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The 2013 Hurricane Season Promises to be a Busy One

images (1).jpgAccording to recent reports, we should anticipate a busy hurricane season in 2013.

Higher than normal temperatures in the Atlantic, among other factors, hint at a busier than normal hurricane season. Indeed, the past three years have been fairly active as each of the past three seasons have produced 19 named storms. However, South Florida has been spared a direct hit from a major storm since Hurricane Wilma passed through South Florida in October of 2005.

Last year, Superstorm Sandy was the most memorable storm of the season causing $75 billion in damages just before the presidential election.

This year, forecasters are predicting the following:

16 total storms;
9 hurricanes;
4 major hurricanes.

Predicting this season is also less predictable than in years past. The reason being is that this year there is no El Nino or La Nina.

The official hurricane season forecast by the National Hurricane Center comes out in late May, and hurricane season starts on June 1st.

It is never too early to start planning for hurricane season.

Coastal Populations Grow Yet Storms are Growing Stronger

coastal-damage.jpgEveryone seems to want to live on the beach. As a result, coastal populations now make up 40% of the total population. Yet our nation’s coastal region only consists of 10% of the Country’s total land area.

If current trends continue, the U.S. coastal population could reach 134 million in 2020, up from 123 million in 2010.

And while Americans continue to flock to the coasts, the costs of disasters increases with every household that moves there. That risk is also carried by the rest of the nation’s underwrites who asses that risk and offer insurance coverage.

Part of the reason why the National Flood Insurance Program is so far in debt is because over the last several decades our coastal areas have been repetitive targets for natural disasters. And the strength of those natural disasters have only increased.

In Florida alone over 16,000 properties have been lost, multiple times because of flooding; meaning the public has paid to rebuild them each time. However, its not just beach condos and waterfront homes, most of the population simply can’t afford to move, so they’re forced into the high risk areas, low-lying areas that see repeated flooding.

The population numbers and trends recently released by the U.S. Census Bureau should help guide policymakers who shape regulations governing coastal development.

But with hurricane season upon us, now is the time for all Floridians to start assessing their hurricane preparation plans. Especially for all Floridians that live on our beautiful coast line.

Don’t Delay in Reporting Your Insurance Claims

insurance_claim_form-resized-600.pngWe have previously discussed the frequent litigation of late notice claims and their impact on property owners. Florida court decisions indicate that the best way to place your claim in the best possible light with the insurance company is to immediately notify them of your loss.

However, and for a number of different reasons, “immediate” notice is not always possible. Therefore, and in situations where “immediate” notice is not provided, insurance companies all too often take the position that they have been “prejudiced” by the insured’s failure to provide “immediate” or “prompt” notice of the claim. The nature of that “prejudice” is often the source of much contention in litigation.

Florida courts have been churning out decisions on “late notice” claims as of late. Part of the reason for the decisions that have been issued is in large part a corrective response to the erroneously decided decision in Kroner v. FIGA, which incorrectly suggested that all claims not reported within two years were barred as a matter of law. The appellate decisions decided since then discussing “late notice” claims have all concluded that each case must be evaluated on its own merits and they have all receded from the Kroner conclusion that such claims are barred as a “matter of law” if not filed within two years.

The newest pronouncement of that analysis is a case decided by the Third District Court of Appeal. In 1500 Coral Towers Condominium Ass’n, Inc. v. Citizens, Feb. 6, 2013 WL 440554, the Condo Ass’n notified Citizens of damage to the property five years after the damage was sustained to the property during Hurricane Wilma. The Ass’n was unsure whether the damage sustained would exceed their deductible, and waited to fully assess the damages before notifying their insurers.

The court concluded that a two-step analysis was required. The Court had to determine: (1) if the Ass’n gave timely notice of the damage; and (2) whether Citizens was prejudiced by the late notice. In 1500 Coral Towers, the Court of Appeals agreed that the Ass’n failed to give timely notice. However, they disagreed with the trial court’s decision to grant the summary judgment in favor of Citizens, and sent the case back to the trial court for further proceedings.

