of business income that the insured suffers as a result of a covered peril. However, although an insured may suffer an interruption of business, it does not necessarily follow that the insured actually incurred a recoverable loss.

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Fortunately, South Florida was not slammed this past hurricane season as the forcasters predicted. Now, with the holiday season here, the last thing on many policyholders’ minds is the ramifications surrounding hurricane claim settlements and restoring affected property. In my December 13, 2010, post titled Hurricane Law Tip - Document Hurricane Repair Expenditures Even After a Claim Settlement, I wrote about the importance of documenting repairs to property following a hurricane claim resolution. The focus of that blog was directed toward policyholders themselves. However, everyone involved in the first-party property insurance industry can do one thing for the policyholders who may not have the pleasure of reading the hurricane law blog posts. With the New Year approaching, we can make a resolution to discuss with our policyholder clients the importance of making repairs and documenting them after a hurricane claim resolution.

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Fox News had me debate cell phone bans last fall. Transportation Secretary Ray LaHood was calling on Congress to pass a national law banning the use of cell phones in vehicles. Millions of us safely use cell phones in automobiles. Many conduct business, get directions and otherwise use the phone for work efficiency while in our automobiles. Research has never supported the assumption that banning cell phone use in automobiles saves lives or reduces property damage claims.

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Finding out that your insurance policy does not provide coverage for your losses is probably one of the hardest pills to swallow. For that reason, commercial property owners should pay careful attention to the landlord-tenant insurance responsibilities before entering into leasehold agreements.

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I would like to continue the topic of my last few posts addressing the “preferred contractor” or “quality vendor” programs that insurers frequently implement. Generally, these programs consist of a number of vendors, such as electricians, contractors, roofers, etc. that have agreed to provide their services to the insurance company’s insureds in the event of a loss. Those services are typically provided at a discounted rate and are often guaranteed by the insurer. The repairs to an insured’s home after a covered loss by a preferred contractor selected from the insurer’s quality vendor program can play a role in a bad faith case against an insurance company.

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Buy Christopher Boggs’ new book, Property and Casualty Insurance Concepts Simplified: The Ultimate ‘How to’ Insurance Guide for Agents, Brokers, Underwriters and Adjusters. It is a wonderful and practical treatise for anybody in the insurance business. For instance, he starts with a very basic concept—how to read an insurance policy.

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Dan Odess wrote an excellent article, Public Adjusters and Insurers: Time to End the Cold War, in Claims Magazine. His premise was simple and professional:

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What do you get your friendly adjuster for a Christmas stocking stuffer? How about an itunes app called “Claim Denied!” Here is the description:

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It is the time of the year when I reflect on my performance over the past year and set new goals for 2012. I also find myself studying trends in insurance to help anticipate how they may impact my legal practice and clients. While doing this, I came across an excellent study in a comparative law analysis of an insurer's good faith obligations and remedies for the breach of that obligation in Damages for Late Payment and the Insurer’s Duty of Good Faith, published by the Scottish Law Commission earlier this year.

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As is their custom, several major insurance companies have recently announced that they will be raising Texas insurance rates across the board. Last month, the Houston Chronicle reported that Farmers Insurance plans a 3.9 percent statewide hike that will affect about 324,000 Texas customers. Farmers stated that the increase was “in response to increasing costs of paying claims, especially weather related claims.” Farmers Insurance customers will see the increase take effect starting March 16, 2011.

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My last couple of hurricane related posts involved discussions of The Other Insurance Clause and The Total Loss Recovery Rule as discussed in Citizens Property Ins. Corp. v. Ashe, No. 1D09-1546, 2010 WL 4628915 (Fla. 1st DCA Nov. 17, 2010). The last major legal issue that was discussed in Ashe was the evidence of alternate insurance payments.

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Property manager’s fees are normally considered “continuing expenses” in business income claims. The standard Business Income (And Extra Expense) Coverage Form CP 00 30 04 02 says, "We will pay for the actual loss of Business Income you sustain due to the necessary 'suspension' of your 'operations' during the 'period of restoration.'" Business Income is defined as:

1. Net Income (Net Profit or Loss before income taxes) that would have been earned or incurred; and
2. Continuing normal operating expenses incurred, including payroll.

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In less than one month, the Florida Association of Public Insurance Adjusters (FAPIA) will be kicking off their Winter 2011 Conference at the Gaylord Palms in Orlando, Florida. FAPIA has been going strong for over 17 years now and includes over 500 members who are invited to meet twice a year in Florida. The FAPIA conference includes several networking and social events and a full schedule of continuing education courses for public adjusters.

