Florida Insurance Law Blog : Florida Insurance Lawyer & Attorney : Mark Nation Law Firm : Orlando, Longwood, Gainesville

Tile floors are cemented into place when they are installed.  Water intrusion at a home can often result in floor tiles becoming loose.  The technical term for this is "debonding" of the floor tiles.  Debonding occurs when water breaks the seal between the tile and the concrete which bonds the tile to the floor.

Debonded tiles can happen whenever there is water intrusion in or around tile floors.  Frequent causes are broken toilet supply lines, broken ice maker lines, leaking windows or walls, and broken washing machine lines.  Debonded tiles also occur when water is used to put out a fire. 

Debonded tiles are covered under most homeowners insurance polices in the State of Florida.  Also, importantly, often the tiles cannot be resealed, but have to be removed.  When tiles are removed, they frequently crack.  If you cannot match the new replacement tiles with your old tiles then your homeowners insurance company must replace all contiguous floor tiles.  Your homeowners insurance company will often not tell you about this matching requirement.  

It is easy to determine if you have debonded tiles.  You can determine if tiles are debonded by simply tapping on the tiles with a broom handle of screw driver handle.  Properly affixed tiles will sound and feel solid.  Loose tiles will have a hollow sound when tapped, and will feel loose.  

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My client, a local lawyer, sustained substantial wind damage to his tile roof as a result of the severe unnamed storm that hit our area on March 30, 2011.  He submitted the claim to his homeowners insurance company.  The insurance company had his roof inspected by an engineering firm that found that his tile roof - which had been in place for about 15 years without any problems - had been improperly installed. 

Based on the engineering report, the homeowners insurer denied the claim.  The insurer and the engineering firm it hired ignored the facts that: 1) prior to March 30, 2011 the roof was working perfectly; and 2) during the storm, many of his roof tiles were blown off and others shifted. 

Yesterday, I filed a lawsuit against the insurance company for breach of contract. I suspect that once the insurance company hires a lawyer he will tell the insurer to settle this case. 

The important lesson for homeowners in this case is that you still have options even if your insurance company hires a professional engineer who writes a report against you.  My promise is simple: I will review any insurance denial for free.  Never evaluate an insurance company denial on your own.  What may seem like a bullet-proof denial to you, may really be simple to overcome. 

As with most of my roof cases, if I win, the insurance company will be required to pay my fees and costs, and if I lose, I'll work for free. 

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After back-to-back trials which ended last week, I've been quite busy meeting with new clients.  In this case, my client's homeowners insurance company confirmed that his house was suffering from damage from sinkhole activity.  The insurance company hired an engineering firm to prepare a sinkhole remediation plan.  On its face, the remediation plan appeared deficient. 

I sent the insurance company's remediation plan to a geotechnical engineer for review.  The review confirmed that the insurance company's remediation plan was indeed deficient.  It failed to include sufficient grouting and failed to utilize underpinning. 

Today, I filed a lawsuit against my client's homeowners insurance company in order to force the insurance company to pay for an appropriate remediation plan. 

As with most of my insurance cases, if I win, the insurance company will be required to pay for my hourly fees and costs, and if I lose, I'll work for free. 

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My client owns a business which operates out of a wooden building which was built in 1956.  Recently, upon arriving at the business, my client noticed that ceiling was sagging.  Upon further inspection, it was determined that one of the wood trusses had cracked.  The one cracked truss, has now led to another cracked truss.  Because of the problem, the building is uninhabitable.

My client reported the claim to his property insurer.  The property insurer summarily rejected the claim, alleging that the cracked truss was due to old age, and poor construction. 

Today, I filed a lawsuit against the property insurer under the collapse coverage.  The collapse coverage contained in most policies is quite broad and allows recovery if there is a sudden falling down or caving in or a building or any part of a building.  The cracking of the truss was sudden, and certainly constitutes a "part of a building." 

As with most of my insurance cases, if I win, the insurance company will be responsible for my fees and costs, and if I lose, I'll work for free. 

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My client’s homeowners insurance company has confirmed that a sinkhole is damaging his home. Additionally, several of his surrounding neighbors have sustained significant sinkhole damage. The insurance company retained an engineering firm to come up with a sinkhole remediation plan. The plan suggested by the insurer’s engineering firm is inadequate in two very significant respects. 

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My clients sustained lightning damage to electrical items in their home. A few weeks later, someone stole their truck from their driveway and torched it.  The truck contained a significant amount of Ham Radio equipment as well as other items. They filed claims with Allstate, their homeowners insurance company, for the lightning damage, and also for the stolen/burned items from the truck.  (Yes, most homeowners policies cover items stolen from your car).  

Because of the amount of electronics and radio equipment involved, as well as what Allstate claimed were other irregularities, Allstate put its Special Investigations Unit on the claims. Prior to us becoming involved, Allstate took 3 recorded statements from our client, and received photographs and documents that supported the claim. Then Allstate set my clients for an Examination Under Oath. At that time we were retained.

Allstate claimed that it had requested our clients to fill out a Sworn Statement in Proof of Loss prior to them retaining us. After we were hired, we requested blank POL forms to fill out, as well as a copy of the policy. Neither was provided to us.

Our clients sat for their EUO’s. The day after the EUO’s were completed, we wrote a letter to Allstate asking if they needed anything else in order to evaluate the claim. They did not respond to that letter. So, we waited, and waited, and waited. Ninety-two days after their EUO’s with no word from the insurer we filed suit.

Allstate defended by claiming that the insureds had failed to timely file a sworn statement in proof of loss, and that the insureds had committed fraud in the presentation of the claim.

The case went to a jury trial in October. We won.

Just prior to the case going to the jury, the judge dismissed Allstate’s claims of fraud. The jury then determined that while the insureds did not file the POL forms, Allstate was not prejudiced by that failure.  In other words, Allstate had all the information it needed to evaluate the claim.

I want to thank our fantastic clients who would not back down.

Because we were successful, Allstate will be required to pay all of our fees and costs incurred in prosecuting the case.
 

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One of the most common types of homeowners claims is for water damage.  And, one of the most common types of claim denials or underpayments I see is for water losses. 

In many cases, the insurance company will deny the claim and assert that it is not covered, or will low ball the damage.  Typical illegal denials include where the insurance company says that the water loss is due to wear and tear, or improper maintenance, or that the leak was caused by a plumber.  These are covered losses under your policy, although the insurance company may tell you otherwise. 

Yesterday, I was retained by a homeowner who had a water leak.  The estimate for repairs was around $32,000.  The insurer agreed that the loss was covered, but then low balled the damage at $13,000.  The adjuster told my client that was all he was going to pay "no matter what."  Upon hearing this, most people go away.  I'm sure that is what the adjuster was hoping. 

Instead, I filed a a breach of contract lawsuit against the insurance company.  If I win, the insurance company will be required to pay my fees and costs, and if I lose, I'll work for free. 

Please know that I promise to look at any insurance denial for free.  Even if you think there is no way to overturn the denial; even if the insurance company has an engineering report against you; even if you think the insurance company is right...let me look at that denial for free. 

Fighting the good fight. 

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My client's slate roof was damaged by wind in a severe March 30, 2011 unnamed storm.  I have many, many roof cases arising from this severe wind event.  Several tiles were blown off during the storm.  Thankfully, there is no leaking yet.  Nor, does there have to be in order to force your insurance company to replace your roof.   

My client submitted the claim to his homeowners insurer.  His insurance company sent out an engineer who wrote an extensive report which concluded that the roof was not damaged in the storm, but instead needed to be replaced because it was old.  I am convinced that in many of these cases the insurance company gets the report it wants and hopes the homeowner just goes away.  Sadly, many do.  This one did not.

Yesterday, I filed a breach of contract suit against my client's homeowners insurer.  I've probably handled over 1,000 of these roof cases over the past 21 years.  This is actually one of the easier ones. 

What is most disconcerting is that I know that most homeowners just go away after receiving an engineering report from the insurance company.  That is why I promise to look at any insurance denial for free!

Further, in most of my insurance cases, if I win the insurance company has to pay my fees and costs, and if I lose, I'll work for free!

Do not go it alone.  Every insurance case I've won has one thing in common.  The insurance company refused to pay.  Most of the time, there is an extensive engineering or other expert report explaining why the insurance company doesn't owe anything.  That denial letter is not the end of the inquiry, it is just the beginning. 

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My client was having her roof replaced in July of this year.  Unfortunately, during the tear off process, the roofers left the roof open when they finished working for the day.  As you can imagine, there was a large storm that evening.  My client's home was inundated with water. Her ceilings caved in, and her walls, carpets and other items throughout the house were destroyed.  Additionally, she hasn't been able to live in the house since July, and her pets have had to be boarded at a kennel since July. 

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My client purchased a standard Florida homeowners insurance policy when she bought her home in 2006.  At the time of the purchase her mortgage company required a home inspection.  The home inspection revealed that the roof was in good shape with no noticeable damage.  In 2010, she noticed that several of her neighbors were having their roofs replaced at the same time.  She asked one of the roofers performing the work to inspect her roof.  The roofer found that her roof had substantial hail damage. 

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My client's homeowner's insurer retained the services of a geotechnical engineering firm and geologist to perform a sinkhole investigation at my client's home.  The insurance company's engineers and geologist wrote a report concluding that there was no sinkhole activity at the insured's home.  However, while the engineering/geologist's report concludes that there is no sinkhole activity, the data in the report proves that there is a sinkhole.  Plus, the report seems to omit some very important information that one would expect to be in a statutorily compliant sinkhole investigative report. 

Unfortunately, insureds are not capable of reading and understanding the finer points of a sinkhole investigation report.  Once I received the report, we filed a lawsuit against the homeowners insurer for improperly denying the existence of a sinkhole.  Immediately upon receiving the lawsuit, the insurance company demanded "neutral evaluation." 

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In Alderman v. BCI Engineers & Scientists, Inc., ____ So.3d ____ (Fla. 2^nd DCA Sept. 2, 2011), the insured homeowner hired BCI Engineers & Scientists, Inc. (BCI) to 1) perform a subsurface sinkhole investigation; and 2) supervise the remediation of the sinkhole activity. The insured also filed a claim with State Farm, his homeowner’s insurance company, for losses due to sinkhole. State Farm agreed to pay the sinkhole claim, and the remediation commenced. Some time during the process, the insured entered into a settlement agreement with State Farm releasing State Farm and any of its “contractors” and “privies” from any claims “in relation to the filing of insurance claims.”   

