Claims and Bad Faith Law Blog

PART PAYMENT OF FLORIDA PROPERTY CLAIMS.

          In Florida, the Unfair Claim Settlement Practices Act has been amended to apply to situations of “partial coverage”:

 (i) Unfair claim settlement practices.--

***

 e. Failing to affirm or deny full or partial coverage of claims, and, as to partial coverage, the dollar amount or extent of coverage, or failing to provide a written statement that the claim is being investigated, upon the written request of the insured within 30 days after proof-of-loss statements have been completed ....

 Fla. Stat. § 626.9541(1)(i)3e.  Paragraph (i) of Subsection 626.9541(1), quoted above, is made actionable by Fla. Stat. § 624.155(1)(a), “the Florida Bad Faith Statute”.

        A more recently enacted Florida statutory provision, Fla. Stat. § 627.70131(5)(a), provides in pertinent part:

    Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay such claim or a portion of the claim is caused by factors beyond the control of the insurer which reasonably prevent such payment.

 Failure to comply with this provision is a violation of the Florida Insurance Code.  Fla. Stat. § 627.70131(5)(a).  "However, failure to comply with this subsection does not form the sole basis for a private cause of action."  Fla. Stat. § 627.70131(5)(a).  [Emphasis added.]

        It has therefore been held in the Florida case law that failure to comply with this subsection does not provide a separate claim.  However, the same Court that announced this holding also stated in apparent dicta that a violation of this statutory subsection could nonetheless be considered in evidence in a bad faith claim or a Department of Insurance review.  Buckley Towers Condo., Inc. v. QBE Insurance Corp., 2008 WL 2490450 *11 (S.D. Fla. June 18, 2008)(Torres, United States Magistrate Judge), report and recommendation adopted by United States District Judge in 2008 WL 2856457 (S.D. Fla. July 24, 2008).  Accord as to holding, QBE Insurance Corp. v. Dome Condo. Ass'n, Inc., 577 F. Supp. 2d 1256, 1261-62 (S.D. Fla. September 16, 2008).

        Perhaps in response to such Federal judicial decisions, a new statutory Unfair Claims Practice was thereafter enacted by the Florida Legislature:

       4.  Failing to pay undisputed amounts of partial or full benefits owed under first-party property insurance policies within 90 days after an insurer receives notice of a residential property insurance claim, determines the amount of partial or full benefits, and agrees to coverage, unless payment of the undisputed benefits is prevented by an act of God, prevented by the impossibility of performance, or due to actions by the insured or claimant that constitute fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which benefits are owed.

 Fla. Stat. § 626.9541(1)(i)4.  The new provision applies to residential property insurance claims. 

           New Florida case law clarifies the meaning and application of the statutory mandates for paying undisputed parts of residential property insurance claims.

 To be continued on Insurance Claims and Issues Weblog ....

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CALIFORNIA "REASONABLENESS" FIRST-PARTY BAD FAITH STANDARD: NATIONAL STANDARD SAME?

     The case of Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 (E.D. Cal. November 8, 2012), involves a burglary claim under an auto repair shop owner's Property Insurance Policy.  The Travelers, the Property Insurance Company, denied all Coverage "on the grounds that [the Policyholder] had made material misrepresentations during the investigation and while being examined under oath."  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *4 (E.D. Cal. November 8, 2012).

     The Policyholder then became a Plaintiff and The Travelers became a Defendant.   The Plaintiff sued for alleged Breach of Contract and for alleged Bad Faith.  The Travelers filed a Motion for Partial Summary Judgment on the Bad Faith Claim, in part here pertinent.  The Defendant's Attorneys attended the Hearing, while the Policyholder's Attorney did not attend the Hearing.  Only after what appears to be nothing less than a dissection of the entire record in this case, Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *1-*4 (E.D. Cal. November 8, 2012), the District Court denied the Motion for Partial Summary Judgment on the Bad Faith Claim under established rules of California Bad Faith law, which can accurately be summarized in three parts, below.

1.  "Reasonableness" is an Objective Standard in California to Measure a First-Party Insurer's Exposure to a Bad Faith Claim.

            The Federal Court reiterated established standards of California Bad Faith law at the beginning of its decision.  A Plaintiff-Policyholder claiming Bad Faith under a First-Party Insurance Policy must, under California law, show in essence that (1) the Damage claim was covered by the Policy and (2) the First-Party Insurance Company's withholding of the Covered benefits was objectively "unreasonable".  See Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *5-*6 (E.D. Cal. November 8, 2012).  In stating this holding, the Court followed not just California Bad Faith law, but the Court also followed the established majority First-Party Bad Faith view in United States jurisdictions:

The legal standard governing an insurer's settlement conduct is one of reasonableness.  D. Wall, Litigation and Prevention of Insurer Bad Faith § 9.03 (1985).

Cruz v. American United Insurance Co., 580 So. 2d 311, 312 (Fla. 3d DCA 1991).

2.  Reasonable conduct includes a "reasonable" investigation.  It does not include a pretextual investigation where the Insurer's conclusion was already reached before the investigation was concluded.

     "One form of objectively unreasonable conduct is failure to fully investigate the grounds for denial."  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *6 (E.D. Cal. November 8, 2012).  In other words, "reasonable" conduct includes conducting an objectively reasonable investigation.

    The Federal Court in this case fully explored the contours of California case law on this Insurance Bad Faith issue as well.  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *6-*7 (E.D. Cal. November 8, 2012).  One species of the generic "unreasonable" investigation recognized by the California Courts is a "pretextual" investigation, although the California cases summarized by the Federal Court in this case do not appear to use that description.  An unreasonable failure to investigate, in short, includes an investigation which is shut down early and the Insurance Company refuses to reconsider a denial of its Coverage for the Claim even when presented with evidence of factual mistakes during the investigation or further evidence which has not yet been explored.

3.  In the Bafford Case, the Movant Insurance Company Did Not Negate Record Evidence That It Made Its Mind Up Long Before Its Investigation Was Complete.

     The Travelers failed to meet its Burden as the party requesting the entry of a Partial Summary Judgment when it failed to negate record evidence that would support the Plaintiff's-Policyholder's Claim.  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *10 (E.D. Cal. November 8, 2012).

    To say again, the Court reviewed what appears to be the entire record in this case, and apparently left no stone unturned in doing that.  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *1-*4 (E.D. Cal. November 8, 2012).  After that review, the Court appears to be convinced that the legal questions based on this record could not be clearly decided in the Insurance Company's favor.

    Twice the Court used the word, "disingenuous," to describe several arguments.  See Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *11 (E.D. Cal. November 8, 2012).  "Finally, the evidence suggests that Travelers concluded quite early in the investigation that Bafford had submitted a fraudulent claim and proceeded to seek information confirming that position."  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *11 (E.D. Cal. November 8, 2012).  [Emphasis added.]

    In all cases, it is a best practice as it were to behave with objectively verifiable Good Faith.  In no case is it ever a best practice to behave in what a Judge or Jury can reasonably perceive as the opposite.

One Thing More:  The Court in the Bafford case could not conclude that there was a "genuine dispute" here as a matter of law.

     In reading the Bafford case, California lawyers will also be interested in the fact that The Travelers pursued its Motion for Partial Summary Judgment on the additional ground of what California Courts call "the 'genuine dispute' doctrine."  However, the Court concluded that the doctrine or rule, which operates as a Defense as a matter of law in California, does not relieve an Insurance Company from its "duty" to perform a reasonable investigation and that includes this case.  Bafford v. Travelers Casualty Insurance Co. of Am., 2012 WL 5465851 *12 (E.D. Cal. November 8, 2012).

Dennis Wall is a featured speaker at this year's National Forum on Bad Faith Litigation in Orlando, Florida on November 28 and 29, 2012.  I will be speaking on both days.  On November 28, I will be part of a panel addressing the handling of Bad Faith litigation.  My particular topic will focus on Expert Witnesses.  On November 29, I will be one of the leaders of a Florida Workshop.  Here is the American Conference Institute's website:  www.americanconference.com/badfaith.

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TWO DECISIONS ON BAD FAITH AND FORCE-PLACED Flood INSURANCE.

Remember the Veterans and All Who Gave Their Lives For Our Country, Including Chaney, Schwerner, and Goodman!

    The Federal First Circuit has issued a pair of 2-to-1 decisions affecting Insurance issues that are significant to people and businesses struck by Hurricane Sandy and many other Catastrophes.

    Both decisions were issued on the same day.

    Both involve alleged class actions by Mortgagors suing back against a Lender's alleged national program of force-placed or lender-placed Flood Insurance.

    Both involve Bad Faith claims.

    The first of the two cases involves New Jersey Insurance Law:  Kolbe v. BAC Home Loans Servicing, LP d/b/a Bank of America, 695 F.3d 111 (1st Cir. September 21, 2012).

    The other case involves Massachusetts Insurance Law:  Lass v. Bank of America ["BOA"], 695 F. 3d 129 (1st Cir. September 21, 2012).

    In future posts, we will explore the significance these decisions offer in common both to Homeowners and to Commercial Property owners particularly after the onslaught of the Hurricane Sandy Catastrophe and before the avalanche of Claims as a result.

To be continued .....

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"GOTCHA": $125,000 BECOMES $5,000 WHEN SETTLING WITHOUT SUBMITTING WRITTEN POL.

            It may not be a universal law.  But it is a 'best practice' generally to submit a written Proof of Loss ("POL") as a part of making any First-Party Insurance Claim.  If it is in writing, not only is it a "Proof of Loss," but it is a clearly provable Proof of Loss in Court.

