Damage to Home, Business or Personal Property

Many property insurance coverage disputes involve a claim value disagreement between the insurance company and the insured. Whether it involves the cost to repair a home or building, the value of damaged or lost personal property, or the time and cost of lost use or additional living expenses. Other disputes are over the application of coverage limitations by the insurance company, such as payment of actual cash value or replacement cost value, the payment of debris removal coverage, the amount of law and ordinance coverage available, or whether the coverage includes the payment of a contractor’s overhead and profit on a repair estimate. Yet other disputes involve the complete denial of a claim or coverage where, for example, a policy expires or is cancelled before the date of loss, an insured commits fraud or misrepresentation regarding a loss, or due to application of some other type unambiguous exclusion, definition, condition or limitation in the policy. The lack of coverage may be clear, and the insured may agree with the insurance company, and not challenge the coverage denial. Even with such “clear” cases however the denial of coverage may be improper, depending on the facts particular to a given loss or claim.

Where an insurance company and the insured cannot agree on the amount of loss, or takes the position that there is no coverage at all under the policy, the insured’s recourse is to dispute that position by filing a lawsuit against the insurer (except where the insurer or insured has timely and properly invoked the right of appraisal under the policy*), in order to have a judge or jury determine, after considering the evidence, whether the denial of coverage was proper. If an insured is successful in challenging a denial of coverage the insured’s attorneys fees would be awarded to the insured, in addition to requiring the insurer to pay the claim. Florida Statute, Section 627.428 provides that when an insured obtains a judgment against his or her insured, attorneys fees will be added to the amount recoverable by the insured.

Note: All policies contain an “appraisal clause”, which, if invoked timely by the insurance company or the insured, will usually result in an auto damage claim being resolved short of litigation. If invoked, the appraisal clause provides that each the insurer and insured pick an appraiser at their own cost. Then, those two appraisers choose a “competent and impartial” umpire to hear the dispute, if they cannot agree on the amount or value of the loss. The umpire may have to be chosen by the court if the two appraisers cannot agree on the umpire. Once chosen though, the umpire will decide the disputed issue as needed, and the umpire’s decision, if agreed to by either of the two selected appraisers, will be binding on the parties.

Appraisal does not determine coverage issues however, so if an insurance company maintains a coverage defense, based for example on a policy exclusion, that defense is preserved pursuant to the express language of the policy, and not waived by participating in appraisal.

Many times claims property claims are denied following an insurer’s investigation, from which the insurer concludes that the loss was not caused by a covered peril (e.g. lightning, vandalism, theft, covered leakage or seepage from a plumbing fixture, sinkhole), involved misrepresentation or fraud of an insured, which leads to many disputes and lawsuits.

Presently, there is much litigation in Florida over whether a sinkhole (a covered cause of loss on most policies, and sinkhole specific endorsements) caused subsidence, cracking or shifting of a home, building or other structure, as opposed to excluded causes of loss, such as the natural settlement of a foundation, defective construction or poor site selection (over shallow clay or compressed organic matter). Florida Statute, section 627.707, “the Sinkhole Statute” provides rules for investigation, evaluation, challenge and payment of sinkhole losses. The statue was substantially changed in 2010.

Hurricane and other storm losses are denied where the insurer determines that surface flooding or tidal surge, both excluded causes of loss, caused damage to a home as opposed to wind, which is a covered loss. (Every coastal Florida property owner should consider purchasing a FEMA flood policy, available through independent insurance agents.)

The Tampa Bay area of Florida has been called “the lightning capital of the world”. Lightning may damage air conditioning compressors as well as other equipment and machinery or metal pipes within a building or underground. Issues may arise over whether such damage was caused by lightning or some excluded cause of loss, such as electrical or mechanical breakdown or normal wear and tear, which are not covered. Lightning may strike on or near the property, and such losses are commonly adjusted or declared wear and tear, or normal aging by the investigating insurance adjuster. The facts of each loss, how it is investigated, and how the findings are interpreted may lead to a dispute as to whether the loss is covered or excluded.

NOTE: CANCELLATION OF COVERAGE – Florida has very strict statutory requirments for the cancellation of policy coverage. Florida Statute, Section 627.728, governing cancellation of private passenger motor vehicle coverage, requires an insurer give forty-five (45) days notice prior to the effective date of cancellation, mailed to the first named insured and the insurance agent, except when the reason for cancellation is for non-payment of premium, in which case ten (10) days written notice is required. Section 627.728 contains exceptions, qualifications and limitations on its application, and the statute must be reviewed if there is a question regarding the propriety of a cancellation. (For other than private passenger auto policies, cancellations are governed by Florida Statute, Section 627.4133, which section, in part, places limits on the cancellation of homeowner’s insurance policies during hurricane season. Further, Florida Statutes, Section 627.6645 governs the cancellation of group health insurance policies, which statute is superceded by Federal law where the health plan is and “ERISA” plan.) Where the insured was not given proper notice of policy cancellation as required by Florida law, or where the exclusion, definition, condition or other limitation in the contract of insurance does not, arguably, fit the facts of the particular loss.