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On March 30, 2011 a severe unnamed storm hit Central Florida with high winds, rain and hail.  Since then I have filed at least 20 lawsuits against various homeowners insurers for wrongly denying roof damage claims.  Most of those cases were immediately settled by the insurance company as soon as they received the lawsuits. 

Yesterday, I settled another one, and filed another lawsuit on a new one.  In most of these cases, the insurance company has hired a roof consultant or an engineer to say that the roof is old and has no wind damage.  In each of the cases, I have been able to document that the roof was fine before the March 30 storm and sustained severe wind damage as a result of the storm. 

The team I assemble in these cases typically includes a qualified roofer, an engineer, and a forensic meteorologist. 

In almost all of my roof cases, the insurance company is required to pay my fees and costs if I win, and if I lose I work for free. 

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My client's home is insured by State Farm Florida.  On July 1, 2010, there was a significant wind event in east Orange County, Florida.  My client submitted the claim to his homeowners insurer.  The homeowners insurer hired an engineering firm to inspect the house.  The engineers hired by the insurance company wrote a report that there was no wind damage on the roof, and that any problems with the roof were due to the fact that the roof was over 20 years old.  

However, prior to the July 1 storm the roof was not leaking and was otherwise functioning fine.  The roof has substantial wind damage.  (Such damage is relatively easy to see.  For an article I wrote on how to determine if a roof has wind damage click here http://www.floridainsuranceblog.com/articles/insurance-coverage-homeowners/roof-claims/  The article also has a video showing a roof inspection, and how to prove wind damage to a shingle roof.)

In many homeowners claims, an insurance company will hire engineering firms to write them a report.  Often those reports are quite favorable to the insurance company.  If this happens to you DO NOT get discouraged.  The fact that an engineering firm says that there is no wind damage, or no sinkhole damage, etc is not the end of the inquiry, IT IS JUST THE BEGINNING.  Essentially, every insurance case I've ever won started with a denial letter. 

My deal with people is simple:  Never evaluate an insurance denial on your own.  I will look at any insurance denial for free.  If the insurer is correct I will let you know, and if they are wrong I will let you know that also. 

In this case, because of the refusal to pay for the wind damage, I filed a lawsuit today for breach of the insurance policy. 

As with most of my insurance claims, if I win this case the insurance company will have to pay my fees and costs, and if I lose, I'll work for free. 

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My client's home was damaged by fire in 2010.  At the time of the fire she was insured with Citizens Property for her homeowners insurance.  Citizens sent out an estimator who initially estimated the damages for approximately $40,000.  My client's contractor estimated that the damage was approximately $130,000.  Citizens later sent an additional check for another $40,000. 

My client hired me today to help her with the claim.  Today, I filed a lawsuit against Citizens for breach of the insurance policy for failing to properly pay for the fire damages. 

My client has been out of her house for nearly a year now, and there is no way she could afford to hire me by the hour.  So, my deal with her is simple.  As with most of my insurance cases, if I am successful Citizens will be required to pay my fees and costs, and if I lose, I'll work for free. 

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Florida Statutes currently require homeowners insurers to provide their insureds with sinkhole coverage.  The statutes define "sinkhole loss" as sinkhole activity that causes "structural damage" to a home.  Structural damage is not defined in the statute.  However, homeowners insurance company, USAA, applies a very narrow definition of "structural damage" against its policy holders.   

My client has USAA, and reported what he thought was sinkhole damage to USAA.  USAA sent engineers to my client's home to perform sinkhole testing.  The engineers confirmed the existence of sinkhole activity causing damage to the home, but USAA stated that the level of damage to not rise to the level of its very narrowly drawn definition of structural damage. 

USAA's definition of "structural damage" is too narrow.  Because the sinkhole statute doesn't define structural damage, the court will utilize a dictionary definition.  The dictionary definition of structure damage is damage "of or pertaining to a structure."  Under this definition of structural damage, the sinkhole damage to my client's home would be covered. 

Today, I filed a lawsuit against USAA seeking to have a court throw out its definition of "structural damage" and apply the common everyday definition. 

If I am successful, the court will require USAA to pay my fees and costs, and if I lose, I'll work for free. 

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Yesterday, I took the deposition of an engineer and field geologist who had been retained by an insurance company to evaluate the presence of sinkhole activity at my client's house.  The engineering firm performed testing and gave the opinion that there was no sinkhole.  However, contrary to the conclusion stated in their report, the actual test results in the report indicated that there was indeed sinkhole activity causing damage to the home.  I filed suit against the insurance company for breach of contract.

Interestingly, in its final report, the engineering firm hired by the insurance company wrote that  “testing of soil samples was judged to be unnecessary to conduct this study.” However, in his deposition yesterday, the writer of that report, admitted that, contrary to what he wrote in the report, he did indeed test various soil samples with hydrochloric acid. That testing and his test results are documented in handwriting on the boring logs contained in the engineering company's internal files. HCL testing is the quintessential laboratory test in a sinkhole investigation. The HCL testing was reactive for the presence of the building blocks of limestone, and indicative of dissolved limestone under my client's residence.

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Our clients’ home in Volusia County, Florida was severely damaged by an electrical fire. They filed a claim with their homeowner’s insurer, Citizens Property Insurance. Despite being presented with much higher estimates from contractors retained by my clients, Citizens is only willing to pay in accordance with its own adjuster’s estimate. Citizens is refusing to acknowledge that my clients’ ordinance and law coverage applies to bring the house up to code. They are also attempting to repair several items that should be replaced.

Although our clients just recently sought our help, they have been fighting with Citizens for over 2 years on this claim. During this time, they have been living outside their home because they do not have sufficient funds to complete the home repairs. Therefore, in our breach of contract lawsuit against Citizens, we will not only seek recovery of those unpaid damages covered by the policy. we will also seek recovery of all damages (even if they are not covered by the insurance policy) incurred by our clients as a result of Citizens not paying the claim in full in a timely manner. These types of damages are called consequential damages and are recoverable in Florida in a breach of contract action.
 

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In an order dated March 2, 2011, the Circuit Court in Hillsborough County ruled that damage caused to a home by Chinese Drywall was covered under a standard Florida homeowners insurance policy.  The Court further determined that policy exclusions for "wear and tear" and "errors, omissions, and defects" did not apply. 

While the coverage for the dwelling itself is covered under the "all-risk" portion of the policy, damage to personal property in the dwelling is only covered if it is damaged by a "named peril."  "Smoke" was a named peril in the policy (as in all standard Florida homeowners policies).  Smoke is not defined in the policy, so the court utilized a dictionary definition of smoke.  Merriam-Webster defines smoke as "a suspension of particles in an gas."  The Court then found that the sulfur particles contained in the "off-gassing" caused by the Chinese Drywall constitutes "smoke" under the policy.  Accordingly, the Court held that the damage to the insureds' personal property was covered under the policy. 

A copy of the Court's decision can be downloaded by clicking here.

This policy did not contain a pollution exclusion.  It is unclear how that particular exclusion would have played out in this case. 

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My client resides in Punta Gorda, Florida and has his homeowners insurance with Citizens Property Insurance.  His water heater malfunctioned and flooded his home with water.  He reported the claim to Citizens Insurance.  Citizens said that the loss was not covered because the water heater malfunctioned.  Citizens cited a clause in their policy that excludes losses caused by defective products.     

However, this clause only excludes the damage to the defective part itself, not damage caused by the defective part.  The water damage is covered.  I see this type of denial from various insurance companies all the time.  To an unsuspecting homeowner, this may sound reasonable, but it is dead wrong.  Homeowners insurance covers this type of loss. 

Yesterday, I filed a lawsuit against Citizens for breach of contract.  As with many of my insurance cases, if I win the insurance company will be required to pay all of my fees and costs; and if I lose, I'll work for free. 

I handle these types of cases all over the State of Florida. 

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My client resides in Dunedin, Florida and has his homeowners insurance with Citizens Property Insurance.  The roof on his condo leaked, and damaged his wood flooring and walls.  He reported the claim to Citizens Insurance.  Citizens said that it was the fault of roofers who had recently been hired by his Condo Association, and that either his Condo Association or the roofers were responsible.  Wrong.   

This is a common tactic which I see quite frequently.  To an unsuspecting homeowner, this may sound reasonable, but it is dead wrong.  Homeowners insurance covers this type of loss, plain and simple.  If the loss was caused by a negligent party, then the homeowners insurer is supposed to pay the claim; and then the insurer will sue the negligent party in order to get its money back as well as getting the insured's deductible back.  Nothing could be clearer.

Yesterday, I filed a lawsuit against Citizens for breach of contract.  As with many of my insurance cases, if I win the insurance company will be required to pay all of my fees and costs; and if I lose, I'll work for free. 

I handle these types of cases all over the State of Florida. 

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Allstate Floridian, which is now Castle Key Insurance Company, insures my client's luxury home.  After noticing cracks in the walls and flooring, my client asked her insurance company to perform sinkhole testing.  The insurer confirmed the existence, and proposed a remediation plan.  The remediation plan did not include underpinning.  Given the significant sinkhole activity present at this sight, an appropriate sinkhole remediation plan should include underpinning.  Additionally, the amount estimated by the insurance company for damage to the house is not sufficient. 

In order to prove the appropriate remediation plan, and the amount of structure damages, I have retained a geologist, a technical engineer, and forensic general contractor.  

Today, I filed a lawsuit against Castle Key in order to force them to pay for the underpinning, as well as the appropriate amount for the damage to the home.  In many of these cases, if I win, I can force the insurance company to pay my fees and costs. 

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On Monday, I took the deposition of a "neutral" evaluator in one of my sinkhole cases.  In this particular case, my client submitted a possible sinkhole claim to her homeowner's insurance company.  The homeowner's insurer hired engineers who did testing and stated that there was no sinkhole activity.  (A review of the engineer's testing actually confirms the existence of a sinkhole, even though their conclusions state that there is not, but that is another blog). 