            In Katie Realty, Ltd. v. Louisiana Citizens Property Insurance Corp., 2012 WL 4901067 (La. October 16, 2012), the corporate Policyholder made a claim on its Citizens Commercial Property Insurance Policy for Property Damage caused by Hurricane Gustav.  The Policyholder succeeded.  The claim was settled at Mediation for a Quarter of a Million Dollars ($250,000.00).

            Unfortunately, "Citizens failed to timely pay the settlement funds".  Katie Realty then "filed a motion to enforce settlement and to assess penalties pursuant to La. Rev. Stat. §§ 22:1892 and 1973."  The Louisiana penalties statutes invoked by Katie Realty trigger a penalty for delayed payment and, collectively, they also import a duty of Good Faith and Fair Dealing with additional penalties in the event of a finding of arbitrary and capricious behavior or 'Bad Faith' on the part of the Insurance Company.

            Citizens was assessed total penalties of $125,000.00 in this case for the delayed payment and for alleged Bad Faith in delaying the payment.  Katie Realty, Ltd. v. Louisiana Citizens Property Insurance Corp., 2012 WL 4901067 *1 (La. October 16, 2012).  On appeal, the Louisiana Supreme Court reduced the penalties assessment from $125,000.00 to $5,000.00.

            The reason for the reduction rests on the fact that Katie Realty apparently mediated and settled its Property Insurance Claim without submitting a satisfactory Proof of Loss.  Katie Realty, Ltd. v. Louisiana Citizens Property Insurance Corp., 2012 WL 4901067 *1, *6 (La. October 16, 2012).

            The Louisiana penalties statutes invoked by Katie in this case all require satisfactory Proofs of Loss.  Without them, only nominal penalties could be assessed under the Louisiana statutes here.  This legal result was reached by the Louisiana Supreme Court redefining 'proofs of loss' to mean 'proof of claim' after the Trial Court and Appellate Court had ruled that the settlement was a legally sufficient Proof of Loss to trigger the penalties statutes.

            Here, the payment which was delayed was payment of a settlement.  That made all the difference to the Louisiana Supreme Court.  "A settlement, however, is not an insurance claim arising under a contract of insurance."  Katie Realty, Ltd. v. Louisiana Citizens Property Insurance Corp., 2012 WL 4901067 *7 (La. October 16, 2012).  Therefore, said the Supreme Court, not Bad Faith penalties but only "a penalty award of $5,000 is appropriate and warranted."  Katie Realty, Ltd. v. Louisiana Citizens Property Insurance Corp., 2012 WL 4901067 *8 (La. October 16, 2012).

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RECORD: NO BAD FAITH FAILURE TO INVESTIGATE FIRST-PARTY CLAIM.

     In Scorpio v. Underwriters at Lloyd's, London, 2012 WL 2010168 (D.R.I. June 5, 2012), the Federal District Court in Rhode Island was confronted with an alleged claim of First-Party Bad Faith denial of a Property Insurance claim.  Specifically, the Plaintiff-Policyholder submitted a claim for Property Damage after a building containing six (6) residential apartment units was damaged by rainwater which accumulated on the roof during heavy rain storms during the policy period, on July 24, 2008.  Scorpio v. Underwriters at Lloyd's, London, 2012 WL 2020168 *1 (D.R.I. June 5, 2012), Download Scorpio v. Underwriters at Lloyd's, London (D.R.I. No. 10.325, Memorandum and Order Filed June 5, 2012) PUBLIC ACCESS.

    The Plaintiff claimed Bad Faith as a result of the Defendant Insurance Company's alleged failure "to properly investigate the claim."  Scorpio v. Underwriters at Lloyd's, London, 2012 WL 2020168 *6 (D.R.I. June 5, 2012).  The District Court held that the evidence of record disputed every element of this claim.

    In its ruling granting Defendant's Motion for Summary Judgment on this Bad Faith claim, the District Court compared the record evidence in that case, to every element of First-Party Bad Faith required by Courts in most jurisdictions, including Rhode Island.  First, the Federal Court announced the applicable State Bad Faith standard of liability:

    In order for Plaintiff to succeed on her bad faith claim she must “demonstrate an absence of a reasonable basis in law or fact for denying the claim or an intentional or reckless failure to properly investigate the claim and subject the result to cognitive evaluation .” Skaling v. Aetna Ins. Co., 799 A.2d 997, 1012 (R.I.2002).

 Scorpio v. Underwriters at Lloyd's, London, 2012 WL 2020168 *7 (D.R.I. June 5, 2012).

     Next, the Federal Court compared each relevant item of record evidence to that standard of Bad Faith exposure.  Recast in bullet points, the following complete quotation from the Court's opinion illustrates this comparison:

•  Defendant's actions do not even approach the bad faith standard.
• The record reflects that Defendant acted in a reasonable manner by timely and appropriately investigating the claim,
• engaging its own expert,
• and reviewing the appropriate information, including Plaintiff's engineer's report, before denying the claim.
• Defendant's denial letter noted the pertinent policy provisions and that the policy provided that a building that is still standing is not considered to be in a state of collapse.
• Defendant's actions, in addition to the Court's conclusion that the collapse provision is ambiguous and thus the claim is fairly debatable, leads this Court to conclude that Plaintiff's bad faith claim cannot survive Defendant's motion for summary judgment.

 Scorpio v. Underwriters at Lloyd's, London, 2012 WL 2020168 *7 (D.R.I. June 5, 2012).

     This is a "case study," if you will, in the kind of record evidence -- and the kind of conduct in First-Party claim handling -- that can defeat a claim of First-Party Bad Faith in most Courts.

Please Read The Disclaimer. 

Force-Placed Insurance Issues in New York: Your State, Too.

     The New York State Department of Financial Services has issued an order to three Insurance Companies to submit new Premium rates for force-placed Insurance, because the companies overcharged millions of dollars for it.  The three companies have until July 6, 2012 to respond.  The companies receiving the order are Assurant (a unit of American Security Insurance Company), QBE, and American Modern Home Insurance Company.  These three companies "make up more than 90 percent of the so-called force-placed insurance market in New York."  Zachary Tracer, "New York Asks Insurers of Lapsed Borrowers for New Rates" (Bloomberg.com, posted June 12, 2012).

    Other reports previously estimated that Assurant and QBE alone control about 90 percent of the force-placed insurance market in New York State.  See "Forced-Placed Insurance Under Investigation," posted here on May 22, 2012.     

    And here is a link to the New York State Department of Financial Services' Press Release announcing this action and the requirement that responses must be submitted by July 6, 2012:  Press Release, "Governor Cuomo Announces DFS Action Could Save Some New York Homeowners Millions in Overcharges to Home Insurance," June 12, 2012.

    Do not think that the issues of force-placed Insurance belong only to New York State.  The issues of force-placed Insurance apply across the nation.  The issues include Premium charges, forced placement of Insurance selected by the Lenders and their Mortgage Servicers when homeowners are not actually in default in carrying the Insurance which the homeowners selected, and issues involving an implied covenant of Good Faith and Fair Dealing not only by the Force-Placed Insurance Companies, but allegedly by Banks, Lenders, and Mortgage Servicers too.  See, e.g., "Force Placed Insurance and the Duty of Good Faith," posted here on June 12, 2012; "Good Faith in Lender-Placed Insurance?" posted here on April 12, 2012. 

Please Read The Disclaimer.

FOURTEEN FOR THE EXPERTS: NEW INSURANCE CASES THAT MAKE EXPERT WITNESS LAW ....

.... TWO MORE:  ELECTRONIC FILING, AUTHENTICATION, AND GENUINE ISSUES OF MATERIAL FACT.

    In a change-of-pace, Insurance Claims and Bad Faith Law Blog and Insurance Claims and Issues Weblog will carry consecutive posts addressing a single common theme:  Court rulings on Expert Witness Testimony and Reports in recent Insurance Cases.  For the previously developed rules of law and judicial decisions on these issues, see generally as to Liability Insurance Cases, volume 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 8:17 (West Publishing 3d ed. 2011; 2012 Supplement in process), and see generally as to all types of First-Party Insurance Cases, volume 2 id. § 12:18.

 Expert Witness Testimony:  Where Electronic Filing is Required, File Electronically; Authentication is Required in All Courts for All Exhibits.

   Where Exhibits to an Expert's Affidavit or Report are required to be electronically filed by Local Rule, but are not, the Exhibits may be stricken especially where they have not been authenticated.  References in reliance on those Exhibits in the Expert's Report and in pleadings are subject to being stricken as well upon the same grounds.  Such rulings came in an Insurance Case in which two Counts were alleged against the  Defendant Insurance Company:  Breach of the "individual disability income" Insurance Policy, and alleged breach of Good Faith and Fair Dealing, in Bonenfant v. Standard Insurance Co., 2011 WL 3904300 *3 (E.D. Cal. September 6, 2011), Download Bonenfant v. Standard Ins. Co. (E.D. Cal. Case No. CIV S.10.0361, Order Filed September 6, 2011) PUBLIC ACCESS.  In this Order, the District Court granted the Defendant Insurance Company's Motion for Partial Summary Judgment on the Plaintiff's Bad Faith Claim.  This Order, as noted, was entered on September 6, 2011.  The next day, the Plaintiff filed a Notice of Settlement, according to PACER, the Online Docket for this Federal Court case.  At the end of that same month, on September 29, 2011, the Court entered a 'minute order' dismissing the entire case with prejudice, each side to bear its own attorney's fees and costs.

