Citizens Property Insurance Corporation has been earning a reputation for systematically denying almost every insurance claim asserted by its policyholders. Instead of honoring valid claims, Citizens spends millions of dollars each month “defending” claims – the same type of claims that other insurance companies would routinely pay without question. Although those of us in the industry have been decrying Citizens’ business practices for years, last week the Tampa Bay Times finally posted an article pointing out Citizens’ track record of fighting valid insurance coverage claims and needlessly lining the pockets of law firms to “defend” against these claims.
Now, on the chance you might believe that Citizens’ policy of denying claims and raising meritless defenses is just urban legend, I offer the following examples of Citizens’ behavior from our recent experience:
Example A – Our client presented Citizens with a sinkhole damage claim, which Citizens summarily denied. We provided Citizens with testing evidence which undeniably reflected sinkhole activity on our client’s property and also provided reports from neighbors on all three adjacent sides (left, right and behind) which had been confirmed for sinkhole activity. Citizens’ response? They offered $500. They also promised that, once the policy holder ultimately won at trial (which they conceded would happen), Citizens would appeal the outcome (regardless of merit) in order to further drag out the process.
Example B – Citizens’ engineers actually confirmed sinkhole activity on the property of another one of our clients, but still – three years later – Citizens refuses to pay for the appropriate repair of the property. Just yesterday, a large sinkhole actually opened up directly next to their house. Our clients’ story even made the evening news last night. Even so, Citizens refuses to provide coverage for the appropriate repair of the home.
Sadly, there is no one guarding the hen house at Citizens. Outside vendors – mostly insurance defense law firms with the most to gain from Citizens’ stance on fighting claims – have convinced Citizens that the best way to handle claims is to fight tooth and nail on every issue, even when there is absolutely no chance of winning. Obviously, the harder you fight payment on a given claim, the more money the insurance defense law firm can make billing Citizens for delaying/defending/denying the claim.
The other side of this coin is that, once the policy holder ultimately prevails on his claim, the insurance company is also responsible for the payment of the policyholder’s attorney’s fees and costs. Accordingly, Citizens ultimate “reward” for denying valid claims is that the insurance company has to pay (1) the full amount of the repair costs, (2) pre-judgment interest on this amount, (3) the policyholder’s attorney’s fees and costs, and (4) Citizens’ own attorney’s fees and costs. It doesn’t take a financial genius to see that it makes more sense to resolve a valid claim early in the process – and thereby avoid the payment of items (2) through (4) above – rather than needlessly waste money defending a claim which the insurance company will ultimately have to pay anyway. But until there is a change of heart – or management – at Citizens Property Insurance, it may be best to retain qualified representation early in the insurance claim process.