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Consumers Prevail in Fight Over Assignment of Benefits

AdobeStock_66625883State lawmakers have been appointed the task of deciding on the controversial issue of what is known as “assignment of benefits.” An appeals court decided that lawmakers rather than the court system would have the ultimate say on this issue. The appeals court also declined to certify the question to the Florida Supreme Court.  Consequently, Florida Consumers have prevailed in their fight with insurance companies over assignment of benefits

An “assignment of benefits” involves homeowners signing over their insurance policy benefits to contractors in return for repair services. This comes up a lot in cases which involve water damage, in which contractors fix the homeowners water issue and in turn seek payments from the insurance company.

The insurance industry feels that this practice causes inflated prices and fraud on the part of the contractor. Contractors, on the other hand, feel that the practice helps homeowners in choosing a contractor quicker when in need of emergency repairs.

The three Judge panel in Florida’s First District Court of Appeal concluded that, “it is for the legislative branch to consider this public policy problem, not the courts, at this juncture.” Additionally, Judge Makar wrote, “Legislative review provides a more detailed inquiry into the current situation in the industry and greater flexibility in achieving meaning reforms, if deemed necessary.”

As we previously discussed, earlier court decisions such as in One Call Property Services, Inc. v. Security First Insurance Company, ruled that post-loss assignments of a claim are allowed even when the insureds policy has anti assignment and loss payment clauses. The appeals court in One Call also stated that an insurance policy does not preclude an assignment of post-loss claims even when payment is due. Additionally, standard loss payment provisions merely address the timing of the payment and in fact contemplate a lawsuit before payment is due.

One Call seems to shed light on the First District Court of Appeals ruling. The First District Court of Appeals seems to deal with homeowners assigning over benefits to the contractor upon hiring and before payment is due or services are rendered. One Call has ruled post-loss claim assignment can survive even in opposition to anti-assignment clauses and loss payment clauses. The legislature will likely have to tackle the question of whether or not contractor can get into an assignment of benefits agreement prior to the work being performed or payment being due. It seems as though the court has deemed this as a public policy issue rather than a question for the courts, which will now be in the hands of the legislature.

Insurance Claims: Coverage Defense Waived by the Insurance Company because they Waited too Long to Assert it

Fire DamageA Florida appellate court recently concluded an Insurance Company’s coverage defense had been waived because the insurance company waited too long to assert them.

Axis Surplus Insurance Company vs. Caribbean Beach Club Association, Inc., 2014 WL 2900930, (2nd DCA 2014), involved a fire loss.  In April of 2003, a fire swept through the time share condominium in Ft. Myers Beach causing extensive damage to the property.  The insured had purchased an insurance policy that included coverage for fire damage.  The insured had also purchased Law and Ordinance coverage for an additional premium.

The insured made a claim for fire damage.  Both the insurance company and the insured knew that Lee County might enforce the “50% rule” contained in its ordinances. The 50% rule mandates that if a building is more than 50% damaged, any reconstruction or repair must comply with current building codes. If Lee County enforced the 50% rule, the insured would have to raise the entire building to meet existing flood elevation requirements.

Both the insurance company and the insured cooperated in a common goal of repairing, not replacing, the damaged building; they tried to convince Lee County not to enforce the 50% rule. Unfortunately, in November 2004, some nineteen months after the fire, Lee County informed both the insurance company and the insured that it would enforce the 50% rule. Therefore, the insured would be required to replace its building to satisfy current flood elevation codes.

After receipt of this news, the insured continued to cooperate with the insurance company.  But things changed some 19 months later when the insurance company, for the first time, informed the insured that it would rely on the two year clause in the Law and Ordinance Coverage endorsement to deny payment for the increased construction cost because the replacement was not completed.  Except for the general, non-specific, reservation of rights letter, the insurance company had never raised the two year clause previously with its insured.

Litigation between the insurance company and the insured followed.  The trial court granted summary judgment in the insured’s favor, and an appeal followed.  On appeal, the appellate court sided with the insured.  In so doing, the appellate court reasoned that the insurance company waited too long to assert the coverage defense.

The Appellate court concluded that the insurance company’s conduct had in fact waived the coverage defense it attempted to assert later.  It noted that that if an insurance company intends to rely on a reservation of rights, that it should specifically inform the insured of all the valid coverage defenses as soon as practicable.  In this instance, the insurance company simply waited too long.  In this case, the insurance company’s failure to bring the coverage defense to the insured’s attention, even though the insured expected the entire claim to be paid and the insurance company continued to adjust the entire claim after the two-year expiration, were unequivocal acts inconsistent with invoking the forfeiture. In other words, when an insurance company acquiesces to an insured’s failure to strictly adhere to a timetable of payment or performance, courts are inhospitable to the insurer’s sudden invocation of strict enforcement of forfeiture provisions.

