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

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 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 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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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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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 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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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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