 

  Expert Witness Testimony May Provide a Jury Question on Bad Faith Denial of Insurance Coverage.

    Expert Testimony on Hurricane Ike Wind Damage, or not, provided a Jury Question on Bad Faith Denial (or not) of all Insurance Coverage under a "wind and hail" Commercial Insurance Policy, precluding Summary Judgment, in Beaumont Preservation Partners, LLC v. International Catastrophe Insurance Managers, LLC, 2011 WL 6707287 *12 (E.D. Tex. October 6, 2011)(Hawthorn, USMJ), Download Beaumont Preservation Ptrs., LLC v. International Cat. Ins. Mgrs., LLC (E.D. Tex. Case No. 1.10CV548, Report and Recco of USMJ Filed Oct. 6, 2011) PUBLIC ACCESS, report and recommendation adopted, 2011 WL 6709920 (E.D. Tex. December 21, 2011), Download Beaumont Pres. Ptrs., LLC v. International Cat. Ins. Mgrs., LLC (E.D. Tex. Case No. 1.10CV548, Order of USDJ, Filed Dec. 21, 2011) PUBLIC ACCESS.

   The Expert who filed the Report in question is a lawyer "who is experienced in cases involving insurance disputes."  2011 WL 6702787 at *12.

Part of  a Series.  To be continued ....

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Hurricane Winds, Conflicting Expert Testimony, Bad Faith Jury Question.

   In Beaumont Preservation Partners, LLC v. International Catastrophe Insurance Managers, LLC, 2011 WL 6707287 *6-*9,  *9 (E.D. Tex. USMJ Report and Recommendations Filed October 6, 2011), Download Beaumont Preservation Ptrs., LLC v. International Catastrophe Insurance Mgrs., LLC (E.D. Tex. Report and Recco of USMJ Oct. 6, 2011) PUBLIC ACCESS, a U.S. Magistrate Judge in Texas recommended, id. at *9, that the Federal District Judge rule that differing Expert Testimony on the existence and extent of Hurricane Ike Wind Damage, provides a Jury Question on Bad Faith Denial of a Commercial First-Party Property Claim.

   The Federal District Judge recently agreed with this recommendation and adopted the Magistrate Judge's Report, in  2011 WL 6709920 (E.D. Tex. December 12, 2011, Order of U.S. District Judge Adopting Report and Recommendation of USMJ).

   In other words, the conflicting evidence available on the underlying claim for Coverage in this peculiar case made the Bad Faith Claim a Jury Issue in this case.

   This was one of many interesting rulings and recommendations in this Texas case.  Some will be posted further here and on Insurance Claims and Issues Web Log.

    Please Read The Disclaimer.

No Bad Faith Where Coverage Reasonably Disputed, BUT ...

  What did you say that Policyholders' "duty" was, again?

     In Northrop Grumman Corp. v. Factory Mutual Insurance Co., 2011 WL 4501945 (C.D. Cal. September 28, 2011), Download Northrop Grumman Corp. v. Factory Mut. Ins. Co. (C.D. Cal. Case No. CV05.08444, Order Granting Partial Summary Judgment Filed Sept. 28, 2011) PUBLIC ACCESS, a Federal Judge applied existing California law.  Then he invented new law out of thin air.

   The Insurance Company contested Insurance Coverage in that case.  The Policyholder's claim was for Hurricane Katrina damage.  Ultimately, the Insurance Company won on Coverage in an appeal to the Ninth Circuit Court of Appeals.  "[T]he Ninth Circuit reversed, holding that the Excess Policy's Flood Exclusion encompassed storm surge damage."  Id. at *1.

  One of the Policyholder's alleged claims in the present litigation against the Insurance Company was for Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing.  Under existing California law, the duty imposed on an Insurance Company -- specifically, the duty imposed on a First-Party Insurance Company providing "property insurance" Coverage for Business Interruption losses incurred by its own Policyholder, as in this case -- "is not to unreasonably withhold payments due under the policy....  Because there was a genuine dispute as to whether Northrop was entitled to flood-related time element damages, Factory Mutual's withholding of these claimed damages was neither unreasonable nor without proper cause."  Id. at *3.  [Emphasis in original.]

   This conclusion follows from existing California law, as noted.  However, in reaching this conclusion (which may have been totally correct under the circumstances of that case and which is not in question in this post), the Federal Judge constructed a "duty" upon a Policyholder that never existed before in California.

   Or anywhere else.

   That may be why the opinion did not contain any supporting citations of authority.  There aren't any.

   The Federal Court constructed a duty upon the Policyholder which negated the Good Faith, "genuine dispute" Coverage duty upon the Insurance Company in this case:

Where a contract is ambiguous, Northrop had the duty to seek clarification at the time of entering and agreeing to the policy.  Under the facts of this case, failure to seek clarification at the time of signing resulted in a surviving ambiguity and a concomitant forfeiture of the right to seek bad faith damages.

Id. at *3.

   To paraphrase this unique holding, what this Federal Court is saying is that a Policyholder had the duty to seek clarification at the time of entering and agreeing to the policy, presumably in the knowledge that years later Hurricane Katrina would make landfall and cause an ambiguity in the Business Interruption Coverage.  Since a Policyholder cannot make such a forecast, of course, it means that whenever Coverage provisions are ambiguous as applied to an actual claim, there is always "a concomitant forfeiture of the right to seek bad faith damages."

   That is one holding too far.

   It should have been enough that Factory Mutual had a legitimate, reasonable basis to contest Business Interruption Coverage in that case, without resort to fiction.  Citing no authority, this ruling in turn provides no authority for rulings in other cases in the same or other Courts. 

    The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  Here is a link to the American Conference Institute Website Page which features this Conference including registration. If you or someone you know would like to attend, the ACI is offering a discount to the readers of this weblog.  If you would like to explore the ACI discount offer, contact:

Marc Gerstein
Delegate Coordinator
Office: 1-212-352-3220  x5432

[email protected]

 

Please Read The Disclaimer.

 

More From Pepperwood: This Time, Association's Interrogatories; Privilege Log Required.

   In a decision made after this site's post on September 8, 2011, the Pepperwood Court was confronted with a Motion to Compel Better Answers to Interrogatories.  Pepperwood of Naples Condominium Ass'n v. Nationwide Mutual Fire Insurance Co., 2011 WL 4382104 (M.D. Fla. September 20, 2011)(Polster Chappell, USMJ).

   In pertinent part, the Federal Court repeated its previous rulings in accord with nearly unanimous holdings in the Federal Courts:  "Even though the practice has become common here and elsewhere, courts have found that whenever an answer accompanies an objection, the objection is deemed waived, and the answer, if responsive, stands."  Id. at *5.

   One of the Policyholder-Condominium Association-Plaintiff's Interrogatories asked for the names, addresses and telephone numbers of persons who have personal knowledge of files that the Insurance Company opened "relating in any way to the policy or claim".  The claims files had already been produced.  The Defendant Insurance Company responded, in part:

Answer:  Objection.  This interrogatory is overbroad and seeks to invade the work product doctrine and the attorney-client privilege.  Subject to this objection, and without waiver of the same, [the Defendant referred the Condominium Association to the claim files already produced by the Defendant].

However, the Defendant did not file a Privilege Log when it objected on the grounds of the work product doctrine and the attorney-client privilege.  "If this is the case, Nationwide is obligated to provide Pepperwood with a privilege log setting forth this information.  The party invoking the privilege bears the burden of proof.  Id. at *8.  [Emphasis by the Court.]

   The Court in this case proceeded to grant the Motion to Compel as to this Interrogatory in part and deny it in part.  The Defendant was ordered to "provide the names, addresses and phone numbers" of the fact witnesses asked for in this Interrogatory, quoted above, in pertinent part.  "Any other requests within the interrogatory are denied as the Court finds that this information can be found in the claims files themselves."  Id. at *9.

   Presumably, this information includes the alleged work product and privileged information which was produced when the claims files were produced.  At any rate, after noting that the Defendant in this case did not provide a Privilege Log at all, after invoking the work product doctrine and the attorney-client privilege, and describing what should be in a Privilege Log to be considered by a Court, the Court in this case did not write another word about it.

    The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or someone you know would like to attend.

Please Read The Disclaimer.

Citizens Property Insurance Corporation: Are All States' Citizens Corporations Immunized?

In statutory language that likely has parallels in other States, Florida has enacted Section 627.351(6)(a)(1), that qualifies Citizens Property Insurance Corporation as a public body.  The qualifying language is located in Section 627.351(6)(a)(1), which provides in pertinent part:

 The Legislature intends by this subsection that affordable property insurance be provided and that it continue to be provided, as long as necessary, through Citizens Property Insurance Corporation, a government entity that is an integral part of the state, and that is not a private insurance company.

[Emphasis added.]  This statutory provision has been in effect since the creation, so to speak, of Citizens Property Insurance Corporation.  In  Citizens Prop. Ins. Corp. v. Garfinkel, 25 So.3d 62, 64 (Fla. 5th DCA 2009)(subscription required), the Florida appellate court concluded that Citizens is shielded by sovereign immunity from bad faith claims because “it is explicitly clear that Citizens is not a private insurance company, but rather is a state body”.

