HD Law Partners Blog

Florida law requires all insurance companies to act in good faith when approving, denying, or settling claims. An insurer that fails in this duty may face a bad faith lawsuit from an aggrieved policyholder or third-party victim. In defending against such claims, however, the person alleging bad faith still has to present evidence in support of their case. Put another way, an insurance company is not guilty of bad faith based merely on the say-so of the plaintiff.

Federal Court Rules GEICO Not Responsible for $14.9 Million Stipulated Judgment in Motorcycle Accident

A recent decision from the U.S. 11th Circuit Court of Appeals, Pelaez v. Government Employees Insurance Company, provides a useful example. This case arose from a 2012 motor vehicle accident in Florida. An 18-year-old man was driving his mother’s car to his high school prom when he collided with a motorcycle. The mother insured the car with GEICO. The son reported the accident to GEICO but did not mention any injuries, even though the motorcycle driver had been airlifted to a hospital.

Insurance companies have a duty to act in good faith when handling an insured party’s claims. This often includes defending the insured against lawsuits that are within the scope of a policy. If an insurer wrongfully refuses to provide such a defense, the insured can settle the case themselves in exchange for the plaintiff promising to only seek collection from the insurance company. This is known as a Coblentz agreement based on a 1969 federal appeals court decision.

The problem with Coblentz agreements is they are susceptible to collusion between the insured party and the person suing them. For this reason, courts will only enforce such agreements if the plaintiff–the party seeking to collect against the insurer–can show that coverage existed, the insurer wrongfully refused to defend the insured defendant, and that the terms of the ultimate settlement were reasonable and made in good faith.

The COVID-19 pandemic has caused a significant disruption to many Florida business owners. It has also led to litigation over the scope of “business interruption” insurance. In other words, if a business loses revenue due to pandemic-related restrictions, does that qualify as an insurable loss?

The United States Court of Appeals for the 11th Circuit recently addressed this question in a Georgia breach of contract lawsuit, Gilreath Family & Cosmetic Dentistry, Inc. v. Cincinnati Insurance Company. The plaintiff in this case is a dental practice based in Marietta, Georgia. Following the Georgia governor’s declaration of a public health emergency in early 2020 due to COVID-19, the plaintiff followed official guidance and canceled its routine and elective procedures. As this was the bulk of the practice, the plaintiff said it lost a “substantial portion” of its income.

The plaintiff therefore filed a claim on its business interruption coverage with the defendant insurance company. The policy provided coverage for income lost “due to the necessary suspension of its operations” as well as compensation for additional expenses “sustained during that suspension.” The defendant denied the claim, however, noting that business interruption coverage only applied if the suspension was due to a “direct loss to property,” i.e., damage to the insured premises itself. In effect, the insurer’s position was that there had to be some physical damage to the dental office itself–the mere interruption of business due to the state’s health restrictions was not sufficient.

In early August, the U.S. Centers for Disease Control and Prevention (CDC) issued a new 60-day moratorium on residential evictions in certain parts of the country that continue to experience a “high community transmission” rate of the COVID-19 virus. This includes most of Florida. So if you are a Florida resident currently behind on their rent, you may continue to be eligible for certain protections under the new CDC order.

Prior CDC eviction moratorium orders applied nationwide. As noted above, the new order only covers those counties within the United States that are “experiencing substantial or high levels of community transmission.” As of August 24, every county in Florida meets that requirement, according to the Tampa Bay Times. However, if in the future any particular county goes 14 consecutive days below the “substantial” or “high” levels of community transmission, the CDC’s moratorium will not apply to that county until the rates again meet the required threshold.

It is common practice for homeowners to assign their insurance benefits to businesses that perform repair work. But such assignments must strictly comply with the terms of the underlying policy. Insurance companies are under no obligation to pay over benefits to an unauthorized third party.

A recent decision from the Florida Fourth District Court of Appeals provides a useful example. In this case, QBE Specialty Insurance Company v. United Reconstruction Group, Inc., a homeowner sustained water damage to their property. The day the damage was found, the homeowner hired a contractor–the plaintiff in this case–to perform emergency mitigation services.