When she received the insurer's engineering report, my client naively requested a "neutral evaluation."  The "neutral" evaluator reviewed the insurance company's engineering report and gave the opinion that there was no sinkhole.

I have never seen a "neutral" evaluator disagree with an insurance company's report.  Never.  At his deposition on Monday, this "neutral" evaluator testified that he has done many such evaluations and he has NEVER disagreed with the insurance company's conclusions. 

To further compound this problem, the Florida Statues say that the neutral evaluator's conclusions are "presumed correct." 

This particular engineer also confirmed that 1) he solicits sinkhole business from insurance companies; and 2) doing these evaluations was a good way to get his name in front of insurance companies to let them know he's available to do sinkhole investigations for them.  This is typical, as most of the neutral evaluators I've seen also do substantial work on behalf of the insurance industry. 

Bottom line: Homeowners, DO NOT ASK FOR A NEUTRAL EVALUATION.  Not only do the evaluators typically do substantial work for the insurance companies, but they also routinely find in favor of those insurers, and our Florida Statutes say that their conclusions are presumed correct. 

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My client's homeowners insurer, Nationwide, confirmed the presence of sinkhole damage at his home.  However, the remediation plan proposed by the insurance company's engineers only calls for underground grouting.  The insurance company also estimated the damage to their insured's home (which appeared at first blush to be quite light). 

I retained a geologist, engineer, and forensic general contractor to determine the proper remediation plan and the proper amount to repair the damage to the home.  These experts determined that the remediation plan, and damage estimate are both inadequate.  According to the geologist and geotechnical engineer, the home needs underpinning in order to properly remediate the sinkhole.  The forensic general contractor believes the damages to the home are much more than what was estimated by the insurance company. 

Yesterday, I filed suit against Nationwide in order to have a jury determine the proper remediation plan, and the amount of damage to the home. 

A lot of the times, in this type of case, if I win, the insurance company is required to pay my fees and costs, and if I lose, I'll work for free. 

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My client's home has been sinking.  She submitted a claim to her homeowner's insurance company which sent out a geotechnical engineer and geologist to investigate the claim.  The engineer and geologist concluded that the home was sinking because of the "high organic content" in the soil, and was not due to any sinkhole activity. 

Contrary to the engineer's and geologist's conclusion, their actual tests results indicated that the sinking home was indeed due to sinkhole activity.  I filed a lawsuit against the insurer for breach of contract. 

I spent the day today taking the deposition of the insurance company's geologist.  The case is currently set for trial in April. 

As with many of my insurance cases, if we win, the insurance company has to pay all of my fees and costs, and if we lose, I'll work for free.  There are no out of pocket fees or costs for my client. 

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There was a water leak at my client's home caused by pinholes in copper tubing. The leaks occurred in the crawl space under the floor. The home was insured at the time of the leak by Nationwide.

My client realized there was a problem when the floors in her home began to sink down and separate from her walls. She called her homeowners insurer who sent engineers to investigate the claim. Based on the engineers' report, Nationwide denied the claim. In denying the claim, Nationwide relied on the following exclusion:

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Proving a sinkhole case on behalf of a policy holder depends a lot on teaching the jurors about geology, construction, and engineering.  One of the ways I do that is through 3-D drawings which I prepare in each sinkhole case. 

Some examples from a recent case are set forth below.  While these images won't move in the blog, I am able to rotate and spin these images for the jury.  (These may be slightly grainy in the blog, but are crystal clear in my 3-D software). 

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I have previously written rather extensively about insurance coverage for wind damage to roofs.  You can see my articles on roof claims by clicking here:

http://www.floridainsuranceblog.com/articles/insurance-coverage-homeowners/roof-claims/

When litigating roof claims it is important to document the wind damage.  Wind damage is somewhat easy to see if you know what to look for. 

Shingles are manufactured with a sealing strip on the bottom of the shingle which seals them to the shingle below.  Shingles in good working order should be solidly sealed to the shingle below.  You should not be able to lift the shingles easily.  

I've attached a video of a recent case which readily shows wind damage to a shingle roof.  You will note that the shingles are easily lifted, and that there is debris blown in between the shingles.  There's only one way for debris to get between shingles and that is from wind.  You can view the video below.

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Spent the day yesterday in beautiful Bartow taking the deposition of the Geotechnical Engineer who performed sinkhole testing on my client's home on behalf of her homeowners insurance company. 

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I have previously written on what is and is not "flood" damage.  Now, another chapter in that same story.

My client's home was inundated with water when the fire hydrant at the front of his property literally blew off.  The ensuing deluge undermined the foundation of his house, and penetrated his frame walls, and soaked his garage.

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My client notice water staining on his first floor ceiling.  His home was a two story house.  He is a building contractor and opened up the ceiling and found significant damage to the wood member and floor joists supporting the second story.  All of this wood damage was hidden from sight before he opened up the ceiling. 

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My client's rental condo was for sale.  He and his wife did not live in the condo, but lived nearby.  One day their realtor called and advised that he went to show the condo, and found water on the floor in several rooms. 

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My clients sustained a fire loss at their home.  The fire, smoke and water also significantly damaged their personal property.  As a result, they were out of the house for quite a while and incurred additional living expenses. 

The claim was submitted to their homeowners insurance company for payment.  The insurance company has paid some of the losses, but has simply refused to pay for the entire loss.  Instead of paying the claim, the insurance company has also consistently requested that my clients provide it with documents which they have already repeatedly given to the insurance company. 

My clients' public adjuster eventually demanded appraisal.  In response, the insurance company named its appraiser, while refusing to give his phone number or address.  Since identifying its appraiser (by name only), the insurance company has refused to participate in the appraisal process. 

Yesterday, I filed suit for breach of contract as a result of the homeowners insurance company failing to pay the loss.  At this point, the insurer has waived its right to demand appraisal, and we will be pursing litigation.

As with almost all of my insurance cases, I take no fees and costs from my client. If I win, the insurance company must pay my fees and costs, and if I lose, I'll work for free.

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My client's home was built about 20 years ago in Central Florida.  Less than a year ago, cracks began to show up in various places throughout the home.  My client reported the damage to her homeowners insurer.  The homeowners insurer hired an engineering firm to inspect the home and to determine the cause of the cracking.  The engineering firm (a firm I have have seen helping insurers on many other claims) says that the damage was due to settlement, and thermal expansion, and was not due to sinkhole activity .  Settlement and thermal expansion are not covered under the homeowners policy, but sinkhole damage is a covered cause of loss.

Based on the engineering report, the insurer denied the claim.  My client requested a "neutral evaluator" to review the engineering firm's findings.  Unfortunately, the neutral evaluator agreed with the original engineers findings.  This is not uncommon.  I frequently see the neutral evaluators simply rubber stamp the original engineering report. 

Upon reviewing the engineering firm's testing and boring records, it appears that the damage is indeed due to sinkhole activity.  As a result, I've filed a breach of contract lawsuit against the homeowners insurer.

Additionally, I've filed a Civil Remedy Notice of Insurer Bad Faith.  If the insurance company doesn't "cure" its violation within 60 days of the CRN, then the insurer may ultimately be held responsible for full damages - even if those damages are in excess of its policy limits.   

As with most of my insurance cases, if I win, the insurance company must pay all of my hourly fees and costs, and if I lose, I'll work for free. 

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My client's parents own a home near Orlando.  The parents moved to a new home at the beach, and left their grown son to live in their Orlando area home.  There was a fire at the Orlando area home which destroyed the home, and the son's personal property. 

The property insurer agreed to pay for the damage to the home itself, but denied the claim for the son's personal property.  The insurance company claims that the son is not entitled to any coverage under the policy because he is not an "insured' under the policy.

The policy defines "Insured" as follows:  

You [meaning the named insured - parents] and residents of your household who are: (1) Your relatives....

According to the insurance company, because the parents moved out of the Orlando area home, that house is no longer their "household."  However, elsewhere in the policy, the insurer defines "residence premises" as the one family dwelling where the named insureds reside.  Thus, household and "residence premises" are not the same thing.  Also, case law holds that while a named insured may only have one "residence premises," the named insured may have multiple "households." 

As with most of my insurance cases, if I win, the insurance company will pay my hourly fees and costs, and if I lose, I'll work for free.  There are no out-of-pocket fees or costs for my client. 

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My client had a back up of raw sewage into his home from a blockage in a plumbing line.  He insures his home with American Traditions.  The insurance company denied the claim based on an exclusion for "water damage" that results from a "back up of water through a sewer or drain."

Today, I filed a declaratory judgment action against the insurance company for wrongfully denying the claim.  There are numerous reasons why I believe that the claim is covered. 

First, there is a significant difference between "water damage" and damage from raw sewage.  Case law indicates that those two things are two completely different types of loss.  Thus, while water damage may be excluded, damage from raw untreated sewage is not excluded under the insurance policy.

Second, this was not a back up "through a sewer or drain."  Sewers and drains are outbound lines which begin at the property line and take sewage from the property.  The lines that travel from the plumbing fixtures in the house to the property line are not considered "sewers and drains" for purposes of homeowners policies. 

In this case, and in most of my insurance cases, if I win, the insurance company must pay my fees and costs, and if I lose, I'll work for free. 

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My client's home was built in 1979.  He recently began seeing cracks in the walls, around windows, and in the ceiling.  He reported the cracking to his homeowners insurer - Universal Property and Casualty Insurance Company.  Universal had an engineer inspect the home.  The insurance company's engineer wrote a report stating that the cracks in the home were caused by settling, and not by sinkhole. 

I have had the home inspected by engineers who determined that the damage is being caused by ongoing sinkhole activity. 

Today, I filed suit against Universal for breach of the insurance policy.  I also filed a Civil Remedy Notice concerning what I believe to be the insurer's bad faith in denying the claim. 

This lawsuit was filed in Nassau County, Florida  I handle insurance cases such as this for policy holders throughout the State of Florida.  As with most of my insurance cases, if I am successful, the insurance company will have to pay all my hourly fees and costs.  If I lose, I'll work for free. 

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You spend a lot of money on homeowners insurance. What does it really cover? And, what do you do if your insurance company denies, low-balls, or simply delays your claim? You have more power than you think.