Who Determines if the Examination Under Oath was Meaningful?

examination under oathExaminations Under Oath are an important part of an insurance company’s investigation of an insurance claim.  We have previously discussed the importance of EUO’s and how they impact your insurance claim.  But who determines  if the examination under oath (EUO) was meaningful?

We have previously discussed the importance of not only fully cooperating with an insurance company’s investigation of the claim, but to ensure that you attend an EUO when requested to do so.  Indeed, failure to sit for an EUO may result in the denial of the insurance claim.  On the other hand, however, EUO’s do have their limits.  They are not open ended expeditions for an insurance company to inquire on topics that go beyond the insurance claim at issue.

But what happens when an insured sits for an EUO and the information provided is less than “perfect.”  Is an “inadequate” EUO grounds for an insurance company to deny the claim?

That was the issue the issue the Fourth District Court of Appeal was confronted with him in Solano v. State Farm, 2014 WL 1908827 (4th DCA 2014).  In Solano, State Farm was initially presented with a Hurricane Wilma claim.  State Farm initially agreed to pay Solano for the damage.  After the initial payment was made by State Farm, Solano requested that the claim be re-opened in order to seek greater compensation.

Once the claim was re-opened, State Farm requested that Solano appear for an EUO.  Solano appeared for the EUO, and answered questions.  However, his wife failed to appear for an EUO.  State Farm requested that Solano’s public adjuster also appear for an EUO, but the public adjuster took the position that State Farm could not compel him to appear for an EUO.

Solano eventually filed a lawsuit against State Farm.  At the trial level, the trial judge granted summary judgment in State Farm’s favor on grounds that the Solano’s wife and public adjuster’s failure to appear for the EUO barred the claim.  On appeal, however, the Fourth District Court of Appeal reversed.

The appellate court noted that there was not a total failure to comply with the EUO request made by State Farm.  Indeed, Solano had appeared and answered questions during his EUO.  The appellate court also noted that State Farm could not demonstrate that it could compel the public adjuster to appear for an EUO.  Moreover, the appellate court also noted that while the public adjuster could not be compelled to the EUO, the public adjuster had nonetheless provided documentation to State Farm and even met with State Farm, at the property, to discuss the claim.  The appellate court noted that State Farm should have had enough information to either settle this claim with Solano or go to appraisal.

Fourth District Court of Appeals–Condo Associations may not rely on Condominium Act for protection

6a010534acc2cc970c01156f8e783e970c-800wi.jpgThe Condominium Act in Florida states that insurers must cover damage to the exterior common elements. However, the 4th District Court of Appeal recently held that associations cannot rely on that provision to cover damages to those areas.

In a recent dispute between Citizens and River Manor Condo Association, Inc. (“Ass’n”) in Wilton Manors, the Court reversed $1.24M of a $6M damages awarded to the Ass’n for damages caused by Hurricane Wilma in 2005.

Citizens argued that structures and landscaping separate from the buildings was excluded from coverage. In response the Ass’n cited the section in the Condominium Act that requires coverage for those damages. The Circuit Court Judge found conflict between the policy exclusions and the Act and found for the Ass’n.

The 4th District panel looked at the legislative intent and insisted that the Act was created to regulate associations not insurance companies because a subsection in the Act requires associations to use their “best efforts” to obtain such coverage and if the Act regulated insurers the subsection would be meaningless. However, the panel agreed that the “best efforts” language is ambiguous, and could lead to negative consequences in future application.

The Court interpreted the statute to mean that an association should use its best efforts to obtain insurance that covers the exterior elements of common areas but implicitly recognizes that due to market constraints this may be impossible. This means that insurance policy exclusions strictly construe the coverage of the association’s property and the association may not rely on the section of the Condo Act to “extend” coverage to those areas.

Exceptions to Exclusions: Am I Covered or Not? Even the Insurance Company May Be Confused.

Thumbnail image for insurance policy.jpgIn those pages and pages of insurance documents explaining the coverage of your policy you’ll find exclusions that are not covered, but surprisingly, there might be some exceptions to those exclusions. Even the insurers did not seem to understand the headache of their own policy provisions in a case litigated in the United States District Court for the Northern District of Florida.

That case centered on a dispute between an apartment complex and several insurance carriers. The dispute stemmed from water damage caused by faulty workmanship in the construction of the building. The apartment building was covered by primary coverage and three additional layers of excess coverage under what’s called all-risk insurance.