The appellate court reasoned that whether or not a delay in the filing of timely notice prejudiced Citizens’ ability to appropriately investigate the claim was a factual question, and was therefore inappropriate for summary judgment. The reason being is that all factual questions are left to a jury to determine. Therefore Citizens was not entitled to a judgment as a matter of law while factual questions remained unanswered.
While this is no doubt a victory for the Ass’n, it is also reminds us that when in doubt report the claim. While the Ass’n may have been attempting to be prudent, their prudence may still end up costing them a lot of money. Even though the appellate court remanded the case back to the trial court for further proceedings, there is no guarantee that a jury will agree with their position that the insurance company was NOT prejudiced with their delayed reporting.

Consequently, you should always promptly notify your insurance company immediately of any damage that you feel may be covered under your insurance policy in order to protect yourself from losing available insurance coverage by waiting too long to report the loss because the insurance company will invariably use that delay to your detriment. When in doubt – don’t delay.

Please do not hesitate to contact our office to discuss your insurance claim needs.

Insurance Company Gets Sanctioned and Admonished for Pursing a Frivolous Defense

Jury verdict.jpgFoolhardy conduct never pays. But every now and again insurance companies truly lose sight of their objectives. A recent case llustrates how unnecessarily difficult insurance companies can make the claims process. In that case, the insurance company ended up paying much more in the long run than it needed to pay if it only handled the claims process in good faith from the outset.

In Albelo v. Southern Oak Insurance Company, the insurance company was sanctioned for its egregious conduct in trying to force a disabled person into probate before it would even consider the claim. Fortunately, the appellate court concluded that the insurance company’s requirement that an insured who suffered from age related cognitive disabilities seek the appointment of a guardian for herself as a condition of maintaining her claim for damages to her home was frivolous, and warranted sanctions against the insurance company. If you find yourself in a situation where the insurance company is giving you the unnecessary run around regarding your insurance claim then please contact us today to discuss further.

Before commenting on the case, a little background is necessary regarding estate planning. As you age you may find it necessary and prudent to execute what is called a Durable Power of Attorney (POA). By doing so you choose who you would like to make decisions for you, and you decide how much authority they have if you’re ever unable to make those decisions for yourself. If you find yourself incapacitated, for instance, later on then the person you elect has the legal authority to make those decisions for you and their actions are as good as if you had acted for yourself.

On the other hand, should you decide not to execute a POA, and you find yourself incapacitated and involved with the court system, then the court will step in and appoint a Guardian for you. A Guardian acts just like the appointed POA. However, you usually don’t get the choice in selecting the court appointed Guardian.

Typically if there’s a valid POA there’s no need for a Guardian if the POA gives the person all the legal rights necessary to act on your behalf. But if you don’t have a POA, then you could find yourself in a situation where drawn out legal battles ensues such as what occurred in the Albelo case discussed in greater detail herein, or worse, what played out nationally with the Teri Schiavo case right here in Florida.

Nonetheless, the 3rd District Court of Appeals recent ruling in Albelo v. Southern Oak makes it clear that some insurance companies don’t seem to understand those distinctions even when they should.
Ms. Albelo, at the time she executed a POA appointing her son, was 78 years old and had all of her mental capacities intact. Only about a month after the POA was executed she found herself the unfortunate victim of a home burglary and a year later she informed her insurance company, Southern Oak Insurance, about the burglary. Despite the time lapse, and purported late notice of the claim, the company acknowledged the loss and cut her a check for $1,690.00. However, a few months after reporting the loss to the company Ms. Albelo submitted a proof of loss form indicating that her damages totaled $57,760.66. Southern Oak argued that Ms. Albelo didn’t initiate the claim, but that it was fraudulently brought by her son. It is undisputed that Ms. Albelo now suffers from age-related cognitive disabilities, hence the POA which provided her son could continue making decisions for her despite any future incapacity.

Southern Oak argued that the claim was fraudulently induced by Ms. Albelo’s son and was not the product of her own capacity. Now, remember, she’s incapacitated and the insurance company knows this. Still Southern Oak pushes the issue of her incapacity, repeatedly stating that Ms. Albelo had to appoint a guardian for her in order to bring the suit. The company didn’t attack the validity of the executed POA nor did they argue that the POA was invalid because Ms. Albelo was incompetent when she executed it; the insurance company simply said that because she was incompetent a guardian had to be appointed for her to sue.

Fortunately for Ms. Albelo, the Appellate Court was so disgusted with the frivolous defense asserted by the insurance company that they issued an opinion solely to explain how ridiculous the insurance company’s actions were and then sanctioned the insurance company accordingly.