There are innumerable ways your home can be damaged. You may immediately think of fire and storm damage like a tornado or hurricane. However, there can be water damage from a broken washing machine or ice maker line, vandalism, sinkhole, hidden decay, hail damage, tear gas (yes, tear gas), sewage back-up, damage from blasting nearby or even from vibrations sent through the earth by heavy equipment being used in the vicinity.

I have handled many actual cases involving all these types of damage and many more. I even had a case where someone’s wooden floors were destroyed by someone dancing on them in high heels. It would be impossible to list all the various ways a home can be damaged. As a result, coverage for your home is typically provided as “all-risk” coverage, which means your home is covered for damage from all risks unless there is a specific exclusion.

The most typical homeowners claims in the Central Florida area are:

- Wind and hail damage to roofs.
- Sinkhole damage
- Broken water lines to ice makers, plumbing and washing machines
- Fire damage
- Vandalism and theft

In this article, I will discuss how to identify roof damage, and what to do if you find it.

You Paid for “Replacement” Cost

Your homeowners policy covers all storm damage to your roof. And, not only is your roof covered, it is covered for “replacement cost.” This means that the insurance company has promised you in your policy to replace your roof – regardless of age – if it is damaged by a storm. For example, suppose you have a 20 year old shingle roof that is working fine when it is damaged by a storm. Your policy provides for complete replacement of the roof with no depreciation. Some people feel bad about asking for the entire replacement cost of an older roof. Don’t. You paid for replacement cost in your premium, and the insurance company promised to provide you with replacement cost if you need a new roof.

What if I Suspect Wind or Hail Damage?

If you suspect your roof has been subjected to high winds or hail, you need to have it examined by a qualified and experienced roofer immediately. You can have severe damage to the tiles or shingles on your house even if no tiles or shingles are actually blown off the house. Many roofs look absolutely fine from the ground even though they have been totally compromised by storm damage.

Wind Damage

Shingles have a sealing strip between them. Many times, wind will lift the shingles and break the sealing strip during a storm. After the storm, the shingles simply lay back down in place – looking fine. If that sealing strip is compromised, then your roof likely needs to be replaced. This sealing strip is critically important to the integrity, functionality and longevity of your roof. If the sealing strip is compromised you roof will likely start leaking within a year or two of the wind event. That is why you need to have it examined immediately, before it starts leaking.

Likewise, tile roofs suffer from a similar plight. The tiles themselves on a tile roof system are simply decorative. The water barrier for a tile roof is the underlayment – the paper below the tiles. In a strong wind, the wind can “chatter” the tiles on your roof. This means the wind gets up under the tiles and repeatedly “jiggles” them up and down during a storm. After the storm, the tiles look fine. However, during the storm the chattering tiles have also “jiggled” the nails securing them to the underlayment causing the holes around the nails to open up wider than they should. This allows water to seep in around the nail holes throughout the roof. As with shingles roofer, many times, the water damage does not begin to show up for a year or two from the wind event.

Hail Damage

If your home is subjected to hail, you should also have your roof examined by a roofer. Some hail damage is easy to spot – like when it knocks holes in your pool screen, or dents the metal or lead boots on your roof. But, just as significant is hail damage that can only be seen close up. Often when hail hits a roof it causes what is known as “degranulation” of the shingles. Degranulation can only be seen on close inspection by someone who knows what they are looking for. When hail causes degranulation the integrity of the shingle is compromised, and the serviceable life of the shingle is significantly shortened – all of which warrant roof replacement under your homeowners insurance policy.

Choosing a Roofer

Before allowing a roofer to examine your roof for storm damage, you should quiz him about his experience in identifying storm damaged roofs. Ask him what he will be looking for and how he is going to document the damage. A qualified and experienced roofer will have a camera, video camera, and chalk readily available to document the damage. If you have doubts about the roofer’s ability to be able to identify and effectively communicate the damage to another, then don’t even let him on your roof. Find a roofer in whom you are confident.

If your roofer identifies wind or hail damage, then call your homeowners insurance company. Do not delay. There are certain time limits set forth in your policy that may prevent a recovery if you wait too long after discovering a problem. Ask your insurance company to send an adjuster out to inspect your home. Make sure the adjuster coordinates the visit with your roofer so that the roofer can show the adjuster the damage.

Under the Florida Building Code, if 25% of your roof needs to be replaced, the insurance company is required to replace the entire roof. Under Florida’s Insurance Statutes, even if less than 25% of the roof needs to be replaced, the insurance company must replace your entire roof if the repaired area won’t “match” the existing shingles. This is often the case when new shingles or tiles are interspersed into an older roof. Under either situation above, the insurance company must replace the entire roof with no deductions for depreciation.

What if the Insurance Company Denies, Delays or Low-Balls?

In my experience, most of the times the insurance company does the right thing. Sometimes they don’t. Sometimes, the insurance company will have an “independent” engineer or roofer come to inspect the roof. That “independent” engineer or roofer may say that the roof has no damage, or is simply failing because of age, wear and tear, or poor maintenance. Based on that report, the insurance company may deny the claim in its entirety or offer a nominal settlement. The insurance company’s “no,” is not the end of the inquiry…it is just the beginning.

If your insurance company says “no,” you should contact an attorney who handles roof claims immediately. In a situation such as this, I will always meet with you and review your case for free. Most importantly, in Florida, there is a statute that requires the insurance company to pay your fees and costs if you are successful against your insurance company. This statute is a powerful tool in leveling the playing field between the homeowner and the insurance industry.

Mark Nation is a civil trial lawyer who focuses his practice on helping policy holders in claims against their insurance companies. He has litigated thousands of cases involving homeowners, business owners, life, health and disability insurance against most of the world’s largest insurance companies.
 

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U.S. Property and casualty insurer have sufficient capitalization to withstand what is predicted to be a busy Atlantic hurricane season.  Ruud Bosman, Vice Chairman of the Board of Directors of FM Global, a major global insurer, told Reuters in an interview that

The global property insurance industry is well capitalized at the moment following strong underwriting results from a successful 2009 for insurers, and recovering financial markets.

Private forecaster WSI expects the 2010 Atlantic hurricane season to produce 20 named storms, 11 hurricanes and five intense hurricanes of category 3 or greater. 

A copy of the full article can be found here: http://www.businessinsurance.com/apps/pbcs.dll/article?AID=/20100628/NEWS01/100629920

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My client sustained damage to his roof from Tropical Storm Fay.  After the storm, he found many of his shingles in his yard.  He called a roofer who confirmed that he had sustained wind damage to his roof, and that his roof needed to be replaced.  He also called his homeowner's insurer who stated that all of his roof damage was due to the roofer tarping his roof.  (The roofer had to tarp his roof to keep water from pouring in when it rained. 

Today, I filed suit against my client's homeowners insurer for breach of contract.  As is generally the case, if I win the insurance company has to pay my fees and costs, and if I lose, I work for free. 

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In Warfel v. Universal Insurance Company of North America, ____ So.3d ____ (Fla. 2nd DCA May 12, 2010), the insured homeowner submitted a sinkhole claim to his homeowners insurer, Universal Insurance.  Universal had its own engineers examine the home and the soil under the home.  Based on a report from its engineers, Universal Insurance denied the claim.  

Florida Statue Section 627.7073(1)(c), states that

The respective findings, opinions, and recommendations of the professional engineer or professional geologist as to the cause of distress to the property and the findings, opinions, and recommendations of the professional engineer as to land and building stabilization and foundation repair shall be presumed correct.

At trial, Universal convinced the trial court to give a jury instruction that Universal's experts reports were presumed correct, and shifted the burden of proof to the insured to prove that their damage was due to sinkhole.  In a typical sinkhole case (as with any case where an insurer is attemption to limit or exclude coverage on an all-risk policy) the burden of proof is on the insurance company to prove a limitation or exclusion from coverage. 

The insured argued that the 627.7073 presumption was a "vanishing" or "bursting bubble" presumption merely requiring that he produce evidence contrary to the presumption, not shifting the burden of proof. 

The 2nd DCA held:

Absent a clear legislative directive, we must conclude that section 627.7073(1)(c) is a 'vanishing' or 'bursting bubble' presumption that affected only Mr. Warfel's burden of producing evidence.... 

[W]hen credible evidence comes into the case contradicting the basic fact or facts giving rise to the presumption, the presumption vanishes and the issue is determined on the evidence just as though no presumption has ever existed.  Conversely, if the basic facts are sufficiently proven so as to give rise to the presumption and not thereafter contradicted by credible evidence, the party in whose favor the presumption exists becomes entitled to a directed verdict.  Thus, in either event, the presumption is productive of these procedural consequences but is not a matter of the jury to consider.

The jury is not told of this presumption.  

The court then noted that because the insured presented credible evidence refuting the presumption that the trial court should have allowed the case to go to the jury with the burden on the insurer to prove no sinkhole damage.  The court reversed in favor of the insured. 

A copy of the 2nd DCA's Warfel decision can be downloaded by clicking here.

The Court did cerfity the question to the Florida Supreme Court as one of great public importance.

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In Florida Farm Bureau Casualty Insurance v. Mathis, ____ So.3d ____ (Fla. 1st DCA April 20, 2010), a home was significantly damaged as a result of Hurricane Ivan in September 2004.  The homeowners had a $250,000 flood policy and a $295,000 homeowners policy on the home. 

The homeowners submitted claims to both the flood carrier and their homeowners carrier, Florida Family.  The flood carrier paid its limits of $250,000 and Florida Family refused to pay its limits. Suit was filed against Florida Family and a jury found that the home was a total loss as a result of wind - a covered cause of loss under the Florida Family policy.  Pursuant to Florida Statute Section 627.702 - Florida's Valued Policy Law (VPL) - the trial court then entered final summary judgment against Florida Family for the policy limits less prior payments. 

Florida Family argued that the trial court erred in not reducing the judgment by the $250,000 previously paid by the flood insurer.

The appellate court determined that there should be no such offset or reduction in the judgment.  According to the 1st DCA, the juries inquiry was limited "solely to the amount of wind damage legally caused to the Mathises' residence and whether that wind damage caused a total loss either constructively or because of the cost to repair the damage."  Pursuant to the VPL Florida Family was obligated to pay its entire policy limits if the home was a total loss as a result of a covered cause of loss.  Based on the juries determination the home was a total loss as a result of wind - a covered cause of loss - and therefore the homeowner was entitled to the policy limits from Florida Family. 

