During the 2012 Florida Legislative Session, insurance company lobbyists pushed for the passage of HB 119, which greatly overhauled the Personal Injury Protection portion of your automobile insurance policy.  As part of their sales pitch, proponents of this bill stated that the passage of this Bill would GREATLY REDUCE the cost of automobile insurance in the State of Florida and cut down on “fraud”.

As we learned years ago, “cutting down on fraud” is just another way of saying “severely reducing a policyholder’s chance of ever getting paid on his claim.”  But what about the claimed reduction in the cost of auto insurance premiums?  Surely insurance companies have lowered their automobile insurance rates in exchange for HB 119’s severe limitation of the rights of policy holders…..right?

Well, the Office of Insurance Regulation announced this week that the cost of Personal Injury Protection coverage is expected to drop an average of 13.2 percent in Florida.  Great you say!!!  But then the fine print – since this “no fault”/ Personal Injury Protection coverage accounts for such a small percentage of your overall automobile coverage, the overall decrease in your overall policy would be about 1.2 percent!!  Not a very good reduction in exchange for the severe limitations this new law places on the rights of policy holders.

Once again, it appears Florida’s elected officials have fallen for the insurance companies’ old yarn of “Allow us to restrict coverage today, and we promise to reduce premiums…..tomorrow….maybe.”

As part of an ongoing effort to give the shaft to Florida consumers, a bill was recently filed with the Florida Legislature which would greatly restrict – or even eliminate – the rights of property owners attempting to properly repair damage caused to their homes by sinkhole activity.  Senate Bill 416 (blandly titled, “Sinkhole Coverage”) is a blatant attempt to not only force property owners to repair their property in the manner chosen by Citizens Property Insurance Company, but to also relieve Citizens of any further liability if its mandate repairs fail to repair the home.

In order to understand the true malevolent nature this proposed bill, it is necessary to understand the manner by which sinkhole damaged properties are normally repaired.  If a property is deemed to have been damaged by sinkhole activity, the insurance company must then provide coverage for the cost to repair the property.  Usually, the engineering firm which initially found the sinkhole activity would set forth a recommended repair method, but then, per the Florida Statutes, the homeowner would also have a say in the manner by which the property was to be repaired.  Through this statutorily mandated consultation between the insurance company and the property owner, it was hoped that an agreeable resolution could be reached and the property repaired to the satisfaction of all.  Furthermore, the law mandates that, if the homeowner was forced to used the insurance company’s repair method, the insurance company must stand behind these repairs and if any further damage resulted or the mandated plan was not sufficient, the insurance company must come back and provide any additional  repairs necessary.

Citizens Property Insurance is now attempting to “legislate” its way out of this deal – but in an amazingly brazen way.  Per SB 416, Citizens would be able to legislatively mandate that property owners not only repair the property pursuant to Citizens’ method, but that the property owners MUST use one of Citizens’ “chosen” repair companies.  But here comes the real kicker – these repair companies must fix the property on a “fixed price” contract.  In essence, whatever cost estimate Citizens’ engineer thinks up, the third party repair company will only be paid that amount per the contract and, if the cost estimate is not accurate or the job runs over, the third party repair company must continue to repair the property and eat the difference in cost!    But wait, it gets better.  Not only does the repair company have to eat any overages in the repair costs (which almost always occur), the repair company would be legislatively mandated to “guarantee” the repairs down the road!  (Remember, it was Citizens’ engineer who made the cost/repair estimate, not the repair company.)  If the shoddy repairs set forth by Citizens fail and further damage is caused to the home – the third party repair company is stuck with having to pay for the damage – and Citizens gets to walk away with no exposure!   Under the new proposal, despite Citizens being able to force its version of the repairs upon the property owner, Citizens’ only exposure for these repairs – even if the repairs catastropically fail (think Dunedin) – is paying the initial cost estimate set forth by its own engineer.

Now, let’s take this one logical step further.  If Citizens knows that its only exposure is paying the repair cost estimated by its engineer, and Citizens is the entity that pays the engineer….how long will it be before this engineer starts getting pressure to “under-estimate” the repair protocols?  It would be a great deal for Citizens – if its engineer can look at a repair job that should cost $50,000, but instead the engineer gives the opinion that the repair cost should only be $30,000 – that would be all Citizens would have to pay!  And hey, when the expenses hit their true value during the repair of the property, it is the third party repair company that has to pick up the tab – no matter what the cost!  What a deal!  Heck – why not just estimate the cost of repair at a dollar – by law, that is all Citizens would then have to pay!

Clearly, Senate Bill 416 is not good for Florida consumers – or even repair companies for that matter!  During the upcoming legislative session, it is important that all Florida property owners make sure that their elected officials fight for the rights of their constituents and not allow insurance company lobbyists to have their way in Tallahassee.