Bad Faith Can Still Be Pursued Even After a Favorable Appraisal Award is Issued

insuranceclaimsandbadfaith.jpgIn Trafalgar at Greenacres, Ltd. v. Zurich American Insurance Company, 100 So.3d 1155 (Fla. 4th DCA 2012), the Fourth District Court of Appeal was tasked on deciding whether an appraisal award constituted a “favorable resolution” of an underlying dispute for purposes of filing a bad faith claim. The appellate court concluded that an appraisal award in the insured’s favor constituted a favorable resolution of the underlying breach of contract dispute for purposes of an insured’s bad faith claim.

As with so many insurance related decisions being decided these days, this case has its origins with Hurricane Wilma. This case has its origins with Hurricane Wilma. A shopping center damaged by Hurricane Wilma led to problems for the property owner after the center was denied full payment for its losses by Zurich American Insurance Company. Discrepancies between the purported costs resulted in the hiring of appraisers and finally an umpire to determine the actual damage cost. An amount was determined, and the check was issued. Prior to this resolution the center had filed a breach of contract suit for Zurich’s failure to pay the amount due, but once the appraisal award was dispersed the court granted Zurich’s motion for summary judgment and the suit was over.

However, because the insurance company failed to timely investigate the center’s claim the owner was determined to bring a Bad Faith claim against the company. Bad Faith claims crop up when the insurer fails to act in the best interests of the insured in settling a claim. Zurich argued that the center had not met all the prerequisites under Florida law to bring a bad faith claim.

To bring a bad faith claim a party must show that: (1) that the insurance company has offered no defenses that could defeat the insured’s coverage; and (2) that the extent of loss has been determined and any underlying action resulted in a favorable resolution to the insured.

The court decided the center had met all of those requirements. Zurich had written an appraisal award check to the center, by doing so they waived any and all defenses they might have had against providing coverage for the damages. Because there was an appraisal award, the amount of loss had been determined. The only sticking point, however, was whether the appraisal award constituted a favorable resolution for the insured.

Zurich argued that the granting of the motion for summary judgment constituted a favorable resolution for them not the center. The Court disagreed. They concluded that an arbitration award was a favorable resolution for the insured, and the court saw no reason to distinguish between an arbitration award and an appraisal award. Indeed, the court concluded that all the conditions precedent to bringing a statutory bad faith claim had been satisfied.

Insurance Premiums are Poised to Increase Again Despite Florida Not Being Hit Again by any Major Storms

MIP.pngMany Florida policyholders can expect to see yet another spike in their already high insurance rates at their next renewal. This rate increase is expected to take place even though a major hurricane hasn’t made a direct hit with the state in over seven years.

Yet despite our good fortune, statistics show the average Florida homeowner is paying twice the rates they were charged six years ago, and some are paying even more than that. Many in the industry place the blame on the number of claims submitted to the insurance companies; claims are up 17% over the past ten years, most due to non-catastrophic water damage like leaky toilets, and broken water heaters.

Others are blaming the increase on a lack of competition in the insurance business in Florida. The largest provider in the state, Citizens Property Insurance Corporation is often the only option for many homeowners who can’t obtain policies through private companies.

Citizen’s policyholders have seen an increase of 8.1% statewide in their rates over the last four years, and that trend doesn’t seem to be ending anytime soon.

Yet others argue simple greed is the root of the problem.

Some argue that insurance companies are all to quick to accept insurance premiums, but often times they are just as quick to deny legitimate claims in an effort to potentially maximize profits.

Citizen’s new President argues the company would have to increase rates on all its products by 16.4% to be comparable with the market rates a private company would charge. One Citizens’ board member blames the number of policies and the low rates, calling it a “competitive drag” for the state. Governor Scott agrees that more private companies may be willing to provide coverage if Citizens was reduced in size. Because private companies know they can’t compete with government, no matter what they’re selling. Even so, many homeowners currently insured by Citizens are being shifted to private companies as the corporation attempts to downsize, and many are left to wonder what kind of coverage they can expect from these private companies.

However, rates and coverage don’t seem to be the only issues. Some Citizen’s policyholders are apprehensive about switching to a private company because they believe that there’s more money available to Citizens so they’re more likely to receive a payout if a claim is necessary.

