Public Adjuster Explains How Policyholder Claims Can Be Compromised When Insurance Carriers Fold
Julie Patel of the Sun-Sentinel continues her dedicated investigative reporting series looking into insurance issues in her recent article, Expect low and slow claims payments if your insurer folds.
Patel points out that since 2006, eight property insurance companies in Florida have gone insolvent and insureds with more than 55,000 claims have been forced to deal with the Florida Insurance Guaranty Association (FIGA) for their insurance claims.
We have posted about FIGA in several other posts including, When Insurance Companies Go Under - The Fallacy of FIGA and FIGA is the New Slow Paying and Litigation Threatening "Insurer" in the Florida Property Insurance Claims Game.
The Florida Insurance Guaranty Association was created by legislation in 1970 as a non-profit organization that has a duty to settle claims in accordance with the FIGA Act, the policy, and Florida insurance laws, in a timely manner.
The husband/wife team at Public Adjusters Incorporated, led by President Daniel L. Guilfoyle, III and Vice President Rosemary Guilfoyle, has extensive knowledge of the insurance industry’s ever changing landscape. Dan Guilfoyle was contacted by Julie Patel about his experience as a public adjuster handling claims that had been turned over to FIGA.
Dan mentioned to a policyholder who lost $25,000.00 after his claim was turned over to FIGA. Dan told me the story. Dan’s company was hired as the public adjuster for two separate clients. Both insureds had purchased insurance policies from Northern Capital, and both suffered covered water damage losses. Before Northern Capitol was declared insolvent, both policyholders participated in the policy’s appraisal process to determine the amount of the loss Northern Capital would pay.
Northern Capitol named its appraiser and happened to use the same appraiser on both claims. Likewise, the same umpire was appointed on the two water claims. Both policyholders received signed appraisal awards of damages owed by Northern Capital. But Northern Capital didn’t pay, and FIGA was ordered to step in because Northern Capital was insolvent.
Dan recounted what happened next but said it was unexplainable… FIGA paid one award in full (minus the FIGA deductible), but FIGA determined that the $69,000.00 award for the other insured was not going to be honored. FIGA required that loss be adjusted from scratch by a FIGA adjuster. This policyholder was first delayed by FIGA’s rejection of payment on the signed appraisal award and then further delayed as FIGA began its own evaluation of the damages. FIGA then determined the damages for the loss only totaled some $24,000.00. Dan said that explaining FIGA’s response and actions to his 80-year-old client was beyond difficult. To make matters worse, the policyholder had listed his home for sale and a pending sale fell through because of the water damage claim that had not been resolved. Dan and the team at Public Adjusters Inc. were able to increase the claim amount further, but FIGA ultimately paid $25,000.00 less than the original appraisal award signed on the claim.
Julie Patel interviewed the former vice-president of Northern Capital. He did not understand why FIGA started over on many of the claims. “It wasn't particularly cost-effective for them to start over, especially [because the contractors estimating damage for Northern Capital] in many cases charged significantly less than the FIGA" estimators said Alex Blain-Cruz.
Florida policyholders who are dealing with insurance claims with an insurance company on the brink of insolvency or in court-ordered receivership may have all the more reason to hire a professional public insurance adjuster. The delay of the claim process, potential new claim deadlines, and claims adjustment red-tape require the dedication, determination, and experience that many public adjusters can provide.
Here is a link to the Florida Department of Financial Services that shows the Florida insurance companies that are officially in financial trouble.
Nicole, I was surprised that you said policyholders dealing with receivership may have "...all the more reason to hire a public adjuster or an attorney" without mentioning the new provision in SB-408 which would require that attorney's and PA fee's are not covered by FIGA. FS-631.54 now states that FIGA may not pay attorney fee's or public adjuster fee's and is never required to pay more than actual policy limits for repairs. Thoughts?
Scott Johnson
Hi Scott-
Thanks for following my posts.
My hope with this post was to alert policyholders of the changes and the hurdles they may face with a FIGA claim.
It is good to add the FIGA statute section you mentioned here. This statute that was amended on July 1, 2011 says:
§ 631.54
Definitions
As used in this part:
(1) "Account" means one of the accounts created by s. 631.55.
(2) "Association" means the Florida Insurance Guaranty Association, Incorporated.
(3) "Covered claim" means an unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage, and not in excess of, the applicable limits of an insurance policy to which this part applies, issued by an insurer, if such insurer becomes an insolvent insurer and the claimant or insured is a resident of this state at the time of the insured event or the property from which the claim arises is permanently located in this state. For entities other than individuals, the residence of a claimant, insured, or policyholder is the state in which the entity's principal place of business is located at the time of the insured event. The term does not include:
(a) Any amount due any reinsurer, insurer, insurance pool, or underwriting association, sought directly or indirectly through a third party, as subrogation, contribution, indemnification, or otherwise;
(b) Any claim that would otherwise be a covered claim under this part that has been rejected or denied by any other state guaranty fund based upon that state's statutory exclusions, including, but not limited to, those based on coverage, policy type, or an insured's net worth. Member insurers have no right of subrogation, contribution, indemnification, or otherwise, sought directly or indirectly through a third party, against the insured of any insolvent member.
(c) Any amount payable for a sinkhole loss other than testing deemed appropriate by the association or payable for the actual repair of the loss, except that the association may not pay for attorney's fees or public adjuster's fees in connection with a sinkhole loss or pay the policyholder. The association may pay for actual repairs to the property but is not liable for amounts in excess of policy limits.
(4) "Expenses in handling claims" means allocated and unallocated expenses, including, but not limited to, general administrative expenses and those expenses which relate to the investigation, adjustment, defense, or settlement of specific claims under, or arising out of, a specific policy.
(5) "Homeowner's insurance" means personal lines residential property insurance coverage that consists of the type of coverage provided under homeowner's, dwelling, and similar policies for repair or replacement of the insured structure and contents, which policies are written directly to the individual homeowner. Residential coverage for personal lines as set forth in this section includes policies that provide coverage for particular perils such as windstorm and hurricane coverage but excludes all coverage for mobile homes, renter's insurance, or tenant's coverage. The term "homeowner's insurance" excludes commercial residential policies covering condominium associations or homeowners' associations, which associations have a responsibility to provide insurance coverage on residential units within the association, and also excludes coverage for the common elements of a homeowners' association.
(6) "Insolvent insurer" means a member insurer authorized to transact insurance in this state, either at the time the policy was issued or when the insured event occurred, and against which an order of liquidation with a finding of insolvency has been entered by a court of competent jurisdiction if such order has become final by the exhaustion of appellate review.
(7) "Member insurer" means any person who writes any kind of insurance to which this part applies under s. 631.52, including the exchange of reciprocal or interinsurance contracts, and is licensed to transact insurance in this state.
(8) "Net direct written premiums" means direct gross premiums written in this state on insurance policies to which this part applies, less return premiums thereon and dividends paid or credited to policyholders on such direct business. "Net direct written premiums" does not include premiums on contracts between insurers or reinsurers.
(9) "Person" means individuals, children, firms, associations, joint ventures, partnerships, estates, trusts, business trusts, syndicates, fiduciaries, corporations, and all other groups or combinations.