Even though the online insurance marketplace under the Affordable Care Act, otherwise known as ObamaCare, went into effect on October 1, 2013, it seems very few people have actually signed up for coverage under the new law.  A recent blog in the Miami Herald stated that the paper had searched “high and low” for individuals who had completed the online application for the subsidized health coverage through the online marketplace, but that they had been unable to locate anyone who had successfully completed the process and obtained coverage.  The Miami Herald even went as far as equating ObamaCare enrollees in the same category as “legrechauns and unicorns”.  Apparently the goverment created website – Healthcare.gov – has suffered numerous technical issues which have confounded prospective enrollees and caused many to just give up on the process.

Others have set forth a different reason for the technical difficulties.  A recent Forbes article  noted that a growing consensus of technology experts – inside and outside the goverment – are of the opinion that the system is crashing because of the fear of letting people know the underlying cost of ObamaCare’s insurance plans.  Apparently, the website was initially designed to allow prospective customers to browse the available pricing options prior to registering, but that option has since been “delayed”.  When the Health and Human Services Department was asked why this (seemingly important) option was “delayed”, the HHS spokesperson stated that they wanted to ensure users were aware of their eligibility for subsidies before they started seeing the prices of the policies.   

Although this is contrary to procedure of other health insurance websites (eHealthInsurance.com, for one), the goverment’s apparent concern is that they want to see what subsidies you may qualify for prior to showing you the true cost of the insurance.  By forcing you to register and enter all of your personal and financial information first, the goverment can see if you qualify for any of their (heavy) subsidies.  The website can then tout these subsidies to you instead of just hitting you with the full cost of the insurance.  For example, instead of showing up front that your new monthly premium would be $400, they can show you that your premium “could” only be $30 – after the application of the heavy subsidies.  The only problem is that you have to be at or near the poverty level in order to recieve these subsidies and, otherwise, you don’t qualify for a subsidy.  Guess you are lucky enough to pay full freight! 

ObamaCare wasn’t designed to help healthy people with average incomes get health insurance.  The Act was designed to force healthy people to pay more for coverage  in order to subsidize insurance for people with costly medical conditions and/or those with incomes near the poverty line.  Fair enough – if that is what the voters wanted, then that is what the voters should receive.  BUT – the goverment needs to be upfront with the American people as to the true cost of health insurance premiums under the Affordable Care Act.  The very valid concern of the current administration is that, should the average citizen discover that the price of his new health insurance policy is going to skyrocket under the new law – President Obama’s incessantly repeated promise that “nothing would change” under the Affordable Care Act and that there would be savings of at least a $2,500 in their yearly insurance cost would come back to haunt him.

 

Last fall, Hurricane Sandy caused devastating damage to the eastern seaboard – yet the National Hurricane Center did not issue any sort of hurricane warning to the people north of North Carolina.  It is not that the National Hurricane Center was negligent in any way, it is just that by the time Sandy reached the more northern coastlines, Sandy’s maximum sustained winds had died down below the 74 mile per hour threshold in order to be considered a hurricane.  Since Sandy was no longer a hurricane, the storm did not qualify under the then existing standards to issue a hurricane warning to those in the path of the storm.  Clearly, even though the storm did not officially qualify as a hurricane and was “only” a tropical storm upon landfall, Sandy still brought catastrophic damage and caused billions of dollars of destroyed property.

The National Hurricane Center is working to fix this problem.  The Center has now added the following phrase to its definition of Hurricane Warning – “Because hurricane preparedness activities become difficult once winds reach tropical storm force, the warning is issued 36 hours in advance of the anticipated onset of tropical storm force winds.”  Hopefully this expanded definition will better allow the National Hurricane Center to better warn those people in harm’s way and to help mitigate the catastrophic property losses arising out of such storms – hurricane or not. 

 

Back in the good old days of yore (which, at this point, was approximately 4 years ago), whenever an insurance company provided you with a policy of homeowner’s insurance, it automatically included coverage for any damage caused by sinkhole activity.  In 2007, as part of the insurance industry’s never ending attempt to limit coverage to its clients, insurance company lobbyists convinced the legislators in Tallahassee to change this law and to make sinkhole coverage “optional”. 

In fact, after that initial revision to the law, if you lived in Pasco or Hernando counties specifically, sinkhole coverage was automatically excluded from your insurance policy, and if you wanted this coverage, you had to specifically request such coverage and pay an initial premium for it.  For the rest of the state, sinkhole coverage was still included in your policy, but you could opt out of such coverage – if you were feeling lucky!

As part of the insurance industry’s “bait and switch”, the Legislature allowed insurance companies to completely remove full sinkhole coverage from their policies in Florida and to provide Catastrophic Ground Cover Collapse Coverage instead.  In order to qualify for coverage under this new provision, property owners must meet a four prong test – the last of which states that coverage will only be allowed if the property is both “Condemned” and ordered “Vacated” by a “governmental entity”.  What? 

Needless to say, it is vitally important to thoroughly review your policy of insurance.  Should you find that the coverage provided by your policy provides insufficient protection, you should give a lot of thought to obtaining more complete coverage – preferably long before the need to place a claim arises!