Until there is real meaningful reform this problem will continue to exist in Florida. And Floridians may not be so lucky when the next “big one” hits Florida. Please read our proposed list of reforms that we feel will only help to strengthen the insurance market as a whole.

Florida Supreme Court Ruling Obliterates Common Law Bad Faith Claims

badfaith.jpgThe Florida Supreme Court recently eradicated some significant protections for Floridians in a case involving damage from Hurricane Wilma and dissatisfaction with QBE Insurance Corp.’s handling of the claim and its investigation. In that case Florida’s high court addressed several issues of significant import.

The first issue addressed by the Florida Supreme Court was whether Florida law recognizes a first-party claim for breach of implied warranty of good faith and fair dealing if an insurance company fails to investigate and assess the claim within a reasonable time? The court answered that no such claim existed in Florida.

In reaching its conclusion, the court reasoned that the legislative history indicates that there is no common law first-party bad-faith action in Florida, and limited insured parties to the statutory remedy of filing a bad faith claim. While Florida’s high court acknowledged that several Florida courts have concluded that such claims are permissible, the Court went on to reason that those courts misapplied Florida law. In other words, Florida’s Supreme Court concluded that insureds may only file a claim for bad faith and may not assert a separate claim for breach of the implied warranty of good faith and fair dealing under a first-party insurance claim.

Next, the Court determined if an insured party may bring a claim against the insurer for failure to comply with the statutory language and font-size requirements. QBE partially failed to comply with the notice requirements under the statute. QBE’s Hurricane Deductible notice contained the word “windstorm” instead of hurricane and the font-size was 16.5 instead of the required 18 point. The Court needed to determine if the failure to comply opened QBE up to liability to its insured.

Because the plain language of the statute does not prescribe a penalty for failure to comply with the word-choice and font-size requirements the Court next had to look at whether they would imply one. Looking at the legislative intent when the statute was enacted was important to the Court’s determination. Because the Legislature had provided, in other sections, liabilities for failure to abide by the statutes the Court reasoned that it was clear that it was not the legislature’s intent to impose harsh penalties on insurers who failed to comply with this particular section. The underlying purpose for notice requirements was part of a larger design to provide access to affordable housing insurance in the state through higher hurricane deductibles; the Legislature was not intending to create another avenue for insured parties to sue.

In addition, the notice requirement was created to make certain that the insured was aware of the deductible, and the Plaintiff here, did not argue they weren’t aware of the deductible only that the notice didn’t comply with statute requirements. The Court determined QBE could not be held civilly liable for the failure to comply with the statute requirements and that the judgment was reduced by the policy’s deductible.

The final issued the Court addressed revolved around policy language requiring QBE to remit payments upon a “final judgment.” The plaintiff argued that QBE failed to remit payment within 30 days following the trial court’s final judgment and therefore QBE waived its right to a stay of execution by procuring a bond. The Court disagreed determining that the words “final judgment” would not supersede the ability of a party to obtain a stay of execution by bond and that the “final judgment” wording included any appeal period thereafter.

Making the Best Out of the Worst: Former Florida Insurance Commissioner Reflects on the Aftermath of Hurricane Andrew.

220px-HurricaneAndrew.jpgAs we head towards another legislative session where property insurance will no doubt be front and central, it is important to look back and reflect on the impact powerful hurricanes have had on our great state.

Hurricane Andrew was no doubt a game changer. On August 24, 1992, the storm that no one thought could happen, destroyed South Florida. Former Florida Insurance Commissioner Tom Gallagher reflected on the devastation left in the wake of Andrew. Everything was leveled, “everything was gray and black. There was no green. The palm trees had no palms.” At first he couldn’t comprehend the impact, so at the urging of his sister, Gallagher went to see it himself. He eventually took many insurance executives on trips with him; it needed to be seen to be understood. The trips helped to an extent, and many policyholders received payouts to help with the destruction. But many providers indicated they were leaving the state or were significantly cutting back their coverage to those properties on the coast. To make matters worse, no one was there to pick up the non-renewed or cancelled policies. Gallagher knew he had to do something.