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My client insured her home with a standard Florida homeowners insurance policy.  The roof of her home did not leak until hit by strong winds during Tropical Storm Fay in August of 2008.  Shortly after the storm she submitted a claim to her insurance company to evaluate her roof damage.  The insurance company adjuster inspected the roof and found missing and torn shingles, but he advised her that any problem with her roof was due to wear and tear, and not wind damage. 

An inspection by her roofer revealed that the roof had wind damage in every slope of the roof.  Suit was filed today against the homeowners insurance company for breach of contract. 

As a lawyer representing homeowners, I have handled many cases against homeowners insurers for failing to pay for roof damage.  In almost all of those cases, if I win, the insurance company will be responsible for my attorneys fees and costs, and if I lose, I'll work for free.  Initial consultations are always free. 

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As an insurance attorney, I have helped many homeowners with water damage claims against their homeowners insurers.  That includes damage from broken ice maker lines, broken washing machine water lines, overflowing and broken toilets, sewer back-ups, and broken or cracked plumbing lines. 

This blog entry concerns losses or water damage as a result of a cracked or broken plumbing line.  Most Florida homeowners insurance policies cover "water damage," but some contain limitations on damage caused by "repeated or continuous seepage or leakage" from a plumbing system.  However, even if your insurance company denies a claim based on the "repeated or continuous seepage or leakage" exclusion all is not lost.  Many of those claims can still be won by a lawyer skilled in insurance claims.  For instance, many of these exclusions say that the exclusion applies to the repeated seepage must occur over a period of 14 days or a "number of weeks."  By implication, then, all of the damage which occurs in the first 13 days, or before the expiration of a "number of weeks" is by necessity covered.  Further, there is a huge question in my mind about what constitutes a "day" of leaking.  If a shower line leaks only when the shower is in use, and it is only in use for a total of 1 hour per day, then it is my position that the shower did not leak for 1 day, but only for 1/24th of a day. 

Further, many policies will cover the consequences of the water damage, i.e. maybe a policy excludes the water damage in and around a shower, but it will cover the water damage when if caves in the upstairs ceiling.  As you can see, there are many, many ways to evaluate and overcome some common exclusion in homeowners policies.  As with any specialized area, do not try to go it alone.  Contact a lawyer with experience in insurance claims before you give up.  You owe it to yourself and your family. 

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Is termite damage covered under your insurance policy?  It depends on who you ask.  Many insurance companies and insurance agents routinely tell the insured that termite damage is not covered by their homeowners insurance policy, or their business property insurance policy.  In fact, a simple internet search reveals many sites that say it is not covered.  You should not base you decision on what your insurance company or agent tells you; and you certainly shouldn't base your decision on your own internet research. 

However, contrary to popular opinion, termite damage is covered under the terms of some homeowners policies and business property policies.  It takes an experienced lawyer who handles these types of claims to carefully read your insurance policy and determine if damage is covered. 

Let me be clear, you should not make the decision on whether your termite damage is covered or excluded even if there is an explicit exclusion in your insurance policy which seems to unequivocally exclude damage by termites.  For example, an insurance policy may specifically exclude termite damage, but that same policy provides coverage for "collapse."  In that case, termite damage that results in collapse may be covered.  (Also, you should not try to determine what is or is not "collapse."  What is or is not "collapse" is about as complicated as whether termite damage is or is not covered.)

Bottom line, if you have termite damage to your home, you should have a lawyer who is experienced in insurance claims and termite claims evaluate your case.  Not all lawyers are familiar with the interplay between termite claims and insurance policies.  You wouldn't ask a foot doctor to evaluate your brain injury; so don't ask a lawyer unfamiliar with insurance and termite claims to evaluate your case. 

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I represent many homeowners and business owners who are suing their insurance company for roof damage from wind or hail.  Many times, the leaking in the house gets so bad that the roof must be replaced during the course of litigation.  My clients frequently ask whether it is ok to replace their roofs during the litigation.  The short answer is "yes."  But, there are some caveats. 

Prior to replacing the roof, you must notify me and give me enough time to make sure that I have inspected the roof one last time.  I must also give your insurance company an opportunity to make one last inspection of the home prior to the tear off beginning.  

During replacement, I may also want to be present in order to document damage to the underlayment and decking.  We should also give the insurance company an opportunity to be present during the tear off.  Also, I (and possibly your insurance company) may want to keep some of the items from the roof as evidence. 

With those caveats it is perfectly fine for you to replace your storm damaged roof before and during litigation. 

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I have handled many cases where the roof on a business or home has been damaged by wind or hail. 

Storm damage to your roof is covered under your homeowners and business owners property insurance policy. 

Many times, the insurance company will do the right thing.  Some times they don't.  Common strategies to deny claims that I have seen include:

• Sending out an engineer who writes a report that says there is no or little damage.
• Agreeing to pay for only a portion of the roof.  Florida law requires that if 25% or more of the roof is damaged, then the insurance company must pay to replace the entire roof.
• Saying that the roof has deteriorated because of age when, in fact, the roof never leaked until a severe wind or hail storm.  Most shingle roofs in Florida should last at least 20 years.
• Saying that the problems are due to installation, design or construction errors.

I have litigated each of these issues many, many times against some of the world's largest insurance companies. 

In most cases, if I win, the insurance company has to pay my fees and costs, and if I lose, I'll work for free. 

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Typically, water damage from frozen pipes is covered under your homeowners policy.  Some policies require that one of two conditions be met: The insured has to either maintain heat in the building, or shut off the water supply and drain all systems and appliances of water.  (There is an exception to the exclusion if the building has a fire sprinkler system). 

But, what if the heat malfunctions or the power goes out?  In those circumstances the loss should still be covered.  Also, there is typically no exclusion in your homeowners policy for losses from frozen pipes when the home is vacant or unattended. 

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In the past few weeks I've filed several new lawsuits on behalf of homeowners whose insurance carriers have refused to pay for damage to their homes.  These include several suits over storm damage to roofs; water damage to walls from leaks; and damage from a leaking water inlet pipe. 

The roof damage claims include losses from Hurricanes Charlie, Frances and Jeanne, as well as several Tropical Storm Fay claims. 

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Today, State Farm and the Florida Office of Insurance Regulation announced an agreement for State Farm to remain in Florida.  A copy of the Consent Order between the state and State Farm can be downloaded by clicking here.

State Farm's dispute with the state began with a request by State Farm for a 67.1 percent rate increase.  In the Consent Order, the state did agree to a 14.8 percent rate increase. 

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Defective Chinese drywall is a huge problem.  Not only does it stink, but it also causes other parts of the home to corrode.  What is covered, and what is not?

It appears that any damage to the home resulting from the Chinese drywall should be covered.  Chinese drywall causes many of the components of the home to corrode and deteriorate.  Resulting damages include corrosion to metal studs, metal lath, nails and screws, air-conditioning equipment, pipes, coils, wiring, furniture, fixture, and jewelry.  Those "ensuing losses" should be covered, even if the policy does not provide coverage for the tearing out and replacing the defective drywall.

If an insurer alleges that the policy excludes corrosion or deterioration, keep in mind that that exclusion only applies to a losses that are due to a quality in the product that causes the property to damage or destroy "itself."  It does not apply to deterioration or corrosion that is caused to another item.  In the context of Chinese drywall, the drywall is not destroying itself, but is destroying other items. 

Whether or not losses due to the fumes from the Chinese Drywall would be excluded under a pollution exclusion will be addressed in a forthcoming blog. 

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In The Florida Insurance Guaranty Association, Inc. v. Shadow Wood Condominium Association, ____ So.3d ____ (Fla. 4th DCA December 2, 2009), FIGA moved for appraisal of a condo claim.  The insured argued that FIGA's predecessor waived its right to demand appraisal by failing to provide the insured notice of the state sponsored mediation program pursuant to 627.7015(2). 

Subsection (2) of 627.7015 requires the insurer to "notify all first-party claimants of their right to participate in the mediation program under" section 627.7015 "[a]t the time a first-party claim within the scope of this section is filed."  Citing subsection (7), the court noted that:  

If an insurer fails to comply with the section 627.7015(2) notice requirement, then the insured shall not be required to submit or participate in any contractual loss appraisal process of the property loss damage as a precondition to legal action for breach of contract against the insurer for its failure to pay the policyholder's claims covered by the policy.

The court then noted that the predecessor insurer did not properly notify its insured of the availability of mediation, and then held:

 Because FIGA is bound by Southern Family's failure to notify Shadow Wood of the availability of mediation, we hold that Shadow Wood was not required to submit to the loss appraisal process sought by FIGA.

The 4th DCA made a similar finding in another case released at the same time.  See, The Florida Insurance Guaranty Association, Inv. v. Devon Neighborhood Association, ____ So.3d ____ (Fla. 4th DCA December 2, 2009). 

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In State Farm Florida Insurance Company v. Nichols, ____ So.3d ____ (Fla. 5th DCA November 6, 2009), the insured homeowners submitted a claim to State Farm for sinkhole damage.  The amount of the loss was settled by appraisal.  Although the appraisal awarded an amount for subsurface sinkhole repairs, State Farm refused to pay for the subsurface repairs until after its insureds' entered into contracts for the performance of the repairs. 

State Farm based its position on Florida Statute Section 627.707(5)(b) which states:

The insurer may limit its payment to the actual cash value of the sinkhole loss, not including 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. After the policyholder enters into the contract, the insurer shall pay the amounts necessary to begin and perform such repairs as the work is performed and the expenses are incurred. The insurer may not require the policyholder to advance payment for such repairs.

The homeowners argued that, notwithstanding the 627.707(5)(b), State Farm's policy itself required State Farm to pay the full amount of the appraisal award within 60 days after the amount of the loss was settled by the appraisal. 

State Farm's policy stated:

 SECTION I - CONDITIONS. . . .

10. Loss Payment. We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment. Loss will be payable:

a. 20 days after we receive your proof of loss and reach agreement with you; or

b. 60 days after we receive your proof of loss and:

(1) there is an entry of a final judgment; or

(2) there is a filing of an appraisal award with us.

The 5th DCA agreed with the homeowners.  According to the Court, the language of the statute is

permissive, not mandatory.  Because it is permissive, the policy language that requires payment of subsurface repairs within sixty days after the appraisal award is not in conflict with the statute and is binding on the parties to the insurance contract. 