Over the past several years, many homeowners in Florida have had the misfortune of incurring damage to their property as the result of sinkhole activity. For many homeowners, the headaches and inconvenience caused by having to undergo the initial repair of this damage turned out to only be the beginning of the battle.

In almost every claim, when an insurance company agrees to repair an insured’s property, the insurance company will only agree to provide coverage for the repair protocol set forth by its chosen expert. Not surprisingly, the insurance company’s chosen expert will usually choose the least expensive repair method for the home. (It goes without saying that, were the expert to recommend a more complete repair method, he would not be the insurance company’s “chosen expert” for very long!) Faced with the insurance company’s mandate, the homeowner often agrees to allow the insurance company to repair the home pursuant to the insurance company’s chosen method.

The problem which has now arisen for numerous property owners is that the repair method mandated by the insurance company is insufficient to fully repair the property. Even though the insurance company’s version of the repairs have been completed, the property owner continues to incur damage to the home as the result of the sinkhole activity. Unfortunately, when this additional damage is pointed out to the insurance company, the carrier will deny any further repair to the property and state that the issue has been resolved – regardless of the existence of this new damage.

Fortunately, these property owners continue to have rights under their policies of insurance. Under Florida law, if an insurance carrier mandates that an insured repair his property pursuant to the insurance company’s chosen repair method, the insurance company must fully warrant those repairs. In other words, if the insurance company’s chosen repair fails to fully solve the problem, the insurance company is responsible to pay for any additional repairs necessary in order to bring the property to its pre-loss condition.

If you’ve filed an insurance claim for sinkhole related damage in the past few years in Florida, you’ve most likely seen the term “neutral evaluation” in various correspondence or heard the term mentioned by an insurance adjuster.  A few years ago, the Florida Legislature enacted a law whereby if there is a disagreement as to whether sinkhole activity is present on the property or as to the appropriate method to repair the damage, either party to the claim can elect to submit the claim to the neutral evaluation process.  During the neutral evaluation process, a third-party expert chosen from a list maintained by the Department of Financial Services reviews all the investigative reports, inspects the property, and then renders a non-binding “third-party” opinion as to the issue in dispute.  Although the report issued by the neutral evaluator is non-binding, the law states that his report is automatically admissible in any legal proceeding relating to the claim.

Sounds pretty straight forward, right?  Perhaps not.  Exactly what standard does a neutral evaluator have meet in order to be considered “neutral”?  When the neutral evaluation process first began, the Florida Legislature (or perhaps, the insurance company lobbyists?) set forth that an expert would be deemed “neutral” if that expert received 90% or less of their income from insurance companies.  So, in light of this definition, an expert who received 89% of his livelihood from an insurance company would not be seen as being biased in favor of insurance companies.  Hmm – how odd.

Recently, the insurance company lobbyists – er, I mean, the Florida Legislature – further refined the definition as to what would be deemed “neutral”.  Currently, the only “neutral” qualification they must meet is that the expert be, “determined by the department (of financial services) to be impartial”.  Apparently, the Legislature believed that the 90% cut-off requirement was too restrictive and that experts who received in excess of  90% of their income from insurance companies should still be considered “neutral” for this process.  Who are we to question that logic!

Clearly, the use of the word “neutral” in the neutral evaluation process is subject to scrutiny.  Although this process may have been sold to the general public as a way to have sinkhole claim disputes resolved by an “impartial” third party, the reality may be that the “independent” expert may be very beholden to the insurance industry.

After watching scores of television commercials and other paid advertisements touting the supporting and nurturing nature of insurance companies, one can’t help but feel that the “good hands people” will always act “like a good neighbor” once a policy holder incurs a loss.  After years of practicing insurance claims law, we have learned the unfortunate truth that insurance companies – like all big corporations – are only after one thing.  Profit!  Unfortunately, the way the insurance companies make this profit is by collecting insurance premiums from its insureds for years and then, upon the placement of a claim by its insured, denying or otherwise minimizing the payment the insurance company makes to the insured on the claim.

A perfect example of this attitute was reflected in a claim we recently resolved for one of our clients.  Our client was a 90 year old gentleman who had served his country honorably in the military for decades and had even parachuted into France the day before D-Day!  He was one of the original members of USAA Property and Casualty Insurance and had been insured by them for 60 years – without ever having made a claim!  After noticing a substantial amount of cracking to his house, he placed a sinkhole claim with his insurance company, only to be summarily denied – in spite of the fact that the report from the insurance company’s expert clearly reflected sinkhole activity and that sinkhole activity had been confirmed to be a cause of loss to all of the other houses in his neighborhood!  After vigorously pursuing this matter for our client, the insurance company eventually agreed to a substantial settlement which allowed our client to finally repair his home.

Although insurance companies will often try to do the right thing, their judgment is too often clouded by their desire to keep your premium dollars in the insurance company’s coffers.  If you ever have the unfortunate experience of incurring a loss or other damage, make sure you seek the advice and counsel of an insurance claim professional who can explain your rights and make sure you are appropriately compensated for your loss.