  There may be an incipient conflict among the Florida Courts, however, which the Florida Supreme Court will ultimately have to resolve.  At least one Trial Court has reasoned as follows, and its reasoning does not appear to be disputed by another of Florida's intermediate Appellate Courts other than the one which decided Garfinkel:

Citizens is a statutory corporation created by the legislature to ensure that properties in Florida can be insured against hurricane damage.  See § 627.351(6)(a)(1), Fla. Stat.  In creating Citizens for this purpose, the legislature imbued Citizens with the status of a government entity, see § 627.351(6)(a)(1),  and gave Citizens a limited grant of immunity in connection with Citizens' performance of its duties or responsibilities. See § 627.351(6)(s)(1), Fla. Stat.  However, section 627.351(6)(s)(1) provides that such immunity does not apply to a willful tort or for a breach of contract pertaining to insurance coverage.

   In its section 624.155 action, San Perdido alleged that Citizens engaged in a series of bad faith practices in its handling of San Perdido's insurance claim, and that such conduct was both a breach of contract and a willful tort under section 624.155.  In denying Citizens' motion to dismiss, the trial court reasoned that San Perdido's section 627.155 [sic] lawsuit is within the section 627.351(6)(s)(1) exceptions to Citizens' immunity. Although Citizens could challenge that ruling after an adverse judgment if San Perdido should prevail on the merits of its lawsuit at trial, Citizens now seeks an immediate writ of prohibition or certiorari, and asks this court to preclude any further proceedings in the trial court.

Citizens Property Ins. Corp. v. San Perdido Ass'n, 46 So.3d 1051, 1052 (Fla. 1st DCA 2010)(subscription required), review granted by Citizens Property Ins. Corp. v. San Perdido Ass'n, 56 So.3d 765 (Fla. Feb 17, 2011).  The Supreme Court of Florida's Online Docket shows that Oral Argument was held on September 8, 2011 and that this case is still pending as of Thursday, September 14, 2011.

   The Supreme Court apparently granted discretionary review in order to assess the appellate jurisdictional issues addressed differently by the Fifth and First District Courts of Appeal in the Garfinkel and San Perdido Association cases.  However, the Supreme Court can of course resolve any issue it chooses to address having now assumed jurisdiction to do so.  It is possible if not likely that the Supreme Court will resolve the issue, in Florida, of whether Citizens Property Insurance is statutorily immunized from Bad Faith Claims or not.

     The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or someone you know would like to attend.

Please Read The Disclaimer.

 

 

Conditional Objections Are Waived Objections in Insurance (or Any) Case.

    In Download Pepperwood of Naples Condominium Ass'n v. Nationwide Mut. Fire Ins. Co. (M.D. Fla. Case No. 2.10cv753, Order of USMJ Filed Aug. 29, 2011) PUBLIC ACCESS, also published as 2011 WL 3841557 (M.D. Fla. August 29, 2011)(authorized password required to access Westlaw), a U.S. Magistrate Judge compelled production of Civil Remedy Notices, from other allegedly similar cases, in a Statutory Bad Faith Case in Florida.  This ultimate holding is not in itself very unusual.  Such holdings are fairly common in Statutory First-Party Bad Faith Actions in Florida. 

   How the Court arrived at its holding is worth noting, however.  I have discussed this holding and its reasoning with Defense and Policyholder Insurance Lawyers, and they tend to agree with it.  It reflects their practice not to raise objections, for example, unless they intend to pursue them and have the Judge resolve the issue if need be.  As one Policyholder Attorney reflected, "That's what Courthouses are for."

   The Plaintiff in the Pepperwood case is a Condominium Association.  It claims that it incurred Hurricane Damage in 2004.  The Condominium Association alleges in its Complaint that Nationwide Mutual Fire Insurance Company recognized Coverage for Property Damage under its Policy issued to Pepperwood, but did not pay all Covered Damages.  Instead, Nationwide allegedly "tendered" $30,270.20.  Pepperwood of Naples Condominium Association v. Nationwide Mutual Fire Insurance Co., 2011 WL 3841557 at *1.

   After various further developments including the Condominium Association hiring a Public Adjuster to interface with Nationwide, and an Appraisal in Pepperwood's favor for "$1,901,645.06 (Replacement Cost) and $1,535,468.28 (Actual Cash Value)," in response to which Nationwide "tendered an additional $1,391,674.64 in owed insurance benefits," Pepperwood sued Nationwide for Breach of Contract and for Statutory Bad Faith.  Id. 

   The Condominium Association then propounded Discovery.  This included a Request No. 1 in "Plaintiff's Second Request for Production," to which Nationwide duly responded.  The Request, and Nationwide's Response, were quoted together by the Court as follows:

Request No. 1: A copy of any and all civil remedy notices (“CRN”) and related correspondence, including Nationwide's responses to the CRN, regarding similarly situated policy holders as Pepperwood from January 2004 until the present.

* * *

Nationwide's Response: Objection. This request is overbroad in temporal and subject scope; this request is vague with respect to the phrase “similarly situated policy holders”; this request is burdensome and harassing; this request seeks irrelevant information that is not reasonably calculated to lead to the discovery of admissible evidence. Subject to these objections and without waiver of the same, this request seeks information that is publicly available online from the Florida Department of Financial Services [FDFS], and can be obtained from that source as easily by Plaintiff as by the Defendant.

Id. at *2.  Time to break out the Discovery issues, much as the Court did.  The focus in the Court's Opinion, and in this post, is on the Defendant's Response, for reasons which will become apparent.

   The Defendant's Response involved four (4) sets of objections, which are addressed below in the order in which the Court addressed them and which was not the order in which Nationwide listed them.  

 The first of four sets of Objections:  "Subject to these objections and without waiver of the same" is a Conditional Objection and did result in waiver of the same.

   The first thing that the Court in this case wrote about the Defendant's Conditional Objection is that "this court is reluctant to sustain the objection."  Then the Court cited case law from other Courts in support.  Id.  The fact that "this seems to be an increasingly common approach to discovery," and "[e]ven though the practice has become common here and elsewhere," it has not received favorable treatment from the Courts which sometimes have to consider them.  The Courts in Insurance Coverage and Insurance Bad Faith Cases, and in other kinds of cases as well, seem to be fairly unanimous in rejecting Conditional Objections to Discovery.

   So it was in this case.  "[I]f a party objects to a question or request but then answers, has the objection been waived despite the claimed reservation of the objection?  This court cannot logically conclude that the objection survives the answer.  Simply put, the rules do not on their face give a party that option."  Id.  [Emphasis added.] 

   Not only is there no "Rule" basis for this practice, in the eyes of this particular Magistrate Judge there is no "rational basis," either.  "There is either a sustainable objection to a question or request or there is not."  Id. at *3.

   In this as in many another case of Conditional Objections to Discovery, "the objection is deemed waived, and the answer, if responsive, stands."  Id.

 Second set of Discovery Objections here:  "Overbroad in temporal and subject scope;" vague; burdensome; and harassing.

    Like many other Courts, the Court in this case referred to objections of this kind, which were made without substantiation, as "boilerplate".  A "boilerplate objection/response ... is not well taken.  Defendant must state specific grounds for each objection."  Id.

 Third set of Discovery Objections:  Irrelevant and not reasonably calculated to lead to the discovery of admissible evidence.

    This objection, too, must by law include a specific explanation saying why.  "Thus, Defendant's objection to this Request as to relevancy was improper."  Id. at *4.

 The "equally available" Response, treated in this case as another Objection.

   The Court first pointed out that "[t]his assertion made by the Defendant is incorrect.  Only the CRN is available online, the other information contained within Plaintiff's request is solely within the control of the Defendant and unavailable to Plaintiff."  Id.

   Second, even if the Response had been accurate in this regard, "'this exact objection is insufficient to resist a discovery request.'"  Id. 

    The Court's decision in this case is not unique.  It is equally available to support Discovery Requests to Plaintiffs as well as to Defendants.  Whether Discovery will be compelled in a given Insurance Bad Faith Case, as in any case in this respect, depends largely on the Responses including Objections to the interrogating parties' Discovery Requests.

    The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or someone you know would like to attend.

Please Read The Disclaimer.

 

 

"Hurricane Irene" Winds Visit the Mall, in Good Faith.

   In a Federal Court in North Carolina, a shopping mall owner is exploring the boundaries of claim investigation and denial.  The mall owner sued under a "business policy" after its Claim was denied.  The mall owner claimed Property Damage from Wind.  Download Lenoir Mall, LLC v. State Farm Fire and Casualty Co. (W.D.N.C. Case No. 5.10cv40, Memorandum and Order Filed August 23, 2011) PUBLIC ACCESS, also published as 2011 WL 3682794 (W.D.N.C. August 23, 2011)(authorized password required to access Westlaw).

  In Federal Court, the shopping mall owner filed a Claim against the "Business Insurance" Company for alleged Bad Faith Settlement Practices, among other things.  "North Carolina recognizes the tort of bad faith settlement practices.  [Citation omitted.]  The elements of a claim for bad faith settlement practices are: (1) “a refusal to pay after recognition of a valid claim; (2) ‘bad faith;’ and (3) aggravated or outrageous conduct.”  Lenoir Mall, LLC v. State Farm Fire & Cas. Co., 2011 WL 3682794  at *2.

   The Plaintiff shopping mall owner and Policyholder failed to allege a legally sufficient refusal of the Insurance Company to recognize a valid claim and refusal to pay the Claim.  Accordingly, the Common Law First-Party Bad Faith Claim was dismissed in this case.  Id.  

    The Federal Court's Opinion in this case also presents an illuminating discussion of the differences and interplay between North Carolina's "general" Unfair Trade Practices Act and its "insurance-specific" Unfair Claims Practices Act.  That discussion is dicta, however, in that the Insurance Company's Motion to Dismiss was not directed to Plaintiff's Statutory Claims in this case.  See id. at *3 & n.1.