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In State Farm Florida Insurance Company v. Seville Place Condominium Association, Inc., ____ So.3d ____ (Fla. 3rd DCA October 14, 2009) a group of condos was damaged by Hurricane Wilma.  Seville submitted the claim to State Farm.  Seville presented an estimate of damage in excess of $4.6 million.  State Farm initially paid a total of $90,564.62 on the claim.  Thereafter, Seville requested appraisal, which State Farm agreed to if Seville would agree to two conditions: 1) that the appraisal award "must be a line item document, broken down by building and unit number, including the pricing that establishes the award of that item;" and 2) that the insured provided State Farm with a proof of loss form. 

In response, Seville filed suit in Circuit Court for breach of the insurance contract, and declaratory relief regarding coverage and State Farm's waiver of policy defenses.  Seville also requested that the court enforce the appraisal provision without State Farm's required conditions. 

The Court ordered the appraisal without State Farm's conditions.  The Court further ordered that the appraisal be completed in 60 days.  State Farm later moved for an additional 60 days.  The Court granted the extra time, and set a final appraisal hearing for June 28, 2008.  The day before that hearing, State Farm filed an emergency motion seeking removal of the neutral umpire previously appointed by the Court.  State Farm later supplemented this motion with a "request for an 'entirely new panel to conduct a new appraisal,' asserting that otherwise it would "require many weeks, months, and possibly even years to sort through the multiple issues related only to this highly problematic and invalid appraisal gone wrong.'"  State Farm's motion was denied.   

Seville's appraiser and the umpire ultimately agreed on a final appraisal award of $2,960,405.  The trial court confirmed the award, and Seville moved to amend its complaint to add claims for bad faith and punitive damages.  State Farm objected, claiming that Seville could not add bad faith an punitive damage claims until there was a "final judgment" and until all of State Farm's appeals were "finally final."  The Court granted the insured's motion to amend.  State Farm sought cert from the 3rd DCA.

The 3rd totally rejected all of State Farm's arguments holding that the final appraisal award was sufficient basis for the commencement of a bad faith claim, and that there is no requirement for an insured to wait until the exhaustion of all appeals before commencing the bad faith and punitive damages claim.  In conclusion, the 3rd stated:

State Farm originally estimated the Association's covered loss at $324,017.  This is less than eleven percent of the amount determined by the appraisal process.  State Farm will have an opportunity to explain this fact, to explain the extraordinary length of time it has taken to resolve the Association's claim, and to defend State Farm's aggressive legal tactics (including the unfounded imposition of conditions on the contractually-stipulated appraisal provision and the last-minute attempt to remove the neutral umpire).  For now, however, we find no basis in this record to quash the orders below as requested by State Farm. 

Ouch. 

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In the first half of 2009, insured property losses from natural disasters topped $11 Billion.  Of those losses, thunderstorms led the way by causing more than $6 Billion in insured property losses in the first half of 2009.  Interestingly, while thunderstorms generate a wide variety of types of losses -  from wind to water - losses due to lightning are continuing to rapidly increase.  According to the Insurance Information Institute, in 2008, lightning losses exceeded $1 Billion for the first time.  "The reason for this, we believe is the fact that homes are absolutely loaded with electronics today.  That part of the loss, particularly with homeowners but also businesses, is growing very, very rapidly." 

The Insurance Information Institute also noted that

The industry remains well capitalized despite the financial crisis, despite the recession, and despite last year's catastrophe losses.  In other words, it's a very resilient industry that is designed to withstand major catastrophes and market crashes simultaneously.  Insurance markets continue to operate normally, and the industry's promise to pay remains intact.

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In Liebel v. Nationwide Insurance Company of Florida, ____ So.3d ____ (Fla. 4th DCA October 7, 2009), the homeowner had a leaky plumbing system which led to subsidence under the home, which in turn led to damage to the home itself.  Nationwide refused to pay for the damage to the home under an exclusion for losses caused by natural and unnatural earth movement.  Nationwide also refused to pay to tear out and replace the leaky plumbing system.

The 4th DCA agreed that the damage to the home was excluded under the earth movement exclusion.  The court reasoned that the earth movement in this case was due to an unnatural cause - the leaky plumbing - and was therefore excluded. 

The Court next dealt with whether Nationwide was required to pay to tear out and replace the plumbing system.  The exclusion dealing with this aspect of the case provided that the Nationwide Policy covers water losses which are due to wear and tear, or deterioration unless "otherwise excluded."  In a subsequent sentence, the exclusion goes on to state that: "We also cover the cost of tearing out and replacing any part of a building necessary to repair the system or appliance." 

Initially, the Court noted that that water loss in this case was "otherwise excluded" under the earth movement exclusion.  But, the held that:

In the instant case, the trial court erred by not holding that the Policy covered the cost of repairing the plumbing system.  This is because the Policy, by providing that it does not cover damage caused by water from a plumbing system that is otherwise excluded, but then stating that it covers the cost of repairing a system that caused water damage, has created an ambiguity, as two or more reasonable interpretations of these two intersecting provision are feasible.  Specifically, one may interpret the 'otherwise excluded' language to preclude coverage for all damages caused by a matter otherwise excluded, including the cost of tearing out and replacing any part of Liebel's home necessary to repair the ruptured water line.  In contrast, a reasonable person could interpret the Policy to exclude from coverage the damage caused by earth movement, but include the cost of repairing the water line that caused the loss, as it is a plumbing system that caused water damage due to its deterioration from wear and tear.  As such there is an ambiguity....  [W]e hold that the cost of repairing the water line was covered by the Policy and reverse the trial court's order to the extent that it held to the contrary. 

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In Florida Insurance Guaranty Association, Inc. v. Castilla, ____ So.3d. ____, (Fla. 4th DCA September 30, 2009), the insureds submitted a Hurricane Wilma claim to their homeowners insurer.  The insurer paid a portion of the claim, and refused to pay any more.  The insurer then went into liquidation at which point the claim was taken over by FIGA.  

The insureds then submitted the claim to FIGA.  (This was smart because the only way to obtain attorneys fees from FIGA is if FIGA denies a claim through "affirmative action."  See, Fla. Stat. 631.70)  FIGA then refused to pay the claim. 

The insureds filed suit, and in its response FIGA asked for appraisal.  FIGA also requested that the court dismiss/abate the lawsuit and compel appraisal.  The 4th DCA opinion characterized the insured's position as asserting that FIGA waived its right to appraisal by "denying their claim without reserving any rights under the insurance policy."    

The trial court denied the request for appraisal, and the circuit court sitting in its appellate capacity affirmed.  The 4th DCA granted certiorari and reversed, stating: 

FIGA never acted inconsistently with its right to an appraisal, having raised that right at the earliest opportunity in this suit and continued to claim it through its subsequent pleadings.  Asserting that the insured meet all other conditions precedent to claiming a loss is not inconsistent with demanding an appraisal.  Claiming that the loss is not covered is also not inconsistent with a demand for appraisal.

From the opinion, it is unclear if FIGA simply refused to pay more money on a covered claim - thus bringing about a dispute as the amount of the loss; or if FIGA denied coverage for the claim.  Appraisal is appropriate where there is a dispute as to the "amount" of a claim, but is generally not appropriate where there is a denial of coverage. 

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My client lost a valuable diamond tennis bracelet, and reported the loss to State Farm.  State Farm's homeowners policy required it to "replace" the bracelet.  Instead of offering a suitable replacement, State Farm offered my client a check, and advised her that it had contacted a vendor who stated it could replace the bracelet for the amount of the check.  The problem with this (besides the fact that it violated the terms of the policy) was that if the bracelet was not a suitable replacement my client would then be embroiled in a dispute with the vendor while State Farm would be off the hook.

I filed suit and sought to force State Farm to physically replace the bracelet.  State Farm argued that its tender of the check was sufficient.  The court ruled today that State Farm's policy required it to provide my client with a suitable replacement bracelet - not a check. 

The central question in the case was one of policy interpretation.  But, a side issue was who should bear the risk of non-performance by the vendor.  State Farm's position left the insured to bear the risk in the event of non-performance by the vendor.  My position was that the insurer should bear that risk - and assumed that risk under the terms of the policy.   

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In North Pointe Insurance Company v. Thomas, _____ So.3rd _____ (Fla. 3rd DCA August 26, 2009), the insured homeowners filed a claim with their homeowner's carrier for damage to a tile floor caused when a pot was dropped on the floor.  The insurer denied the claim.  The insureds hired counsel who filed a Petition to Compel Appraisal.  At that point, the insurer withdrew its coverage denial and consented to appraisal.  The appraisal resulted in an award in favor of the insureds in the amount of $115,899.52 (That's some tile floor.  But, when one tile is broken, all contiguous tiles must be replaced by the insurer if they can't be matched with the new tile). 

The insureds then moved to have the appraisal award confirmed, and sought prejudgment interest from the date of the loss.  The insurer claimed that, under its policy, it was only responsible for prejudgment interest if if failed to pay the claim within 60 days of the appraisal award. 

The 3rd DCA recognized that, generally, interest on a loss payable under an insurance policy is recoverable only from the date the payment is due under the terms of the policy.  However, an exception exists where the insurer initially denies coverage and later either acknowledges coverage or coverage is determined by a court.  "Once the insurer denies coverage, it is deemed to have waived its policy provision for deferred payment and, should it pay, becomes responsible for prejudgment interest from the date of loss.  '[I]f the insurer denies liability, interest begins to run from the date of loss, even where the policy provides for payment at a later date.'"  Citing, Independent Fire Insurance Company v. Lugassy, 593 So.2d 570, 572 (Fla. 3rd DCA 1992). 

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Last week I filed four lawsuits against various homeowner's insurance companies as a result of their failure to pay, or to pay in full, for roof damage arising out of Tropical Storm Fay.  Two of these roofs also involved degranulation losses due to hail damage.  Over the years since the massive 1992 hail storms I've successfully handled 100's of roof damage cases. 

