Policyholders are often shocked to learn that the loss settlement check they receive from the insurance company is payable not only to the policyholder, but to their mortgage company as well.   Homeowners insurance policies are broken down into several types of coverage – whether for the building, personal property, liability, alternative living expense, or other losses.  For certain types of coverage, the insurance policy will list the mortgage company as an “additional payee” on the policy – which means that the mortgage company’s name must be listed on any loss settlement check.  

The reason the mortgage company is listed as an “additional payee” on the insurance policy is that the mortgage company has a vested interest in insurance coverage payments issued for any loss to the insured property.  The mortgage company presumably loaned money to the policyholder and, in order to provide a guarantee of repayment, the policyholder agreed to grant the bank a mortgage on the property as collateral for the loan.  

Should the subject property be damaged or destroyed, the unrepaired property would then be worth less than before the loss and therefore, the mortgage company would not have the same amount of security for the loan as prior to the loss.  In order to protect the mortgage company’s security for the loan, the mortgage company’s name will appear on all insurance loss payments related to the property given as collateral for the loan.  Because the property protects the mortgage company in case of non-payment of the loan by the policyholder, the mortgage holder has a strong interest in making sure the property is either repaired or the outstanding loan is paid down to a point at which the loan is again fully secured by the value of the property.

The inclusion of the mortgage company’s name on the insurance check usually just affects coverage relating to the actual building on the property, since the home is usually given as collateral for the mortgage loan.  On the other hand, claims for damage to personal property, liability, or loss of use do not relate to property subject to a mortgage and therefore settlement checks on these losses would not have to include mortgage company’s name as an additional payee.

capture87As Tropical Storm Erika was quickly approaching landfall a few weeks ago, Floridians were correctly focused on preparing for the high winds and water that could have caused an unknown amount of damage.  As important as pre-storm preparation is, the steps you take immediately after the storm are also crucial with regard to your ability to adequately present a claim with your insurance company for the damage to your property.

Your first priority after the storm needs to be the safety of your family.  After the safety of your family is assured, you need to thoroughly document the damage to your property.  With the advent of cell phone cameras and other video devices, it is easier than ever to memorialize the damage caused by the storm and to easily provide same to your insurance carrier.  Hopefully, you also have pictures and other documentation from before the storm so that you can demonstrate to the insurance company the nature of your property and the condition of same prior to the damage.

As soon as communications allow, you should also immediately place your insurance company on notice of your loss.  Many insurance policies are now written to specifically mandate “immediate” notice of a loss, and insurance companies will often spend lots of money defending against the payment of your claim based upon an alleged “late notice” defense.  After notification of your claim, the insurance company will send an adjuster to your property to inspect the damage.  It is crucially important that you point out any and all damage to your property so that the damage can be documented.

Remember, even though the adjuster may be friendly and professional, he or she is not an advocate for the full payment of your loss.  The adjuster is employed solely by the insurance company and, whether consciously or unconsciously, his goal will be to provide the least amount of coverage for your damage.   If you are not satisfied with the treatment, coverage or payment provided to you by your insurance company, it is advisable to contact an attorney or other professional who has experience with handling property insurance claims.  Most of these professionals work on a contingency fee basis and offer a free initial consultation, so there are no out of pocket costs to obtain help with your storm damage insurance claim.

 

The University of Florida Gators were scheduled to play football against the University of Idaho Vandals on August 30, 2014 in what was to be the Gators season home opener in Gainesville, Florida.  The football game was initially scheduled to begin at 7:00 p.m., but due to heavy rains and lightning, the start of the game was repeatedly delayed and ultimately began around 10:00 p.m.  After the first play of the game – Idaho kicking off to the Gators – additional lightning appeared and forced the eventual cancellation of the game.  Although the two teams could have potentially rescheduled this game for a bye-week later in the season, officials from both schools ultimately decided against it.

So – all of that is nice, but what does it have to do with insurance you say?  Well, due to the financial acumen of UF Athletic Director Jeremy Foley, the Florida Gators have always maintained an insurance policy to cover any loss in ticket revenue should a game be cancelled.  Prior to each home game, the University provides its insurer, Lloyd’s of London, with an estimate of both prospective ticket sales and any potential losses.  If a game is cancelled or if the University otherwise incurs a total loss of ticket revenue for a game, the insurance carrier pays the University for this loss.

Since the football game between Florida and Idaho was cancelled, the University refunded the purchase price to all ticket holders and placed a claim against Lloyd’s of London for the revenue the University stood to make on these ticket sales.  End result?  Although the score of the actual football game ended at 0-0, the University of Florida still walked away with a cool $1,800,000.00.