   The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  As a result, the ACI will offer you a large  discount if you choose to register for the Conference.  In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI and the deadline most recently announced by the ACI for requesting this discount is August 31, 2011.  Ms. Waltmon's direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at [email protected].  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or someone you know would like to attend.

Please Read The Disclaimer.

Insurance Bad Faith, Expert Testimony and Report Issues After Hurricane.

   Three recent holdings by Louisiana's Fourth Circuit Court of Appeal are of great interest to parties and attorneys involved in Insurance Coverage and Bad Faith Litigation.  The first two holdings are posted here.  The third is posted on Insurance Claims and Issues Web Log.  All of the holdings came in the case of Download Patrick and Elizabeth Jouve v. State Farm Fire and Casualty Co. (La. Ct. App. 4th Cir. Case No. 2010CA1522, Opinion Filed August 17, 2011) PUBLIC ACCESS, also published as 2011 WL 3611800 (La. Ct. App. 4th Cir. August 17, 2011)(authorized password required to access Westlaw).

 1.  "SUBSTANTIAL, REAONSABLE AND LEGITIMATE QUESTIONS" OF

a. COVERAGE ("AN INSURER'S LIABILITY") OR b. THE INSURED'S DAMAGES ("THE EXTENT OF ...  AN INSURED'S LOSS") ARE DEFENSES TO VEXATIOUS DELAYED PAYMENT CLAIMS IN A FIRST-PARTY BAD FAITH CASE IN LOUISIANA.

   This holding may take only a little longer to state, than the heading I have written, above, to describe it.  In the Jouve case, Mr. and Mrs. Jouve sued their Homeowner's Insurance Company, State Farm, for Property Damage allegedly caused by Hurricane Katrina.  Among other causes of action presented by the Jouves, they alleged that State Farm violated Louisiana Statutes which provide for the recovery of penalties and attorney fees where, among other things, the Insurance Company failed to make a timely payment of the Insured's Claim after the Insurance Company received a satisfactory Proof of Loss, and "the insurer's failure to pay was arbitrary, capricious and without probable cause."  Jouve v. State Farm Fire & Casualty Co., 2011 WL 3611800 at *4.

    Under the Louisiana "First-Party Bad Faith" Statutes invoked by Mr. and Mrs. Jouve, "arbitrary, capricious, or without probable cause" means "vexatious," and a refusal to pay is "vexatious" when it is "unjustified, without reasonable or probable cause or excuse."  Id.  "When 'there are substantial, reasonable and legitimate questions as to the extent of an insurer's liability or an insured's loss, [the insurer's] failure to pay within the statutory time period is not arbitrary, capricious or without probable cause.'"  Id.  [Emphasis added.]  This Louisiana defense to Insurer First-Party Bad Faith may go farther than the defense recognized in most other jurisdictions, that when Coverage is fairly and reasonably debatable, an Insurance Company is held "entitled to debate it."  See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 11:17, "Fairly or Reasonably Debatable Claims" Defense to First-Party Bad Faith (West Publishing Co. 3d edition 2011).

   Whether an Insurance Company in Louisiana complies with this standard is a question of fact, id., a holding which is consistent with the holdings in every other jurisdiction concerning the issue of compliance with the prevailing Bad Faith standard of liability.  The evidence in the record of the Jouve case established, in the eyes of the Appellate Court, that the Trial Court correctly entered a Summary Judgment in favor of the Insurance Company on the Jouves' Statutory vexatious refusal to pay causes of action:

    The evidence submitted indicates State Farm timely initiated the loss adjustment of plaintiffs' property and made an unconditional tender based on the first inspection within the statutory time period. When plaintiffs' counsel submitted Mr. Caracci's estimate [requested by Mr. and Mrs. Joure] to State Farm, State Farm arranged for a re-inspection of the property with Mr. Caracci. Based on the re-inspection, State Farm made a second timely unconditional tender.

   Plaintiffs offered no evidence in opposition to State Farm's motion for partial summary judgment that shows State Farm acted arbitrarily, capriciously or without cause in adjusting their homeowners claim. Given that plaintiffs will have the burden of proof at trial, and thus far have offered no evidence of bad faith on the part of State Farm to create a genuine issue of material fact, we find no error in the trial court's granting a partial summary judgment dismissing the bad faith claims against State Farm.

Id. at *5.

 

2.  EXPERT TESTIMONY AND REPORT EXCLUDED IN INSURANCE COVERAGE CASE OVER PROPERTY DAMAGES CAUSED BY HURRICANE KATRINA.

    The Trial Court in the Jouve case also excluded the testimony and Report of Plaintiffs' Loss and Damages Expert.  The Report was actually prepared by the Expert's grandson, using a widely found computer program, Xactimate, to estimate the Plaintiffs' "actual wind and flood damage estimates on the Jouve property".  Id. at *2.

  The Trial Court excluded the Expert's Testimony, in addition.  It appears that the Trial Court followed the requirements of Louisiana Law for Expert Testimony, id. at *2-*3, which are the same requirements generally followed in State Courts across the country in Property Insurance Cases.  See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 12:18, "Experts in First-Party Insurance Bad Faith Cases:  Specific Cases and General Rules" (West Publishing Co. Third Edition 2011).    "Thus, the admission of expert testimony is proper only if all three of the following guidelines are met:  (1) the expert is qualified to testify competently regarding the matters [she or] he intends to address, (2) the methodology by which the expert reaches [her or] his conclusions is sufficiently reliable as determined by the sort of inquiry mandated in Daubert [Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993)], and (3) the testimony assists the trier of fact through the application of scientific, technical or specialized expertise, to understand the evidence or to determine a fact in issue."  Jouve v. State Farm Fire & Casualty Co., 2011 WL 3611800 at *2.  Whether these guidelines are satisfied in a given Louisiana case is within the discretion of the Trial Court.  Id. at *3.

   In this case, the Trial Court's determination to exclude both the subject Expert's Testimony and the Report prepared by his grandson, was affirmed.  "[W]e cannot say the trial court abused its discretion by granting State Farm's motion in limine to exclude the testimony and damage estimate of [Plaintiffs' Expert] from the trial."  Id.

   The third holding of interest in the Jouve case will be posted on Insurance Claims and Issues Web Log.  It concerns the Partial Summary Judgment entered by the Trial Court on Plaintiffs' Dwelling Claims, including whether recovery should be limited to actual cash value at the time of Loss.  See also for a Focused, Particular Policyholder perspective on these and many related issues, Property Insurance Coverage Law Blog, and in particular this interesting post there on August 18, 2011, "The Real Tropical Hurricane Season Begins".

   The 22nd Annual Bad Faith Litigation Conference of the American Conference Institute is being held in 2011 in Orlando, Florida.  The author will be speaking.  As a result, the ACI will offer you a large  discount if you choose to register for the Conference.  In order to register and receive this discount from the ACI, contact Amanda Waltmon, Esquire, Legal Analyst and Program Director at the ACI and the deadline most recently announced by the ACI for requesting this discount is August 31, 2011.  Ms. Waltmon's direct dial is 212.352.3220, ext. 5231 or send Ms. Waltmon an EMail at [email protected].  Here is a link to the American Conference Institute Website Page which features this Conference including registration, if you or anyone you know would like to attend.

Please Read The Disclaimer.

Determining Coverage by Computer: Risking More Than Wind, Water Losses.

   Hurricanes contain Wind and carry Water (or the other way around, depending on how you say it).  Determining Hurricane Losses attributable to Wind as distinct from Hurricane Losses caused by Water can be a difficult task.

   Computer Models are now advertised to solve the problem for Insurance Companies.  (Yet again.)  According to testimony on a bill to extend and change the National Flood Insurance Program, Computer Models not only can be used to, well, "model a storm" but "[i]n addition, statistical models can be used to predict the loss."  Lydia Mulvaney of McClatchy Newspapers, "Models Can Determine Wind and Water Damage, Panel Told" posted in political blog on MiamiHerald.com on Thursday, June 23, 2011.

   There is at least one major drawback to that:  Exposure to Bad Faith, extracontractual Damages without limit.

   Although the Courts have held that it is not Bad Faith in and of itself to use a Computer Model as a tool in evaluating Covered Loss, see, e.g., Henry v. Allstate Insurance Co., 2011 WL 2287817 (E.D. La. Case No. 07-1738 August 8, 2007)(PACER NOT AVAILABLE; authorized password required to access Westlaw), the Courts have also held that it is Bad Faith to turn the responsibility for evaluating a Covered Loss over to a Computer Model.  See also Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" §11:22, "Computer Models and Catastrophe Claim Coverage" (Third Edition West Publishing Co. 2011).

   I was not aware there is such a problem in the process of actually evaluating Hurricane Losses.  There does not seem to be one -- at least before legislation was introduced and Computer Models are being advertised as replacing Insurance Industry Experience in evaluating Covered Losses.

Please Read The Disclaimer.

Florida Intentional Misrepresentation Jury Issue in Federal Condominium Hurricane Claim.

   A relatively new Federal Court decision on a Condominium Hurricane Claim may change Florida Insurance Law.  The Federal Court held in that case that the Property Insurance Company's "ninth affirmative defense" involved facts "that could cause a jury to conclude that Plaintiff [Condominium Association] concealed material information regarding its insurance claims."  The Court reached this holding on a record which included these four sets of facts:

   1.  "[E]vidence that Plaintiff waited long periods of time to respond to information requests and failed to show up for an examination under oath regarding its claims," and

   2.  "testimony suggesting that Plaintiff did not actually believe sliding windows and glass doors were covered," and

   3.  "testimony suggesting that some of the damage was not caused by Hurricane Wilma, and"

   4.  "testimony that Plaintiff overstated the amount of damage actually caused by Hurricane Wilma."