With the economy waning, I've seen many denials of claims that have been paid in years past.  Many of the recent roof cases which I've filed over the past several months involve the insurance companies refusing to pay for replacement of a flat roof where the insurer has agreed to replace the shingled portion of the roof.  These flat roofs frequently need to be replaced because roofers cannot get a proper and effective "tie in" without also replacing the entire flat roof.  Or, the flat roof needs to be replaced because the tie in is so deep into the flat roof that more than 25% of the flat roof has to be replaced.  Under the Florida Building Code, if more than 25% of a roof section has to be replaced, then the entire roof must be replaced. 

In some of these cases, the insurance companies are getting their own roofers to say that they can replace the shingle roof without having to replace the flat roof.  While there may be some roofers who are willing to perform repairs in this manner, beware: this is not the proper way to repair the roof.  Such short cuts may work for a little while, but this improper tie in leaves the roof in a compromised position and will likely soon begin to leak.  This new leaking will usually take a year or two, and once that starts, the insurance company will deny any further responsibility by claiming that the leaks are excluded as "improper workmanship. 

Another problem that has been arising is the insurance companies are refusing to pay profit and overhead when there are 3 or more trades involved.  Overhead and profit are owed when 3 or more trades are involved. 

Interestingly, in one of my hail damage claims I was able to locate video footage of the exact hail storm on youtube.com. 

Who thought roofs could be so much fun. 

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Yesterday, the circuit court in DeLand granted summary judgment in favor of our client in a first-party case where sewage backed up into a residential condo. 

Upon returning to his condo in New Smyrna after a week away, our client found that raw sewage from 7 other units had flooded his entire condo.  Needless to say, it was a mess.  The source of the back up was roots growing into and blocking a gravity fed sewage line which took the sewage from the building to the city's main sewage line. 

My client submitted the cost of cleanup and damage to his family's personal property to his condo owner's insurance carrier, Florida Family Insurance Company.  Florida Family denied the claim based on what it claimed was a clear and unambiguous exclusion for sewage backups.

However, based on the language of the policy, I believed that the policy could be read to only exclude sewage backups which originate from a sump.  As this was a gravity fed line, there was no sump involved.  The court agreed, leaving one very happy condo owner. 

Interestingly, upon reviewing the information which Florida Family had previously filed with the Department of Financial Services, Bureau of Rates and Forms, I found that the insurer's policy was a standard ISO policy; however, the insurer had modified this particular part of the policy.  By modifying the standard policy, the insurer actually created the ambiguity which led to the confusion.  Had the insurance company not modified the standard ISO form, then this loss would have been excluded. 

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In Citizens Property Insurance Corporation v. Cuban-Hebrew Congregation of Miami, Inc., 34 FLW D333 (Fla. 3rd DCA February 11, 2009), the insured property was damaged by wind, and Citizens paid what it believed was the appropriate amount under its policy.  Thereafter, the insured filed suit against Citizens for breach of the insurance contract for underpaying the claim.  The trial court compelled appraisal pursuant to the appraisal clause.  

The appraisal ultimately resulted in an additional payment from Citizens to its insured of $106,646.27.  The trial court granted the insured attorneys fees under Florida Statute Section 627.428.  Citizens appealed the grant of attorneys fees.  The 3rd DCA affirmed the award of attorneys fees stating:

In this case Citizens had underpaid the insured by $106,646.27.  The insured filed suit on the policy.  This was followed by the appraisal and culminated in the judgment in favor of the insured for the additional sum.  We affirm the award of attorney's fees on authority of Travelers Indemnity Insurance Co. of Illinois v. Meadows MRI, LLP, 900 So.2d 676, 679 (Fla. 4th DCA 2005). 

For other cases in this blog on the award of attorney's fees after appraisal, click on the tag, "Attorney's Fees" below. 

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In Citizens Property Ins. Corp. v. Mallett, 2009 WL 485038 (Fla. 1st DCA Feb. 27, 2009), the First DCA dealt with three issues which are common in homeowners insurance claims: 1) interpreting Florida’s Valued Policy Law (VPL); 2) when payment is due under debris removal, and law and ordinance coverage; and 3) when prejudgment interest begins to running after a loss.

VPL

In Mallett, wind and flood combined to render the home a constructive total loss. Wind damage was a covered cause of loss under the Citizens’ policy, and flood damage was excluded. There was uncontroverted evidence that the wind was a “substantial” cause of the loss to the Mallett’s home. The insureds argued that under Florida Statute Section 627.702(1), Florida’s VPL, Citizens was required to pay its entire policy limits because the home was a constructive total loss, and wind substantially contributed to causing that total loss. The trial court agreed, granting summary judgment to the insured for the entire policy limits.

The 1st DCA reversed, holding that Fla. Farm Bureau Cas. Ins. Co. v. Cox, 967 So. 2d 815 (Fla. 2007) governed:

The summary judgment on appeal is expressly contrary to the holding in Cox, and accordingly, we reverse that part of the summary judgment granting the Malletts additional compensation for the damage sustained to their residence not solely attributable to wind.

However, in my mind, this still leaves open several issues. Who has the burden of proof at the trial level to prove which portion of the loss is due to the uncovered peril of flood?  Typically, if an insurer is claiming that all or a portion of a loss is due to an excluded peril, then the insurer has the burden of proving which portion of the loss is due to the excluded peril. Thus, if these two perils (wind and flood) combined to cause the loss, then does the insurance company need to prove by a preponderance of the evidence which part of the loss was due to flood? Or, does the insured have to prove which portion is due to wind?  There is also an issue raised by the “anti-concurring cause clause” that is typically present in these types of policies.

Debris Removal and Law and Ordinance Coverage

In Mallett, the insured argued that because the home was a total loss, and the insurer owed its entire policy limits under the VPL, then Citizens was required to pay out under the debris removal and the law and ordinance coverage. It is unclear from the opinion if the insureds had actually incurred these expenses, or were seeking these as additional coverages that were simply due because they had recovered the entire policy limits at the trial level.  In any event, the 1st DCA held that summary judgment was improper on the issues of debris removal and law and ordinance, and that there would need to be a trial on the issue of how much was due under these two additional coverages that was attributable to wind alone.

Prejudgment Interest

The insureds argued that they were entitled to prejudgment interest running from the date of the loss.  However, the Citizens’ policy specifically stated that Citizens was not obliged to pay a claim until twenty days after it reached a written agreement with the Malletts, or sixty days after entry of a final judgment on the claim or after the filing of an appraisal award or mediation settlement with Citizens.  Relying on this language, the court sided with Citizens and held that: “It is the terms of a contract for insurance which determine the date from which the coverage payment is due, as well as when interest is due on the amounts payable.”

Obviously, this ruling allows an insurance company to breach the insurance contract, force the insured to file suit, retain the use of the money while the case is litigated, and not be liable for interest on the money they illegally retained.

One way to possibly avoid this result is to file a Civil Remedy Notice pursuant to Florida Statute 624.155, and then seek the prejudgment interest as damages in a subsequent bad faith case.

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My client, a water extraction and mold remediation company, performed services for a homeowner insured under a State Farm Florida insurance policy. State Farm refused to pay the entire bill, and in accordance with Florida Statute Section 627.7015, Fla. Stat., offered our client the opportunity to participate in the state sponsored mediation program. My client accepted that offer and attended the mediation. The mediation was unsuccessful and our client asked us to file suit on her behalf as assignee of State Farm’s insured.

Both before filing suit and after, State Farm requested appraisal under the homeowner’s policy. However, pursuant to Section 627.7015, Fla. Stat., I asserted that appraisal is not available to an insurer if: 1) the insurer does not notify the insured of their rights to state sponsored mediation at the time a dispute arises; or 2) when the parties participate in an unsuccessful state sponsored mediation. Because my client had participated in an unsuccessful state sponsored mediation, it was my position that State Farm was no longer entitled to ask for appraisal.

The issue was presented to the court on State Farm's Motion to Dismiss/Abate, and the court denied State Farm's motion, holding that State Farm was no longer entitled to ask for appraisal under the policy because it participated in the state sponsored mediation program.

State Farm attempted to avoid the clear application of the statute by arguing that the right to appraisal is only lost when the insurer requests the mediation, but that appraisal remains available when the insured asks for the mediation. I do not believe that the statute makes such a distinction, especially given the fact that the insurer is never allowed to request the mediation. The insurer is required to notify the insured of the insured’s right to state sponsored mediation. It is then up to the insured agree to participate. State Farm’s reading of the statute would result in an absurdity, where the parties would always be required to participate in appraisal after every unsuccessful mediation; something clearly not contemplated by the statute.
 

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The Goff’s sustained hurricane damage to their home and submitted their claim to State Farm, their homeowners insurer. The Goffs carried a “replacement cost” policy with State Farm. State Farm’s replacement cost policy allowed State Farm to pay only the actual cash value of the loss until such time as repairs were made. Only after the repairs were actually made was State Farm required to pay the difference between the actual cash value and the replacement cost.

The estimate for the damage to the Goff’s residence included projected costs for “overhead and profit” to the general contractor. State Farm agreed that it owed the overhead and profit, but withheld a portion of the overhead and profit until such time as the repairs were made.

The Goff’s filed a declaratory judgment action arguing that State Farm cannot withhold any portion of the overhead and profit pending repairs. The trial court granted summary judgment in favor of State Farm. The 2nd DCA affirmed and held that: “We are unpersuaded by the Goffs’ argument that the policy entitles them to the total amount of overhead and profit in the actual cash value payment. Therefore, we affirm the summary judgment for State Farm on count II.” Goff v. State Farm Florida Insurance Company, 33 FLW D2833a (Fla. 2nd DCA December 12, 2008).

Importantly, this case did not deal with or mention Florida Statute Section 627.7011. Section 627.7011 was amended in 2005 (after the loss in Goff) and states in subsection (3) that:

In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs, the insurer shall pay the replacement cost without reservation or holdback of any depreciation in value, whether or not the insured replaces or repairs the dwelling or property.

Subsection (3) does not state whether it is to apply only prospectively or may also apply retroactively.
 

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Recently, I filed suit against Nationwide Florida for denying a homeowners insurance for substantial hurricane damage to our clients' home. Our clients sustained wind and rain damage to their home from Hurricanes Charley, Francis and Jeanne. After the storms, our clients submitted the claim to Nationwide Florida, their homeowners insurance company.