So they should be covered for just about everything right? Not so fast. All of the policies had long and confusing list of coverage, and all the policies excluded coverage for faulty workmanship. However, the policy contained an ensuing loss exception, which had the potential to bring excluded losses back under coverage.

The exception language stated that if “loss or damage by a Covered Loss results, we will pay for that resulting loss or damage.”

While the apartment owners acknowledge that costs to repair the faulty workmanship itself are not covered, the water (a Covered Loss) that infiltrated and damaged the building should be covered because of the exception.

Not surprisingly, the insurers did not agree. The companies argued that the ensuing loss exception did not apply if the losses (the water damage) were directly related to the original excluded risk (the faulty workmanship). To support their argument the insurers cited several Florida cases where courts sided with companies regarding ensuing loss exceptions.

However, the Court could not support the argument because these cases were distinguishable from the facts before them. The other policies contained very specific language prohibiting excluded losses from being brought back within coverage through the ensuing loss exception. Because of that specific language those courts required a break in proximate cause. Meaning, the exception only covered damage that was not a foreseeable result of the original excluded cause.

Here, however, the policy offers no such terms, and the Court refused to change the meaning of the plain language of the policy.

This case illustrates just how important every word in a policy is, and how even slight deviations can drastically change the coverage.

Insurance Companies are Seeing a Spike in Claims being filed as a result of the damage caused by Tropical Storm Isaac in South Florida

Tropical-Storm-Isaac-on-familiar-course-TL258KB8-x-large.jpgTropical Storm Isaac left its imprint all over South Florida. Tropical Storm Isaac produced flash flooding, down power lines, and overall extensive property damage throughout South Florida.

The next step for all South Florida homeowners who sustained property damage as a direct result of Tropical Storm Isaac is to assess the extent of the damages and determine what needs to be done to repair the damage.

It should be emphasized that all damage should be photographed, and any repairs made should be properly documented. If you purchased supplies at the local hardware store, make sure to keep the receipt. If you hired the contractor to perform certain remedial measures, make sure you keep the invoices documenting the nature, cost and scope of work.

After you have assessed your damages, and performed any remedial repairs to prevent the damage from getting worse, it may be time to contact your insurance company. Our storm damage attorneys are prepared to assist you with the claims handling process as well in the evaluation process.

Filing an insurance claim is often times not an easy process. But it is best to be prepared prior to filing the claim in order to help ensure a smooth claims process. And the best preparation is to fully understand the nature of the loss, and have it properly documented.

With that said, insurance companies in South Florida are expecting a rise in claims. Citizens expects approximately 5,000 to 6,000 claims to be filed over the next few weeks.

As you prepare for your claim, please understand that time could be a significant factor working against you. In order to properly file a claim with your insurance company the claim needs to be timely filed. If you fail to timely file a claim, then your claim is forever barred.

Some claims require that they be filed “immediately” with the insurance company. And failure to file an “immediate” claim may jeopardize the claim. Flood claims in particular have special rules that need to be properly handled. Please contact our office today if you are in doubt regarding the claims process, or if you simply have questions regarding the potential claim.

Rain Rain Go Away. Has All This Rain Caused Damage To Your Roof, Property, or Business? Call Us Today To Discuss.

rain_fall.jpgSouth Floridians have not seen the sun in days due to all this rain. It has been raining non-stop in South Florida since the weekend.

The consistent and persistent rain that has been hounding South Florida over the past several days has taken its toll. The ground is saturated and there are puddles and standing water nearly everywhere.

There is also the potential for widespread flooding and a flood advisory is in effect for the Florida Keys extending into the South Florida mainland.

Given the uncertain weather conditions, we could find development of isolated tornadoes and waterspouts.

Weather reports indicate that Wednesday should be the last day of all this nasty wet and wild weather for South Florida. An approaching cold front will push all of this moisture away and bring cooler temperatures.

The heavy rains, flash flooding, and tornadoes, may have also caused damage to your property. Water damage is one of the most commonly cited reasons in claims on home insurance. After heavy rains such as the ones we are experiencing currently, and experienced a few weekends ago, may result in some form of damage to your property.

The first signs of water damage might seem trivial. But warnings like water stains on the ceilings or a leak under the kitchen sink can lead to real problems, like a weakened roof or rotten floorboards. A burst pipe can even damage your furniture and other personal possessions.
Consider Your Options. Contact Us Today.

If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP at 305-263-7700 or toll free at 866-518-2913 for a free and confidential consultation to discuss your rights.

This Year is Proving to be one of the Costliest Years Ever for Weather Disasters

tornadoDM3030a_800x533.jpgThe National Weather Service estimates that weather disasters have cost more than $35 billion this year, based on insurance estimates.