Royal Bahamian Ass'n v. QBE Insurance Corp., 2010 WL 4355181 *1 (S.D. Fla. Order of Chief District Judge Moreno October 28, 2010)(authorized password required to access Westlaw).

   If this Opinion is treated as though it was meant to be applied to every Insurance Claim involving similar sets of facts, then this Opinion will have very broad implications.  In that event, it would even likely change the Insurance Law of Florida.  Few if any Insurance Coverage Attorneys in Florida, who have participated in Damages Claims presented under Property Policies by Condominium Associations (and many other kinds of Insurance Claims presented by Policyholders for that matter), have not also experienced Claimants "waiting long periods of time to respond to information requests," or failing to show up for E/U/O's, or not necessarily believing that all of their Damages Claims were covered on the particular Claim.

   If it comes to that, so long as there are reasonable grounds for presenting particular Damages as part of a Claim, it seems to be the Insurance Company's burden and easily met to deny Coverage for particular Damages or parts of a Claim where there are reasonable grounds for denying or contesting Coverage for them.

   Some context is required, it appears.  The U.S. Magistrate Judge's Report and Recommendations provide that context.  The Report and Recommendations are attached to the Westlaw publication of this Order.  (The Report and Recommendations are not paginated in the Westlaw publication, i.e., the pages are not numbered.)

   The mysterious "ninth affirmative defense" was raised by QBE on grounds "that the insurance policy is void because Royal Bahamian fraudulently deceived it by submitting a claim for pre-existing damages, damages it knew were not covered under its policy, and grossly inflating the amount of damage to covered property," according to the Magistrate Judge.  There does not appear to be any particular Policy Provision relied on by QBE in this regard, and at any rate no such Policy Provision is reproduced either in the Opinion or in the Report.  (See first full paragraph under the heading of "QBE's Claim of Concealment, Misrepresentation or Fraud" in the Magistrate Judge's Report and Recommendations.)  Therefore, it is fair to say that the facts do not appear to be so simply summarized as the District Judge's Opinion, quoted above, might lead an unsuspecting observer to conclude.

   Neither is the applicable rule of Florida law so easily summarized as might appear from that Opinion.  The Defendant Property Insurance Company in this case was proceeding under a rule of Florida Insurance Law that where there is a "willful false statement" of a material fact, the Insurance Company is not required to prove "prejudicial reliance" in order to void the Policy under a contract provision allowing it to do so in such event.  To say again, the author has scoured the Westlaw publication of both the District Judge's Opinion and the Magistrate Judge's Report and Recommendations, without finding a quotation from nor identification of any such Policy provision in QBE's Insurance Policy.  Accordingly, it may be that QBE was proceeding under an affirmative claim of fraudulent concealment or the like in order to declare its Policy void in this case.

   In any event, the brief Opinion of the Chief District Judge in this Case is understandably cryptic after reference is made to the Magistrate Judge's Report and Recommendations to which the Opinion was addressed.

 Please Read The Disclaimer.

Florida Office of Insurance Regulation Public Symposium at Gaylord Resort ...

...  Bad Faith Law Makes Insurers Pay Uninsured Florida Sinkhole Claims?

   Panelists at the Florida Insurance Commissioner's Office of Insurance Regulation Public Symposium had a lot to say.  They were gathered by the Commissioner and the O.I.R. (formerly known as the Florida Department of Insurance) for a Public Symposium at the luxurious Gaylord Palms Resort in Orlando, Florida on Thursday, October 21, 2010.  I was there to listen, observe, and ultimately, to report to you.

   The first panel presented by the Florida Insurance Commissioner was asked what good news they could report.  One panelist replied:  "Rates are up," meaning that Property Insurance Companies including Homeowner's Insurance Companies are now charging higher Premiums.  I took a brief poll of the people seated around me.  We all agreed that the Public would not be likely to agree that that was "good news".

   The second panel contained several interesting panelists.  One observed that we in Florida are in a "peak zone of Cat (Catastrophe) Risk."

   Another panelist offered his observations on Florida's Bad Faith Law and on Public Adjusters.  He was not alone in his view that Public Adjusters are responsible for "reopening" Hurricane Claims that should have been considered closed in 2004-2005, they think.  In particular, he said, Insurance Companies are now paying out huge sums of money to pay Sinkhole Claims which anybody with common sense would say were not intended to be paid by the Insurance Contract, he said.

   Further, uncovered Florida Sinkhole Claims are also the result of people abusing the system in his view.  He has no doubt, he expressed, that Public Adjusters turned to presenting Sinkhole Claims as Hurricane Wilma Claims began to come to an end.  As another example of people abusing the system, he said, Florida is the only State in the Union which requires Insurance Companies to pay Replacement Cost up front.  In his judgment, this is just another opportunity for people to abuse the system.

   Yet another panelist on the second panel presented by the Insurance Commissioner observed that mitigation is the only way to reduce the potential losses from natural Catastrophes such as Hurricanes.

   More to come....

    Dennis Wall is the Author of the industry leader for 25 years on the subject of "Litigation and Prevention of Insurer Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement), and he is the Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  Mr. Wall will speak on Business Interruption Insurance Coverage Issues including those arising out of the BP Oil Spill Catastrophe, on November 17, 2010, at a Seminar of the Insurance Law Committee sponsored by the Orange County Bar Association in Orlando, Florida.   Mr. Wall will also speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".  The American Conference Institute is offering a discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

Please Read The Disclaimer.

 

 

Appeal, Statute of Limitations, Abatement: Florida Statutory Bad Faith Claims.

   Abatement was ordered with the concurrence of the parties in a Florida Statutory First-Party Bad Faith case, Chalfonte Condominium Apt. Ass'n v. QBE Insurance Corp., Download Chalfonte Condominium Apt. Ass'n v. QBE Insurance Corp. (S.D. Fla. Case No. 10.80584, Order Denying Dismiss and Strike, Filed August 30, 2010) PUBLIC ACCESS also published as 2010 WL 3385982 (S.D. Fla. August 30, 2010)(Westlaw subscription required to access Westlaw).

   That is a case on appeal after a Jury awarded Chalfonte Condominium Association $8,140,099.68, reduced to $7,237,223.88 after the disposition of post-trial motions, plus an additional $678,160.60 for Attorney's Fees and Costs.  The awards came as a result of alleged Damages from Hurricane Wilma, which Chalfonte successfully proved were covered under its Policy issued by QBE.  Chalfonte Condominium Apt. Ass'n v. QBE Insurance Corp., 2010 WL 335982 at *1.

   Chalfonte Condominium Association then pursued additional Claims against QBE for Statutory, First-Party Bad Faith under Fla. Stat. § 624.155.  The subsequent Claims included Claims based in particular on an alleged failure by QBE not to attempt in good faith to settle claims "when it should have if it had acted fairly and honestly and in various other ways."  Id., paraphrasing Fla. Stat. § 626.9451(1) invoked by Chalfonte as a part of its Claims.

   QBE appealed and, while its appeal is pending, QBE filed a Motion to Dismiss or Alternatively to Strike.  "QBE filed the instant motion arguing that Chalfonte's bad-faith complaint is premature because the underlying suit is pending appeal."  Chalfonte Condominium Apt. Ass'n v. QBE Insurance Corp., 2010 WL 335982 at *1.   

   With the Court deciding in favor either of Abatement or of Dismissal Without Prejudice based upon Florida Law, the parties successfully urged the Court to order Abatement rather than Dismissal.   Chalfonte in particular expressed concern about the effect of dismissal, even without prejudice, "for fear that the statute of limitations would run on its bad faith claims."  Id. at *2.  The Court accordingly ordered abatement of the Bad-Faith Claims while the underlying case is on appeal.  Id.

 Please Read The Disclaimer.

Property Insurance Claims Handling Issues for Expert Witnesses.

   I have been fortunate in having two articles released for publication at the same time.  I am already making one of them available to you, on another site, and with this post I am making the other article available to you as well, "Expert Witnesses on the Handling of Property Insurance Claims," published in the April, 2010 issue of The Briefs.  Here is your copy:  Download Expert Witnesses on the Handling of Property Insurance Claims.OCBA Briefs.0410.  (Copyright Dennis J. Wall 2010.  All rights reserved.  No Reproduction or any other use of this material may be made for commercial purposes.)

   I hope that you will find this to be useful and productive.

You may also be interested in the posts on this subject on Insurance Claims and Issues Web Log.  Please Read The Disclaimer.

Risks of Denying All Coverage Under "All Risks" Property Policy.

   An "All Risks" Property Insurance Company denied all Coverage in Download Liebel v. Nationwide (Fla. 4th DCA Opinion Filed October 7, 2009).   The cause of loss was one of the universe of covered "all risks" under such a Policy.  In this case, the cause was a burst water pipe.  The rushing water caused the earth to move.  The Policyholder presented a claim under her All Risks Property Policy for the cost of repairing the damaged pipe.

   The All Risks Property Insurance Company denied all Coverage based on its "Earth Movement" Exclusion.  The Florida Appellate Court held that this was not a good ground for denying Coverage under an "All Risks" Property Insurance Policy in this case.  There was Coverage in this case, the Appellate Court unanimously held in accordance with the universally held rule in such cases.

Interpretation of "All Risks" Property Insurance Policies is addressed in § 7:1, "Introduction and Interpretation," and "Earth Movement" Exclusions are addressed in § 7:9, by Dennis J. Wall in CAT Claims:  Insurance Coverage For Natural and Man-Made Disasters" (West Publishing Company 2008 & Supplement 2009).

