An insurance contract is simply an agreement. The policy itself contains the terms of the agreement and acceptance of a premium payment binds this agreement. Citizens Property Insurance Corporation is Florida’s largest property insurance provider and as I discussed recently, is exposed to bad faith, according to the First District Court Appeal.

I want to highlight an example of Citizens rewriting its policy and intentionally underpaying policyholders’ sinkhole loss claims – potentially exposing it to extra-contractual damages. In the event of a sinkhole loss, insurance companies are obligated to (1) immediately pay the actual cash value of all damages to the structure (commonly referred to as the cosmetics damages portion of the claim); and (2) pay to stabilize the structure after a policyholder submits a subsurface repair contract. Specifically, Florida Statute 627.707(5)(a) states:

(a)The insurer may limit its total claims payment to the actual cash value of the sinkhole loss, which does not include underpinning or grouting or any other repair technique performed below the existing foundation of the building, until the policyholder enters into a contract for the performance of building stabilization or foundation repairs in accordance with the recommendations set forth in the insurer’s report issued pursuant to s. 627.7073.

Hence, Florida law requires Citizens to pay for all damages to the structure related to the claim; however, Citizens is entitled to hold back the depreciation for those damages until the repairs are made. If you deal with Citizens, you know they fail to meet this obligation by substantially underpaying the cosmetic damages portion of the claim. In numerous cases, discovery exposes that Citizens’ desk adjusters remove specific items from its field adjuster’s estimates. In other words, Citizens is knowingly not paying for all of the sinkhole related damages to the structure, despite Florida law and the terms of the policy unambiguously requiring it to do so.

What is Citizens’ explanation for intentionally removing items from its estimates? Citizens argues that it will pay for all of the damages during its post-remediation inspection; however, the policy does not mention anything about a post-remediation inspection. Further, a dispute over these damages often ensues regardless. It appears to simply be an excuse not to fully pay the claim.

Citizens’ attempt to rewrite the terms of the policy is unacceptable. Citizens’ business practice of not paying for damages noted within its field adjusters’ estimates is bad faith and Citizens will hopefully be held accountable. My office has been filing Civil Remedy Notices against Citizens for its conduct, as are many other policyholder advocates.