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I would like to continue addressing the “preferred contractor program” or “quality vendor program” that is implemented by many insurance companies. As discussed in What Role Does an Insurer's "Preferred Contractor Program" Play in a Bad Faith Lawsuit? Part II, some of the reasons insurers might choose to set up such a program is to save money when the approved contractor is used or to exert some sort of control over the type and quality of repairs conducted and materials used. In What Role Does an Insurer's "Preferred Contractor Program" Play in a Bad Faith Lawsuit?, I evaluated a case where the insurer was found not to have any liability in connection with a contractor’s work – a contractor that had been selected from the carrier’s preferred contractor program. A decision from the Arizona Court of Appeals has an interesting opinion on what happens when the Quality Vendor Program does not work as planned.

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Insurance company executives were thrilled that Rick Scott won the Florida Governor's office. I can appreciate that any politician may run on a platform that, upon further reflection, seems absurd or not what they meant. From my impression, many voted for Scott because they were fed up with the status quo. Floridians may be even more upset if they learn that their newly elected governor is supporting a plan which will result in higher property insurance rates and laws that would provide immunity to insurers who treat their customers in bad faith.

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Outcome oriented investigations plague the insurance adjustment process. Outcome oriented techniques arise in number of forms, from limiting the information sought, writing reports with no more than what is called upon, not informing the policyholder of other areas of possible damage, de-selecting those that write reports which provide too much information and lead to greater coverage, and simply trying to form opinions of loss or damage that are not truthful. Insurance adjusters often try to convince me that they do not retain outcome oriented investigators who look for ways to limit their customers' recoveries, it is amazing to me how much additional loss is usually found with a little more honest work.

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From time-to-time, governmental authorities prohibit access to certain areas after a catastrophic event, even though not all the buildings in the area were damaged. For example, after Hurricane Ike passed through the Houston area, Houston officials closed downtown Houston for several days to assess the damage. Another example is the evacuation of New Orleans after Hurricane Katrina. “Civil Authority” coverage protects against losses arising out of orders such as these.

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Randy Goodman, of Goodman-Gable-Gould/Adjusters International, was honored with the National Association of Public Insurance Adjusters' Person of the Year Award at NAPIA's Mid-Year Meeting. Randy served as President of NAPIA in 1998-99. He has remained an active member and is very deserving of the award. Just before receiving the award, he was bragging to me about recruiting two new recent members from Florida after explaining the benefits of NAPIA membership.

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The other day at the NAPIA Conference, Mary Fortson, Vivian Persand and I were discussing an issue of importance for policyholders to be mindful of even after their Hurricane Wilma claims are resolved. Oftentimes, much of the advice offered by lawyers and professionals to policyholders in the property insurance industry concerns what steps need to be taken to help policyholders navigate their way through the intricacies of policy interpretation and coverage. The maze of coverage issues actually continues even after the claim is resolved. If there is another hurricane in the next few years, carriers will be aware of the policyholders who had Hurricane Wilma claims and will likely request documentation reflecting repairs if damage is being claimed to similar areas of property.

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Despite the emergence of global markets and internet economies, physical location is probably the most important factor for the success of many businesses today. Therefore, when a catastrophic loss occurs, many business owners are faced with the tough decision of rebuilding or replacing the property at the same location or relocating the business elsewhere.

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Nationwide Mutual Insurance Company appealed an order from Pennsylvania’s Insurance Commissioner, alleging it did not engage in Unfair or Deceptive Insurance Practices in connection with the cancellation of a residential insurance policy issued to Ms. Darlene Miller. The Court affirmed the decision of the insurance commissioner and found that “the Commissioner properly determined, based on credible evidence, that Nationwide failed to comply with Section 5(a)(9) of the Unfair Insurance Practices Act and the cancellation of Miller's homeowner's policy was ineffective.”

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Frank Artiles commented upon my post, The Initial Political Insurance Views of Public Adjuster Frank Artiles. Since I have been a supporter of Frank and think it is only fair that his response not be buried, I am posting his response here:

Dear Industry professionals,

Many of the quotes that were attributed to me are incorrect, inaccurate and quite frankly not made by me. I would recommend that if anyone has a question regarding statements or quotes feel free to pick up the phone and call me at 305-305-2110

I believe that we need to get public adjusters, insurance companies, attorneys, bankers and independent adjusters to the table to negotiate a system where insurance companies are profitable, homeowners are protected and we reduce the size of citizens which is a disaster waiting to happen. If you do not agree with me, then we can continue the bitter battle. I truly believe as a business man that there is room for negotiations and as a State Representative I believe I can bring people to the table.

As for SOP_81- COMMENT REGARDING MY CAMPAIGN CONTRIBUTIONS- I would ask that you do a little research through Florida elections and look at all my campaign contributions. Not one insurance company donated to my campaign, only public adjusters, appraisers and umpires. However, please be aware that I will be accepting campaign contributions from many entities for the 2012.

I WOULD ASK THAT THE PUBLIC ADJUSTERS, APPRAISERS AND UMPIRES BE PATIENT BUT BE VIGIL. I WOULD LIKE TO THANK THOSE WHO SUPPORT ME AND CONTINUE TO SUPPORT ME.