 

By now, you’ve most likely seen the stories about the large sinkhole that opened in Dunedin, Florida this week.  The Dupre family was awakened early Wednesday morning to what sounded like someone noisily attempting to break into their house.  Upon inspection, the homeowners were shocked to see that their entire back porch was sliding into a rapidly expanding sinkhole.  The family, along with several neighboring households, were all immediately evacuated by the police and soon, both this home and the adjacent house were officially condemned by the city.  As of this posting, the sinkhole has expanded to over 90 feet wide and almost 60 feet deep.

Those are the facts you’ve heard thus far from the media.  What you probably haven’t heard is the long series of events which led up to this disaster.  Approximately two years ago, Michel Dupre noticed cracking to his home and contacted his insurance company – Citizens Property Insurance Corporation (Yes – that’s right – good ole’ Citizens again!).  After testing the property and realizing that sinkhole activity was causing damage to the Dupre residence, Citizens tried to force the family to accept minimalistic repairs to their home.  The repair method mandated by Citizens only consisted of injecting grout into the soil beneath the home and made no allowance for any actual stabilization of the home.  Insiders in the field will tell you that “repairing” a sinkhole home by grouting alone will fail to fix the problem over fifty percent of the time and will almost always cause additional damage to the home.

Take a look at the attached Standard Penetration Testing (SPT) boring logs from Citizens’ investigation of the Dupre home.  When testing a property for sinkhole activity, engineers check the density of the soil by striking the drill bit with a 140 pound hammer and then noting how many blows it takes to drive the drill bit down 12 inches.  (For instance, on SPT boring #1 you can see that at 15 feet below the surface it took 3 blows of the hammer to drive the drill bit down 12 inches).  If you look closely at SPT boring log #3, you will note that there is a “WR” condition from approximately 25 feet below surface to 70 feet below surface.  WR stands for Weight of Rod.  In order for the engineer to record a WR condition, the drill bit must actually FALL UNDER ITS OWN WEIGHT without even being hit by the hammer.  As you can see, beneath the Dupre residence, the drill bit fell OVER 45 FEET – which indicates that Citizens knew there was at least 45 feet of “nothingness” below the Dupre house!  In spite of this finding, Citizens’ engineer only categorized the damage to the Dupre home as “slight” and noted that there was very little possibility of any further damage.  (Bet he wishes he could take that back!)

The homeowners (understandably) had severe reservations about the minimalistic grouting program being pushed upon them by Citizens and therefore the homeowners hired engineers and other professionals to help encourage Citizens to properly repair the home.  In spite of the clear evidence that Citizens’ mandated repair would be insufficient to repair the home and to protect the Dupres, Citizens refused to listen to the Dupre’s experts for over two years.  Now you may have heard in the media that Citizens, “offered to pay the family $90,000 to repair the home”, but that is absolutely false.  In fact, Citizens has only offered to pay the Dupres $1,500 (not a misprint – One Thousand Five Hundred Dollars) despite the all of the evidence (even from its own engineers) of the true cost to repair the home.

As I’ve referenced in previous posts, Citizens has spent over 100 million dollars fighting insurance claims and absolutely refuses to make any payment whatsoever on sinkhole claims.  After two years of fighting for coverage, the Dupre family had no option but to let Citizens have its way with their home.  After two days of letting Citizens stubbornly pump “grout” beneath their home….you guessed it!  (And yes, that is a swimming pool you see below being squeezed down into the hole.)

Clearly, the Dupres are now going to “have their way” with Citizens – hopefully a jury of homeowners will help decide Citizens’ fate.  But the question then arises – what about the neighbors?  At least two homes have now been condemned and several others have incurred grevious damage as the direct result of Citizens’ actions -what recourse do these neighbors have?  If they have sinkhole coverage, then these homeowners could look to their own policies for loss coverage, but why should these other carriers have to bear the burden of Citizens’ arrogance?  What if the neighbors do not have sinkhole coverage?  Unless the damage to their home mandates condemnation (and thereby activating coverage under the Catastrophic Ground Cover Collapse portion of their policy), these homeowners would have no recourse and would have to make any repairs themselves.  Thanks Citizens!

Hopefully Mr. Scott and the rest of our elected officials in Tallahassee will take this situation to heart and will enact some real reforms at Citizens.  If not, the voters of Florida should hold them accountable on election day.  Because, who knows – you could be Citizens’ next victim.

By now, you may have seen the video of the sinkhole swallowing portions of a forest in Louisiana, but – like all classic films – it is worth seeing again.