He attempted to slow the escape of many national carriers by instituting a 90-day rule that required providers to give notice of the cancellation or non-renewal. While the providers may have not been happy about the regulations, including those that limited the percentage of policies they could not renew, the companies weren’t in a place to argue. Gallagher also extended the reach of the Florida Property and Casualty Joint Underwriting Association (PCJUA) to include residential coverage for those homeowners insured by insolvent carriers. PCJUA was previously limited to last-resort coverage for commercial properties. This extension eventually led to the creation of the Residential PCJUA, the predecessor of Citizens Property Insurance Corporation, now the largest residential insurer in Florida.

Other changes ensued, state legislators authorized the issuance of almost $500 million in tax-free bonds to fund a shortfall at the state guaranty fund, and established the Florida Hurricane Catastrophe Fund. With no one looking to invest in the policies left behind; the Florida government had to invest in them itself. Gallagher didn’t want to take these actions because of the effect it might have on citizens in the long run, but Andrew’s destruction left him no viable option.

What lessons are to be learned from these events? There are many. But two big ones stick out. Don’t let insurance companies skirt from their financial obligations. And make sure Florida homeowners are protected above and beyond the insurance companies’ financial interests

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.

Third District Court of Appeal Tackles Appraisal Agreements

<a href=""><img alt="Government-Building-450x300.jpg" src="" width="300" height="200" class="mt-image-right" /></a>Appraisal provisions in insurance policies have been getting some much needed attention in the courts over the last few years.  An "appraisal," as defined in a homeowner's insurance clause, is different from the common connotation given to the term appraisal in everyday language. It is not the same as a real estate appraisal used for valuing a home, nor is it equivalent to an estimated value for an item, such as a car or antique. 

Appraisal, as used in a homeowner's policy, is a tool used for determining the value of a home repair dispute that arises from a covered insurance loss.  
Indeed, most first-party property insurance policies contain an "appraisal" clause whereby each party, insured, and insurer, appoint a "disinterested" or "impartial" appraiser who, in turn, selects an umpire to resolve issues of the amount of loss.
The <a href="" target="_blank">appraisal process</a> is an alternative dispute resolution intended to resolve disputes without the need for litigation. Indeed, Florida courts have concluded that appraisal clauses are preferred, as they provide a mechanism for prompt resolution of claims and discourage the filing of needless lawsuits.

Recently, however, insurance companies have become much more sophisticated regarding appraisal agreements.  Insurance companies often send out elaborate agreements detailing the scope of the appraisal before the appraisal process even begins.  Those appraisal agreements are quickly becoming the source of many disputes.  

One such case was recently decided by the Third DCA.  In <a href=""><u>Citizens v. Casar</u>, 2012 WL 6741083 (3d 2013)</a>, the third DCA held that the insurance company was not required to participate in appraisal given that there was an ongoing dispute over the scope of the appraisal agreement.  

In that case, the insured sustained a significant water loss.  Citizens denied a portion of the claim, but agreed to open coverage for another portion of the claim.  The insureds submitted a written appraisal demand for the entire claim.  Citizens, however, only agreed to participate in appraisal for the portion of the claim that they deemed afforded coverage, but not the whole claim.  The insured refused to sign Citizen's proposed appraisal agreement.  As a result, the insured filed suit against Citizens seeking to have the entire claim, as opposed to just a portion of the claim, appraised.  

The trial court ordered the parties to appraisal, but the third DCA reversed the trial court.  In so doing, the third DCA concluded that Citizens had complied with the terms and conditions found in the insurance policy when it agreed to appraise a portion of the claim, but not the whole claim.  The third DCA reasoned that appraisal may be required only as to those disputes concerning which the parties have expressly agreed.  And in this instance, there was still very much a live dispute as to the scope of damages that could be included in the appraisal.  

Appraisal agreements are often tricky.  Insurance companies are becoming more sophisticated and aggressive with their insistence on having an insured sign a detailed appraisal agreement.  However, if the scope of that agreement does not fully and completely encompass the scope of loss, then the insured may be forever barred from asserting a claim for those additional damages that fall outside the scope of the agreement.  

So before one agrees to sign an appraisal agreement, please make sure that the agreement accurately conveys the scope of damages.  If not, then litigation may be required to determine the proper scope of the claim for appraisal. 
Consequently, a <a href="" target="_blank">Miami insurance claims lawyer</a> should always be called to handle significant damage claims and to address any concerns you may have regarding an appraisal agreement.

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