Semper Fi,

Frank Artiles

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Last week, in my post, What Role Does an Insurer's "Preferred Contractor Program" Play in a Bad Faith Lawsuit?, I evaluated the analysis applied by the Nebraska Supreme Court in order to arrive at its decision that a contractor hired by tan insured through the carrier's preferred contractor program served only as an independent contractor. The Nebraska Supreme Court determined that the contractor's actions could not be used against the insurer to prove the carrier's bad faith.

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Attempts to enforce exclusions within insurance policies have made my law practice prosper. I sometimes think of insurance coverage disputes regarding exclusions as being a recent occurrence. Nothing could be further from the truth. Fire Association of Philadelphia v. Evansville Brewing Association, 75 So. 196 (Fla. 1917), a case from nearly a hundred years ago, is a classic example that insurance policies may not cover what seemingly is a covered event.

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Amazing as it seems, one insurer plans to increase rates, even though we have gone years without a  hurricane. As reported by Colodny, Fass, Talenfeld, Karlinsky & Abate, First Home Insurance requested a 39.3% overall Homeowners Policy rate increase from the Office of Insurance Regulation. Had the "free insurance market" legislators had their way, First Home could charge their customers nearly double last year's rates, and the customers would have no recourse -- except the "free market."

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Last week I wrote about business interruption insurance and how it can help your business during tough times. Today, I would like to expand on that further and discuss what you, as the policyholder, need to show in order to obtain coverage for your business interruption losses. A policyholder may suffer a loss of income from an event, such as a hurricane, but the loss of income may not be tied to property damage. For that reason, business interruption provisions often require a “causal connection” between the business’s loss of income and covered physical loss or damage.

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I am fortunate to practice law dedicated to the protection of and advocacy for policyholders. Our firm's depth of knowledge regarding insurance policyholder advocacy has increased, as Sean Shaw, Florida's former Insurance Consumer Advocate, has joined our firm.

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My last hurricane post on November 22, 2010, involved a discussion on the Other Insurance clause often found in property insurance policies, specifically as it was misapplied in Citizens Property Ins. Corp. v. Ashe, No. 1D09-1546, 2010 WL 4628915 (Fla. 1st DCA Nov. 17, 2010). The Ashe decision included more issues than the Other Insurance clause, and I promised to discuss the other issues as well.

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State Farm lobbyists are going to have their work cut out for them after Paige St. John's story, HOW STATE FARM CASHED IN ON A CRISIS, documented how State Farm used financial slight of hand and friendly politicians in the Florida legislature to help create an insurance crisis leading to greater profits through a re-insurance subsidiary.

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Contingent insurance covers the loss that the insured will suffer if the operation of a key supplier, customer, or leader property on which the insured's operations are dependent is shut down by an insured peril. It is important to note that ISO form CP 15 08 06 07 is used to provide coverage subject to the same limit of insurance, coinsurance percentage, and coverage options as is found on the business income (and extra expense) coverage form, whereas CP 15 09 06 07 is used when direct business income coverage at the insured’s own premises is not provided or when the limits of insurance selected by the insured for the dependent properties differ from the direct business income limit of insurance or differ among the various dependent properties themselves.

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As reported in ClaimsJournal.com, Insurance Brokers and Agents of the San Fernando Valley named The Greenspan Company/Adjusters International as its 2010 Company of the Year. This prestigious honor is given to one company each year. According to Jonathan Schreter, President of IBA-SFV, to be considered for this award the company has to “demonstrate an exceptional commitment and support of the organization.” The IBA-SFV is a San Fernando Valley local chapter of the IBA West, a California organization that is a volunteer driven association of choice independent insurance brokers and agents.

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When a homeowner reports a residential property damage claim to the insurance company, the carrier might recommend a company that can conduct the repairs. Many insurance companies have a “preferred contractor program” also sometimes referred to as a “quality vendor program.” The program typically consists of a list or database of “vendors” such as engineers, roofers, plumbers, general contractors, and electricians that the insurer recommends to policyholders. The particular relationship between the insurance company and the vendor can play a significant role in a bad faith lawsuit. I would like to begin with a Nebraska case that addresses the “how” and the “why."

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Christmas trees do not spontaneously combust. The National Christmas Tree Association makes this point in its Holiday Safety Facts. The National Christmas Tree Association is the professional trade association representing farmers and sellers of Christmas Trees throughout North America.

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Google and other internet search engines transform and open up areas of discovery involving insurance companies. An example is an internet advertisement of a Safeco claims adjuster, Sandra Parker, which we uncovered in a simple internet search.

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After much delay and anticipation, Kenneth Feinberg has issued the Final Protocol for interim and final claims to the BP/Deepwater Horizon Oil Spill Fund. The entire Protocol is below, and an analysis will follow in a future post.

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