Louisiana Sinkhole
Click Image to Watch Video

This video should serve as a shocking reminder of the sudden and brutal nature of not only sinkholes, but of all natural disasters.  Within the past few weeks, we have witnessed numerous sudden and catastrophic collapses – not the least of which include this scene in Louisiana, the violent collapse of the vacation condos near Disney World, and the numerous smaller sinkholes that have opened locally due to the heavy rainfall.

Now more than ever, it is important to check your homeowners insurance policy to verify that you have adequate coverage to protect your family in case your home suffers damage from sinkhole activity, hurricane, fire or other type of loss.  Although you may not be able to prevent Mother Nature from having her way with your property, you can take steps to protect yourself from the financial impact of such loss and to get yourself back on your feet again.

 

Here in Florida, we tend to think that we have the exclusive right to complain about Flood Insurance and the rising premiums that go with it.  Unfortunately, flood insurance and ever increasing premiums are a problem not only in other states, but in other countries as well.

For example, a recent article in the Tampa Tribune pointed out that payouts for flood insurance claims from a single event in Germany would soon top 4 billion dollars (not a misprint – that is billion with a “b”!)  Over the past week, heavy rains in Germany, the Czech Republic, Austria, Slovakia and Hungary have cause extensive overflows of the Elbe, Danube and other rivers throughout the area.  Insurance costs in Germany alone are estimated to run over 3 billion dollars. 

But those shocking facts are not even the real story.  The real story is that the total damage caused by this flood is estimated to be over 16 billion dollars!   Why the huge difference between the estimated insurance claim payouts and the total estimated damage?  The problem is that many residents have been unable to obtain insurance coverage for this hazard due to insurance companies refusing to issue such policies in the area.  Even those who might actually be able to obtain such coverage, were not able to purchase same due to the prohibitively high cost demanded by the insurance carriers! 

Unfortunately, the net result of this situation is that there are a lot of people out there with damaged or destroyed property (to the tune of 12 billion dollars!) and there will be no insurance or other funds available to assist them with the repair of their property or replacement of their personal items.  Although it may be impossible to see into the future, you can always prepare for the future.  Therefore, check your insurance policies today to make sure you have the appropriate amount and type of insurance.  Although your flood insurance premiums may seem high, the cost of such insurance pales in comparison to the cost of replacing your property and personal items.

Despite no major storms or hurricanes hitting Florida since 2005, Florida property insurance rates have continue to skyrocket over the past few years – with no end in sight.  Shockingly, a recent AP report showed that Florida’s Office of Insurance Regulation has approved more than 100 rate hikes per year since 2009.  Where is the money going – surely not for claims!

The biggest “expense” an insurance company faces is the cost of reinsurance.  Simply stated, reinsurance is an insurance product that an insurance company buys for itself to offset any claims it must pay.  If an insurance company has a large number of claims in a given year, the insurance company submits a claim to its reinsurance company for reimbursement of the amount paid in claims.  The only difference between a policy holder’s relationship with his insurance company and the relationship an insurance company has with its reinsurer is…..the insurance company most likely owns the reinsurance company as well!!!  With this cozy relationship, an insurance company can jack up the rates that it must pay itself – er, I mean, its reinsurer – and thereby create an artificial “hardship”.  The insurance company then squeals to the media and to the legislature that it can’t make any money in Florida unless they are allowed to further increase rates.  Clearly, since an insurance company can set its own expenses (due to the fact that it can manipulate the money it pays to itself as a “cost”), it will never show a profit from its Florida operations!  The Sarasota Herald Tribune wrote a Pulitzer Prize winning article on this concept in 2010.

Where does this leave the individual homeowner who is struggling to pay his ever-increasing property insurance premiums?  Until our representatives in Tallahassee are willing to stand up to the insurance companies and their lobbyists, all Floridians will have to just wait and see what this year’s hurricane season has in store for Florida.  Unfortunately, history has shown us that – whether a storm comes this year or not – we will be facing higher insurance premiums either way.  You know – because of those “reinsurance premiums”….  

 

Over the past year or so, we have been getting an increasing number of calls from property owners who continue to experience sinkhole damage to their property – even after their property has been repaired by the insurance company!  The factual circumstances are almost always the same – the insurance company mandates that the insured repair the sinkhole damage pursuant to the recommendations of the insurance company’s experts and then, after these supposed repairs are completed, the property continues to incur new damage.  Although sometimes this new damage appears immediately after the insurance company’s repairs are completed, many times the damage appears years later.  In almost every scenario, after the insured contacts the insurance company regarding this damage, the insurance company’s expert issues a quick report saying that the damage – if the expert even acknowledges the damage – is not from sinkhole activity and the claim is then summarily denied.