Our clients have expended roughly $1,200,000 thus far in repairs to their home. Nationwide hired an engineer who advised that the damage (which did not exist before the 3 hurricanes ravaged the home) was due to problems with the original construction. Interestingly, this is almost the exact same issue which we successfully tried to a jury verdict a few months ago in Orange County Circuit Court against State Farm. In that case we obtained a verdict of nearly double the policy limits.  

The lawsuit was filed in Hillsborough County Circuit Court.  We have successfully pursued 100's of similar claims for homeowners and business owners throughout the State of Florida.
 

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The courts continue to award attorneys fees as the result of appraisal, even upon timely payment of the appraisal award by the insurer. 

On November 19, 2008, the Third District Court of Appeal issued its opinion in Holder v. State Farm Insurance Company.    After the insured suffered hurricane damage, the State Farm adjuster offered (and non-binding mediation confirmed) the insured had $9,065.00 in covered losses.  The insured had a $9,000.00 deductible, leaving a net of $65.00 in insurance proceeds for the hurricane loss.

A year later, the insured filed suit, and State Farm invoked the binding arbitration clause of the policy.  The loss was appraised, and resulted in an appraisal award of $50,178.60.  State Farm promply paid the loss.  However, even though the filing of the lawsuit directly resulted in the payment of over 500 times the amount previously offered, the trial judge denied a claim for attorney’s fees.

The Third DCA reversed the trial court's denial of attorney's fees, citing Ajmechet v. United Automobile Ins. Co., 790 So. 2d 575 (Fla. 3d DCA 2001).  Ajmechet states:

When the carrier did not pay Ms. Ajmechet’s claim for her stolen, insured car, she sued the company in the circuit court, where the insurer demanded appraisal. After the appraisers determined the amount of the loss, the carrier paid the award without further ado. Because the payment was obviously effected by the law suit, we hold the insured was entitled to fees under section 627.428, Florida Statutes (2001).

(citation omitted)  It should be clear that when an insurer forces its insured into litigation to recover proceeds that are owed under the policy, the insurer is responsible for attorney's fees.

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Tropical Storms can cause significant property damage.  In August, 2008, Tropical Storm Fay caused extensive damage across Florida, prompting President Bush to declare the entire state of Florida a Federal Disaster Area.  The Orlando Sentinel reported that Brevard County, alone, suffered approximately $10 to $12 million dollars in property damage due to Fay. 

One of our clients suffered roofing damage from Tropical Storm Fay's winds.  Our client is insured with Tower Hill Select Insurance Company, and submitted his claim for the storm's damage to Tower Hill.  In response, Tower Hill retained the services of engineering firm "Rimkus Consulting Group, Inc." to examine the roof.  Rimkus has stated that the roof damage is not due to Tropical Storm Fay's winds, but instead is due to improper construction, and poor maintenance.  On the contrary, we believe that we will be able to show that the roof, which never leaked until after Tropical Storm Fay, was indeed damaged by Fay's high winds, and extraordinary rainfall amounts. 

The Nation Law Firm has previously been successful in showing an extensive (both long-lasting and deep) financial relationship between Rimkus Consulting and the insurance industry.  We anticipate being able to once again demonstrate that connection.

As usual, if we are successful in prosecuting our client's roofing claim, Tower Hill will be required to pay our attorney's fees and costs to bring the claim and secure justice for our clients.  If The Nation Law Firm is not successful in securing insurance coverage for our client, we will work for free. 

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On September 26, 2008, the 5th DCA clarified an important point regarding the appraisal process.  In Wroe v. Amica Mutual Insurance Company, the insured owner of a vehicle sued his own insurance company under his collision coverage.  The insured was looking to force the insurance company to pay for repairs to his vehicle after an accident.  The case was referred to appraisal, and the appraisal panel determined the amount of loss.  In a very short opinion, the 5th DCA made clear that the insured is allowed to seek additional money from the insurance company if hidden damage that was not accounted for in the original appraisal is discovered during the course of repairs. 

This is an extremely important decision.  Many times, an insurance company will claim that the insured gets one shot at an appraisal, and that appraisal is a final determination of the entire claim.  The insurance company will then refuse to pay for hidden damage that was not accounted for during the initial appraisal.  This damage is hidden because, in many cases, the full extent of the damage can not be determined until the repairs begin.  The insurance industry is well aware of hidden damage such as this, and routinely provides what are known as "supplements" to the insured if additional damage is discovered during the repair process. 

However, once there is a dispute, and the claim goes to appraisal, the insurance industry often takes the position that the appraisal is final, and there can be no supplements.  In Wroe, the 5th DCA makes clear that if there is further unaccounted for damage discovered after the repairs begin, the insurance company will be responsible. 

There are two takeaways from this opinion.  First, never sign a release after the appraisal.  Such a release may preclude an insured from seeking further money if further damage is discovered.  Second, make sure to alert insureds to contact you immediately if further damage is discovered during the repair process.  This further damage will need to be documented and the insurance company alerted immediately.  

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The court found the insurer did not repudiate the insurance contract because it had partially satisfied the claim under the insurance policy (and in fact paid the undisputed portion of the claim).  The court also noted the dispute involved the "dollar value of covered losses," an issue appropriate for appraisal.  The court found none of the insurer's activities were inconsistent with a demand for appraisal, since it didn't even answer the complaint but instead demanded appraisal.

A significant factor in the opinion is based upon the defendant's status as an "insurer."  Lloyds is comprised of members of a regulated market known as the "London Market," in which individuals offer their personal capital to underwrite insurance risks in exchange for a premium. Specifically, the court noted Lloyds sells only "surplus lines" insurance coverage, a type of insurance which insures risks which are not commonly insurable in the primary commercial market.

Normally, we see that an insurer's failure to comply with Florida Statute Section 627.7015 bars enforcement of the appraisal provision when the insurer fails to notify the insured under the statute.  However, in this case, the court noted that Florida Statute section 627.021(2)(e) specifically states that chapter 627 does not apply to surplus lines insurance.  Additionally, in this case, the Florida Department of Insurance (which is responsible for implementing the mediation program under Florida Statute section 627.7015), advised the court via affidavit and memorandum in evidence, that surplus lines insurers are exempt from the requirements of that statute, but may participate in the program voluntarily.

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When insureds are forced to sue their insurance company in order to receive benefits (not attorneys fees and costs), any payment of insurance policy proceeds by the insurance company should act as a confession of judgment, entitling the insured to properly pled attorney's fees.

In Jerkins v. USF & G Specialty Ins. Co., 2008 WL 678667, 33 Fla. L. Weekly D763 (Fla. 5th DCA March 14, 2008), the insureds sustained damage to their home due to Hurricane Charlie.  The insurance company's claims adjuster determined that the insureds sustained only $715.60 property damage due to the hurricane.  This claim was less than the insurance policy's deductible, and the insurance company made no payment on the claim.

Six months later, the insureds filed a breach of contract action against the insurance company.  The insurance company filed a motion to dismiss or abate the insured's suit in favor of appraisal, in accordance with the insurance policy, which provided, in pertinent part: "If you and we fail to agree on the amount of loss, either may ... Demand an appraisal of the loss...."

After the motion to dismiss was filed, the parties actually went forward with the appraisal process.  The appraisers determined the insureds actual loss was $9,084.29.  The insurance company paid the entire appraisal amount, minus the deductible.

Following payment, the insureds filed a motion for attorney's fee and costs pursuant to Section 627.428, Fla. Stat.  In their motion, the insureds maintained that the insurance company's payment constituted a "confession of judgment," entitling the insureds to attorney's fees.   However, in its opposition to the motion for attorney's fees, the insurance company argued that the insureds were not entitled to attorney's fees because the parties' dispute was resolved through appraisal, not litigation.  After a hearing, the trial court denied the motion for attorney's fees, citing Federated National Insurance Co. v. Esposito, 937 So.2d 199 (Fla. 4th DCA 2006), in support of its decision.

The Fifth DCA determined that generally, payment made after a suit is filed operates as a confession of judgment.  The court claimed it was neither reasonable nor just to allow an insurance company to avoid statutory attorneys fees by simply paying insurance proceeds at some point after suit is filed but before final judgment is entered, likening voluntary payment of the insurer to the equivalent of a confession of judgment.  

The court cited its previous analysis of the confession of judgment doctrine as it relates to section 627.428, in State Farm Florida Insurance Co. v. Lorenzo, 969 So.2d 393, 397-98 (Fla. 5th DCA 2007), where the court determined the confession of judgment doctrine turned on the policy underlying section 627.428: discouraging insurers from contesting valid claims and reimbursing insureds for attorney's fees when they must sue to receive the benefits owed to them.   The court also noted the doctrine is generally not applied where the insureds were not forced to sue the insurance company to receive benefits, because otherwise applying the doctrine would encourage unnecessary litigation by rewarding a race to the courthouse for attorney's fees even where the insurer was complying with its obligations under the policy.

The court further reiterated that while Florida law does hold that payments are treated as confessions of judgment where an insurer first disputes the claim and then settles, "the existence of a bona fide dispute and not the mere possibility of a dispute, is a crucial condition precedent to such a holding."

The court determined the sixth month time lapse between claim and lawsuit, combined with the significant difference in the value of the damages, met the confession of judgment doctrine's standards.

Interestingly, the court commented that if the insurance company's policy contained a mandatory arbitration or appraisal provision, the insureds would not be entitled to attorney's fees under section 627.428.  Since the appraisal clause was permissive, the court did not see appraisal as a condition precedent to filing suit (and therefore recovering attorneys fees under the confession of judgment doctrine).  

Significantly, the court distinguished Federal National Insurance Company v. Esposito, 937 So.2d 199 (Fla. 4th DCA 2006), which the trial court relied upon to deny the insured's motion for attorney's fees and costs.  In Esposito, the insured invoked the appraisal process to settle a dispute she had with her insurance company over the value of hurricane damage to a structure.  Through the appraisal process, the parties agreed upon a value of the damage and the insurer paid the appraisal award in full.  Only after the appraisal process was well underway did the insured file an action seeking to confirm the appraisal award and attorney's fees. The Esposito court held that the trial court erred in confirming the appraisal award and entering judgment in favor of the insured because the parties settled their dispute without litigation.  The court determined the Esposito lawsuit was solely filed to obtain fees, not to settle a dispute. 

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