Please Read The Disclaimer.  

Jury Verdict: No Bad Faith Statutory Penalties.

   A Jury reached a Verdict declaring that the evidence did not warrant Bad Faith statutory penalties in Download One River Place Condominium Association, Inc. v. Axis Surplus Insurance Co. (E.D. La. Opinion filed 08.04.09).

   A lesson taught by the Insurance Company in this case is that it was not content to leave the introduction of all evidence to the Policyholder, One River Place Condominium Association, Inc., after Axis denied part of One River's Hurricane Katrina Property Damage Claim.  "Axis set forth evidence that it did not delay in paying the interior damages while inspecting the exterior of the property," that it paid an additional amount for a particular type of damage once it confirmed that the original tally of that particular amount was too low, that it paid depreciation even before it was due under the Policy, and presented evidence, said the Court, that the Policyholder "withheld providing ... documents required to process the claim."  Download One River Place Condominium Association, Inc. v. Axis Surplus Insurance Co. (E.D. La. Opinion filed 08.04.09), attached Official Slipsheet Opinion at 5.

Please Read The Disclaimer.

Katrina CatClaims Revisited: State Farm Settles, Is Sued Again.

    It appears that State Farm may have been sued again for Bad Faith as a result of Hurricane Katrina Catastrophe Claims -- indirectly, this time.

    There was once a settlement agreement, among many policyholders and State Farm, in Mississippi.  The proposed settlement agreement was subject to Federal Court approval.  The Federal Judge was confronted with more questions than answers when he was presented with the proposed settlement for his approval.  The Federal Judge refused to approve it, at least until the many questions were answered.

     State Farm then reportedly reached a settlement agreement of many of the same claims with the Mississippi Insurance Commissioner's Office.  This lengthy previous history was summarized in "Update to the Update:  New Settlement in Mississippi," posted on March 20, 2007 on "Insurance Claims And Issues".   

    It is now reported that the State of Mississippi, through the Mississippi Attorney General, filed a new Complaint on Monday, June 11, 2007 in Mississippi State Court.  The new Complaint contains allegations, it is reported, that State Farm breached the (first) settlement agreement and thus breached a contract.  The new Complaint contains demands for compensatory and punitive damages.  More will be posted as the Complaint becomes available.  As of the night of June 11, 2007, there was a momentary silence on the subject on the web sites of both the Mississippi Attorney General and the Mississippi Insurance Commissioner.

     Here is a link to State Farm's Press Release of June 11, 2007,which State Farm entitled "Mississippi Attorney General's Lawsuit Threatens to Disrupt Hurricane Katrina Settlement Process with MIssissippi Insurance Department". 

     Here is a link to the whole available story on "Insurance Claims And Issues".
   
                                                Please Read The Disclaimer.

World Trade Center Insurance Claims Settlement: Confidentiality vs. Concealment Revisited.

    A post in this space on May 23, 2007 addressed the issue of Confidentiality vs. Concealment in or of Settlements of Bad Faith Claims under Florida law.  It is reported on May 24, 2007 that confidentiality provisions are found in a global settlement of unspecified World Trade Center Insurance Claims resulting from 911:  Charles V. Bagli, "Insurers Agree to Pay Billions at Ground Zero," New York Times Online, May 24, 2007.  It is unclear whether these confidentiality provisions apply to things other than the amount each insurance company participating in the settlement will pay.  It is unknown at this time whether the settlement agreement purports to address Insurance Coverage Claims, or whether it includes any alleged or potential Bad Faith Claims.

     It is also unclear whether discovery could be compelled in a Florida Court, on the ground that Florida law voids as concealment the attempted confidentiality of these settlement agreement provisions contained in a  settlement agreement reached in another State such as New York, in this case.   Further, what New York law may have to say about "confidentiality" vs. "concealment," if anything, is unknown to this writer.  To state the issue is the first step to be prepared for the issue.

                                                 Please Read The Disclaimer.

Partial Payment of Claims ... UPDATED!

     This post updates the post here on January 12, 2007 regarding:

Punitive Damages, Katrina and the Insurance Contract:  Lessons Revisited and a Tale Told in Pieces or in Parts.

   

     On January 31, 2007 Federal Judge L.T. Senter, Jr. entered an Order reducing the Punitive Damages Assessment in the Broussard case.  The Federal Judge reduced the Punitive Damages assessment in that case to 40% of what the Jury assessed, reducing the assessment from $2,500,000.00 to $1,000,000.00.  Here is a link to the Order:  Norman J. Broussard & Genevieve Broussard v. State Farm Fire & Cas. Co. (S.D. Miss. Case No. 1.06CV6, Order entered January 31, 2007) .  For another report on this same decision, go to the February 1, 2007 post on Insurance Claims And Issues.     

     The Federal Court's ruling on January 31, 2007 adds to the facts coming in about the bases for this lawsuit, about the Bad Faith allegations in it, and about the reasons behind the Jury's finding of entitlement to Punitive Damages under Mississippi law.

     The Homeowner's Policy involved in the Broussard case was "an 'all perils' policy in the case of the dwelling and a 'named peril' policy as to contents, i.e., windstorm."

     Second, the initial investigation by the Homeowner's Insurance Company showed clearly that the Policyholders' home "was reduced to a slab by Hurricane Katrina" and that the damage was caused more by flood than by wind, the Federal Judge wrote.

     The Insurance Company "did not obtain any expert opinion on this particular loss."

     Rather than obtaining any expert opinion, as the Federal Court noted, the Insurance Company instead established a procedure for homes reduced to nothing remaining except the slab, a procedure which it applied in the Broussard case.  The subject procedure was to use "the debris line" and declare that in the instance of only a slab remaining, all damage would be presumed to be caused by FLOOD which was NOT a covered loss, thereby leaving it to the Policyholders to bear the burden of proving damages caused by a covered loss such as WIND.

     Although not repeated at any length in the January 31, 2007 Order, the Federal Court had PREVIOUSLY RULED in that same case that the burden of proof was INSTEAD on the Insurance Company to prove at Trial in Court that all or part of the damages claimed by the Policyholders were EXCLUDED.

     The Homeowner's Insurance Company "relied on its flood exclusion to totally deny the claim."

     The Federal Judge held that there was clear and convincing evidence in the Broussard case supporting a finding by the Jury of entitlement to Punitive Damages.  There was in other words clear and convincing evidence, the Federal Judge wrote, "that Defendant acted in such a grossly negligent way as to evince willful, wanton, or reckless disregard for the rights of the Plaintiffs."

     That ruling affirmed the issue of Mr. and Mrs. Broussards' entitlement to Punitive Damages under the facts of this case.  As to the amount of Punitive Damages, to $1,000,000.00, the Mississippi Federal Court reduced them as noted, doing so both under Mississippi State law and under "due process considerations under the United States Constitution."

                                Please read the Disclaimer.

      

Jury Pools in the Wake of Katrina in Mississippi.

    Bad Faith Cases receive careful attention.  Part of the focus in every Bad Faith Case is the potential Jury Pool, or the Venire.  They are the people deciding issues of fact and who they are is clearly important.

    Before Katrina struck Mississippi, most Mississippians were like most residents of the rest of the Gulf Coast.  Few people carried Flood Insurance.  However, the focus on Insurance Coverage for Katrina Damages Claims can divert attention from the fact that many people did not have Property Insurance Coverage or  Homeowner's Insurance  either.

     They are the people who make up the Venire for Mississippi Bad Faith Cases like the recent case reported in newspaper articles and in a post here on January 15, 2007.

    Briefly, the recent case in Mississippi involved First-Party Bad Faith Claims including Punitive Damages Claims.  A Federal Judge directed a verdict for the full Policy Limits available under a Homeowner's Policy.  The case went to the Jury on the question of Punitive Damages under Mississippi law, which is fully discussed in the January 15, 2007 post.  Without repeating all of that post here, in general terms Mississippi law allows the assessment of Punitive Damages for Bad Faith Breach of Contract and it can be Bad Faith not to pay any part of Damages which are covered.

    It is reported that the Homeowner's Insurance Company in that case never made an offer.

    The Jury assessed $2,500,000.00 in Punitive Damages.

     See the detailed discussion of the situation in which these potential Jury members live today, Peter Whoriskey, "As Aid Lags, Volunteers Shoulder Rebuilding on Gulf Coast/Local Gratitude Mixes With Frustration Over Government's Failures" (Washington Post, Sunday, January 28, 2007, p. A03), and the discussion generally of Venires available for Katrina Cases across the Gulf Coast, in Insurance Claims and Issues.

                                                        Please Read The Disclaimer.

Contamination Exclusion in First-Party Policy Held Ambiguous to 911 Damages.

    On December 21, 2006, the Federal Second Circuit Court of Appeals reversed Summary Judgment and remanded for the Federal Trial Court to take evidence on the intent of a First-Party Property Insurance provision.  Here is a link to the Second Circuit Web Site, where you can reach this case by clicking on "Decisions":  Parks Real Estate Purchasing Group, et al. v. St. Paul Fire & Marine Insurance Co., et al. (Second Circuit Case No. 05-5890, Opinion Filed December 21, 2006).  Here is a brief summary why.

    Parks Real Estate and the other Plaintiffs-Appellants in this case, filed their Complaint to recover under a First-Party Property Policy, in pertinent part, "for building damage caused by particulate matter emanating from the collapse of the World Trade Center Twin Towers".  (Slipsheet at 1.)  Their Proof of Loss notified the insurance company that the Plaintiffs "has sustained damage" to a Building, together with Business Interruption Loss, totaling some $18,400,000.00.  (Id. at 5.)