This year has seen some very harsh weather. The year has seen intense floods, drought and tornadoes. In May, a twister killed 160 people in Joplin, Mo. and in April a devastating tornado ripped through Alabama. Texas has been hard hit by a heat wave that will cost the state in excess of five billion dollars in crop and livestock loss.

Nationwide, the number of natural disasters has tripled in the last two decades, according to insurance firm Munich Reinsurance America. Thunderstorm losses since 1980 have become five times more severe, on average. There were $20 billion in such losses by midyear in 2011, doubling the average of the past three years.

In sum, 2011 will go down in history as one of the costliest years in recent years as a result of natural disasters.

Closer to home, we are still in the middle of hurricane season. While South Florida has not been struck by a hurricane in five years, history suggests that it is only a matter of time before another hurricane does strike us. If a hurricane does strike South Florida, it is likely to cause extensive damage to the region.

As such, it is imperative to be prepared. This blog has many useful links to learn more about what you can do to prepare in advance of a hurricane’s arrival, and how to deal with a hurricane’s aftermath.

Florida’s Legislators Were Motivated to Reform Property Insurance Due to a Recent Rise in Sinkhole Claims

sinkhole.jpgInsurance companies may have won another battle to raise rates on hard working Floridians. They may have convinced Florida’s lawmakers to free them from providing comprehensive sinkhole coverage. Even though there is evidence which demonstrates that the rise in sinkhole claims are wholly legitimate, our legislators decided to side with insurance companies complaining about fraud and frivolous sinkhole claims. According to geologists, the recent rise in sinkhole reports can be attributed to the weather.

According to one geologist, you can almost predict sinkholes will occur when its dry and lots of water is pumped into an area. Also, the combination of low water levels and a big rain will lead to sinkholes. To illustrate this point, let’s take a look at some facts.

Between 1991 and 1998, we received normal levels of rainfall and 55 sinkholes were reported each year during that time period. From 1999 to 2001, we faced drought conditions and then the average number of reported sinkholes rose to 93 a year. The spike can be attributed to large amounts of water being pumped during the dry spell.

Currently, Hillsborough County is ripe for sinkholes because of the 2010 drought which was followed by a cold winter that saw many farmers pump water to protect their crops. In 2010, there were 171 sinkholes reported to the Department of Environmental Protection. 150 were in Hillsborough.

Despite a wholly innocent explanation for the rise in sinkhole claims, bills are being proposed that would remove the requirement for insurance companies to offer comprehensive sinkhole coverage. Some bills are proposing that insurance companies will only be required to offer coverage for total ground collapse, which basically means a whole structure falls into the sinkhole.

Its quite the shame that our elected officials are not taking into account the opinions of geologists who are providing an honest explanation for the rise in sinkhole claims. Sadly, it appears that our State can’t stand up to an insurance company when they are not telling the whole truth.

At Alvarez & Barbara, LLP we don’t take an insurance company for their word. On a daily basis, we aggressively represent homeowners, and businesses, who need help standing up to their insurance companies when they have been mistreated. Don’t hesitate to contact us if you find yourself having difficulty with your insurance company.

Danielle? Earl? Fiona? Our Firm Stands Ready to Help Miami Homeowners if a Named Storm Strikes South Florida

So far this year there have been three named storms and two tropical depressions. Any of these storms are strong enough to do significant damage. However, only Bonnie reached South Florida and her impact was minimal.

Tropical depressions are storms with winds of up to 38 mph and are identified only by numbers; tropical storms are given names and have winds form 39 to 73 mph and hurricanes have winds above 74 mph.
Storms so far in 2010 have included:
-Hurricane Alex: Reached speeds of 100 mph and made landfall in Mexico.
-Tropical Depression Two: Speeds of 35 mph and followed Alex’s path into Mexico.
-Tropical Storm Bonnie: The only real threat so far to South Florida, she reached speeds of 40 mph.
-Tropical Storm Colin: Reached speeds of 60 mph in the mid-Atlantic but never threatened land.
-Tropical Depression 5: Formed off Southwest Florida and wandered through the Gulf of Mexico before breaking apart.

Our Miami hurricane damage lawyers urge you to take the South Florida hurricane season seriously and properly prepare for the safety of you and your family. Our staff will be available around the clock in the event of a serious storm and can assist you in filing claims or handling disputes with your insurance carrier.

Storms are named in order of the alphabet each year, except for the letters q, u, x, y, and z, which are omitted. Whenever a storm causes serious damage, like Wilma or Katrina, the name is retired and replaced.

Names for 2010 are:

If you are facing a dispute over an insurance claim in Florida, contact Alvarez & Barbara, LLP toll free at 866-518-2913 for a free and confidential consultation to discuss your rights.

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