Many property owners do not realize that if the insurance company repairs the property pursuant to the insurance company’s recommended repair method, the insurance company must stand behind that repair method and must continue to repair the property – regardless of the cost – until the property is fully remediated.  The law on this process is clear – if the insurance company mandates that a property owner perform the insurance company’s sinkhole repairs to the property, the insurance company must continue to pay the cost of the repairs until the property is fully remediated or, if the insurance company gives up on repairing the home after beginning the process, the insurance company must issue a check for policy limits to the property owner without deduction for monies already spent towards the repair! 

Always know that you have rights against your insurance company and that you do not have to accept whatever remedy the insurance company may try to force upon you.  Clearly, it is important to have your claim reviewed by an experienced insurance attorney who can explain your options and, if necessary, zealously pursue your claim against the insurance company.

For the past three years, my clients have had to battle with their insurance carrier, Tower Hill Select Insurance Company, to obtain coverage for the repair of damage caused to their home by sinkhole activity.  Time and time again, Tower Hill Select refused to provide any assistance to our clients and instead, threatened to pursue legal action against them for the insurance company’s attorney’s fees and costs.  We were finally able to obtain justice for our clients at trial last week.

On the first day of trial, the Court struck all of our experts’ testing and data which reflected the existence of sinkhole activity on the property.  The Court made this ruling because the insurance company was able to confuse the Court as to the law applicable to this matter and to convince the Court that our clients’ testing and data was “not relevant” as to the issue of existence of sinkhole activity on the property.  What?!?!  Although the Court’s ruling on this issue created a right for our clients to appeal this ruling and to seek the reversal of same, at trial we had no option but to push forward and to do the best we could for our clients with the evidence we had.  Unfortunately, the only thing we had left to present to the jury was the data obtained by the insurance company’s experts.  Fortunately, the data and opinions set forth by the insurance company’s experts were clearly biased towards denying the claim and replete with errors and omissions.

In the end, the jury saw through the shell game set forth by Tower Hill Select and their experts and we were able to obtain a jury verdict for  the full amount of our clients’ damages.  This victory was especially sweet as we were able to prove our case merely through the severe impeachment of the insurance company’s experts and the ability to greatly discredit their biased data.  Since we were the prevailing party at trial, the insurance company is now also responsible for the payment of not only all the attorney’s fees and costs associated with our representation of our clients, but also pre-judgment interest on the full amount of the jury award for the past three years.

 

Property damage caused by mold can be a real problem – especially here in Florida.  The combination of Florida’s humid climate and often rainy weather create the perfect petri dish for the creation and growth of toxic and damaging mold.  Fortunately, most homeowner’s insurance policies provide coverage for the damage caused to your property by mold.  Unfortunately, the coverage provided by most policies is extremely limited.  Up until a few years ago, damage caused by mold was covered under Coverage A of your homeowner’s insurance policy.  Coverage A of your policy provides coverage to the main structure and sets forth a policy limit which, at least in theory, is related to the replacement cost of your entire home.  A few years ago, the insurance industry lobbied for and were allowed to alter their policies to include the following language: 

Fungi, Wet or Dry Rot, Yest or Bacteria.

a.   We will pay up to $10,000 for:

(1)  The total of all loss payable under Section I – Property Coverages caused by “fungi”, wet or dry rot, yeast or bacteria;

(2) The cost to remove “fungi”, wet or dry rot, yeast or bacteria from property covered under Section I – Property Coverages;

(3) The cost to tear out and replace any part of the building or other covered property as needed to gain access to the “fungi”, wet or dry rot, yeast or bacteria; and

(4) The cost of testing of air or property to confirm the absence, presence or level of “fungi”, wet or dry rot, yeast or bacteria; whether performed prior to, during or after removal, repair, restoration or replacement.

The cost of such testing will be provided only to the extent that there is a reason to believe that there is the presence of “fungi”, wet or dry rot, yeast or bacteria.

Now – what does all that mean?  There are two kickers to this policy language.  First, no matter how catastrophic your damage is or how high the cost to repair – your policy will only provide coverage for up to $10,000 for these repairs.  Secondly, the insurance company can deduct from this limit the amount the insurance company spent initially investigating this loss!  In other words, if mold caused $50,000 worth of damage to your home and, upon contacting the insurance company, the carrier spends $2,500 investigating the existence of the mold damage and calculating the amount of the loss, you would only be provided coverage for $7,500 to repair your home ($10,000 coverage minus $2,500 investigation expense incurred by carrier).  You would then be on the hook for the remaining cost of repairing your property. 

Although the mold coverage available under your homeowner’s insurance policy may be very limited, there may be other portions of your policy which may provide coverage.  Therefore, it is important to seek legal advice from an attorney with experience with water and mold claims in order to best protect your rights.