    The Plaintiff Policyholders owned an "insured Building [that] was located a few blocks from the World Trade Center."  (Id. at 4.)  On 911, the World Trade Center Twin Towers were both struck and collapsed in a terrorist attack, causing particulates from the pulverized buildings to spread across New York City, among other things.  "The particulate matter apparently penetrated the Building and settled in its mechanical and electrical systems."  (Id. at 3.)

    The subject Policy is "an 'all-risk' property insurance policy providing that [the insurance company] would '[p]rotect against risks of direct physical loss or damage except as indicated in the Exclusions", said the Second Circuit.  (Id. at 13.)  The defendant insurance company that issued the Policy filed a Motion for Summary Judgment against Coverage, arguing that the subject  Policy's "Contamination Exclusion" barred all Coverage claimed by the Plaintiffs.  This Policy's Contamination Exclusion provides that Coverage is barred for "loss or damage caused by or made worse by any kind of contamination of ... products or property covered by this insuring agreement.'"  (Id. at 5-6.)

    The Second Circuit now holds that this First-Party Property Insurance Contamination Exclusion is ambiguous, that Summary Judgment for the insurance company in this case is reversed, and, further, that all parties "should be allowed to introduce evidence" in the Federal Trial Court regarding the intent of this Contamination Exclusion.  (Id. at 18-19.)

    Parenthetically, the insurance company's Motion for Summary Judgment also presented arguments that the Policy's "Mechanical Breakdown" and "Wear and Tear" Exclusions applied.   (Id. at 6.)  The Federal District Court held however that these particular Exclusions did not apply (id. at 11), and they were not otherwise addressed by the Second Circuit.

    Best wishes to all for a Happy New Year!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
 

Sigma 2005 and 2006 Results From Swiss Re.

    Swiss Re has released "sigma" results for 2005 and, tentatively, for 2006 to date.  "Sigma" is the Greek codeword used by Swiss Re to identify its computer-based reports.  A link to both reports, released separately by Swiss Re, is here.   The information is revealing.  Here is some of it.

2005

    Total Insurance Policy Premiums in 2005 were $3,426,000,000.00 or 7.7 % of the World's "Gross Domestic Product".  About 56 percent of Insurance Premiums are for Life Insurance.  There is a definite link to commerce here.   Swiss Re notes further that "the growing loan market generated more mortgage-related life insurance policies."  The rest of the Premiums went to pay for what Swiss Re categorizes as "non-life" Insurance Policies.

2006

    So far in 2006, Swiss Re's computer results reveal the third-lowest "insured losses" in the last 2 decades.  The "loss events" studied by Swiss Re's computers show that this year, typhoons and earthquakes predominated among the Catastrophe list and they "hit mainly newly industrialising countries where insured losses are relatively low."  The irreplaceable loss of Life to Catastrophes appears to be proportionately higher than Property Losses to date.  The role of Insurance available to relieve worldwide Catastrophes in 2006 is not necessarily great, it appears.

    Economic losses worldwide in 2006, Swiss Re says, total $40,000,000.00 and so far $15,000,000.00 or 37.5% "were actually covered by insurance."  There is no word on how if at all, the remaining 62.5% or $25,000,000.00 of economic losses is and are addressed in the countries where this year's Catastrophes have struck.

    Remembering to give thanks for our blessings, and remembering to remember those who may not be as fortunate,  Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

 

   

Computer Models: Facts In, Opinions Way Out.

    All Catastrophe Insurance Premiums such as for Homeowners Insurance and all kinds of Property Insurance, are based on a solid, fact-based Computer Model.  For example, Florida is the first State -- and as of now, perhaps the only State -- to develop its own CatClaims Computer Model which is used to assess Rate Hike requests.  The history of Hurricane damage, for example, is input into that Computer Model to reflect the reality on the ground since statistics about Hurricane damages began.

    This year Florida spent $2,700,000 to obtain a "computer catastrophe model" of CatClaims.  Florida officials are also continuing to use Property Insurers' computer models, which were the only source of claims predictions data available to Florida and other States until Florida developed its own CatClaims Model this year.  See my November 6, 2006 post.

    Recently, some corporate headquarters in other States have quietly submitted Premium Increase Requests in Florida using opinion-based 'models' instead.  One such 'model' originates in California and is based on the input opinions of several paid anonymous persons, for example.   See  my December 3, 2006 post here, and see Peter G. Gosselin, "Insurers Learn to Pinpoint Risks -- and Avoid Them" (Los Angeles Times, Tuesday, November 28, 2006, page A1, col. 2)(Note: Registration for this newspaper article may be required, but is stated on their Web Site to be FREE).

  However, the Florida Office of Insurance Regulation, it seems, is not accepting Premium Increase submissions based on anything but the facts.  One recent example is given by the submissions of USAA, one of many examples and not unique to USAA, a good and exemplary Company in many ways.

   USAA at first requested an increase in premiums for homes and condominiums for a statewide average of 40% in Florida.  USAA's first request was made as of August 11, 2006.

   Within a month and  a half, a Hearing was held by the Florida O.I.R. on September 26, 2006.  The evidence for the Rate Hikes requested was examined and of particular interest here, the regulators questioned the model that was used as a basis for the requests.

  On November 2, 2006 the O.I.R. rejected the 40% rate hike request.  The reasons of especial interest here include that (1) "[t]he company failed to provide sufficient supporting data for the catastrophe model used" in the submission, i.e., there were not enough facts presented that would allow people to review the facts used to support the requested increase, and (2) the 'model' used in the submission "is not currently accepted ...." November 2, 2006 Notice of Intent to Disapprove, from the Florida Office of Insurance Regulation (Mr. Ken Ritzehthaler, Actuary) to U.S.A.A. (Ms. Janet Ogle, Compliance Analyst).

    USAA then "amended its filing and lowered the overall rate requests to 16.3 percent."  USAA's Rate Increase Request of 16.3 percent was approved by the Florida Office of Insurance Regulation on Thursday, December 21, 2006.  It will take effect for Florida Homeowners and Condominium Owners insured by USAA as of February 8, 2007.   See December 21, 2006 Press Release, Florida Office of Insurance Regulation.

    Reporting on these complex issues is done by very few, and very few people report on these issues better than Ms. Kathy Bushouse, for example, and one way to read current and past reporting on these complicated issues is to link to this article:   Kathy Bushouse, "USAA Rates on Home Insurance to Rise by 16.3% Across State" (South Florida Sun-Sentinel, Friday, December 22, 2006). 

    More information needs to be made public about shifts away from reality that are requested anonymously by some people, and to a 'model' that benefits their employers.  Facts are abundant such as in Florida to justify good arguments for many kinds of CatClaim Coverage Premiums.  Let any and all Premium Hikes be submitted in the open -- and if they are not, let them continue to be amended until they are submitted based on publicly available facts.

   Until that day, Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.

 

Schools Face Higher Premiums, Lower Coverage ....

                                        .... And Catastrophe Claims.

    Insurance Premiums for School Districts in Florida increased in 2006 while available Coverage went way down.  A current newspaper report is published for example in an article copyrighted by the Times Publishing Company, written by David DeCamp, "Insurance Bills Hit Schools Hard" (St. Petersburg Times, State Edition, published December 21, 2006).  Link here.

    Across the State of Florida, Premiums for Property Insurance jumped over 80 percent in 2006, from $98,000,000.00 for Coverage in 2005 to $178,000,000.00 for Coverage now, says the Florida Association of District School Superintendents in their report to the public.

    In addition, total covered School District property in Florida fell by 86%, measured by value.  When Hurricane Charley struck in 2004, Florida School Districts were able to -- and did -- insure 7 times the value of property for which they can purchase Coverage now.   In 2005, the amount of covered School District Property was worth $7,400,000,000.00; now, only $1,500,000,000.00 worth of the same Property can be covered.   The current value of covered School District Property is not even 3% of all School District Property in Florida.

    These are facts, and here is one more fact to consider:  In Florida, schools are lower risks for Catastrophic Claims and Property Claims than other kinds of buildings -- so much so, that schools are the location of choice as Hurricane Shelters.  The Shelter your Family flees to in a Catastrophe may not be insurable.

    That is not all.  Since School Districts are not able to obtain Coverage, if a Catastrophe strikes they have no choice but to hope for Federal assistance to rebuild.  The costs of having no other resource are enormous.   For example, in 2004 Hurricane Charley destroyed 7 schools in Charlotte County, which were rebuilt in whole or in part with Federal Funds.  It is reported in the above newspaper article, for example, that the Chief Financial Officer of Pasco County Schools reports that each new elementary school costs $20,000,000.00.

    School Districts are already building more schools.  Many of the new buildings are portables.  Little money has been used to build permanent school buildings, for many reasons not the least of which is the relative unavailability of funds.  When the next Hurricanes strike Florida, there will be many more portable school buildings waiting in the Hurricanes' path than ever before.

    The Florida Legislature is set to meet in a Special Session beginning on January 16, 2007 to address the Florida Insurance Crisis.  The opportunity exists then to address Homeowners and Property Insurance including CatClaims issues that confront the children, teachers and administrators who will preserve and protect Florida in years yet to come.

    In the meantime, Happy Holidays to All!

REMINDER:  THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP.  ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY FAMILIAR WITH THE PARTICULAR INSURANCE ISSUE IN THAT JURISDICTION, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.