As a condition of receiving mitigation services, the homeowner and the plaintiff signed a written contract, which purported to include an assignment of the homeowner’s insurance benefits to the plaintiff. Of note, the agreement had spaces for the homeowner to provide his printed name and signature. There was a signature but the printed name space was left blank.

Insurance policies are contracts. As such, when an insurer fails to pay a valid claim, it is subject to suit for breach of that contract. But this works both ways. If the policyholder fails to live up to their contractual obligations, that can supply the insurer a valid defense to any alleged breach.

A recent decision from the Florida Third District Court of Appeal, Nunez v. Universal Property Casualty Insurance Company, provides a helpful illustration. In this case, the plaintiff insured her home with the defendant. The plaintiff reported a claim in 2015 over purported water damage from two leaks in her kitchen and bathroom, respectively. She later submitted written proof of loss, asserting $50,000 in total damages.

The defendant investigated the claims. As part of the investigation, the defendant requested the plaintiff attend an Examination Under Oath (EUO), which is a common procedure in resolving insurance claims. The plaintiff refused to appear. Indeed, she declined to respond to multiple EUO requests. Accordingly, the defendant denied the plaintiff’s water damage claims. She, in turn, filed a breach of contract lawsuit.

Even when an insurance company agrees to provide coverage for damage to a home, they will often challenge the extent or cost of the insurable loss. This then forces the homeowner to take legal action to protect their contractual rights. Such litigation then often ends up being a “battle of the experts,” with each side offering qualified testimony to establish the true extent of the damages involved.

Federal Court Revives Homeowners’ Lawsuit Over Hurricane Irma Damage

A recent decision from the U.S. 11th Circuit Court of Appeals, Izquierdo v. Certain Underwriters at Lloyd’s London, provides an example of such a dispute. The plaintiffs in this case own a South Florida home that sustained roof damage due to Hurricane Irma in 2017. According to the plaintiffs, their roof had no leaks prior to the storm. Post-Irma, however, they noticed roof leaks and water damage inside their home.

A public adjuster inspected the property and recommended replacing the entire roof. Together with other damages, the adjuster valued the plaintiffs’ insurance claim at about $230,000. The plaintiffs later obtained an estimate for just the cost of replacing the roof, which came to $109,300.

If you have ever filed an insurance claim, you have no doubt dealt with an adjuster, i.e., the person employed by the insurance company to review your case. But there are also individuals known as public adjusters who are licensed by the State of Florida to represent individuals, such as yourself, in protecting your interests during the claims process. Remember, the insurance company’s adjuster is there to protect the company, not you. A public adjuster can thus help to level the playing field, as they understand how insurance policies and laws work better than you.

Of course, public adjusters are not free. They work on a contingency basis. That means you do not have to pay them any upfront fees, but they are entitled to an agreed-upon percentage of whatever settlement you ultimately receive from the insurance company. This makes the public adjuster an interested party in resolving your insurance claim favorably.

After a bad storm, a homeowner might notice damage to their property and assume that the weather was responsible. From the insurance company’s perspective, however, correlation does not necessarily mean causation. In other words, the evidence may show that the damage to the property was the result of normal wear and aging and not a specific weather event.

When these type of disputes arise, the homeowner may assume that a judge will simply “take their word for it” that the storm was responsible and thus the insurance company is responsible for the damages. But that is not how insurance law works. If the homeowner disputes the insurance company adjuster’s findings, they need to respond with credible evidence beyond their own say-so.

Judge Strikes “Expert” Testimony Due to Unreliable Methodology

A recent decision from a federal judge in Jacksonville, Dias v. GeoVera Specialty Insurance Company, provides a helpful illustration. In this case, a homeowner filed a claim with an insurance company, alleging that his roof was damaged in a storm that occurred on December 20, 2018. More precisely, the homeowner told the insurer the damage “may have been due” to this particular storm.

When a home sustains water damage, the property owners understandably want to take immediate action to mitigate the problem. But sometimes this means they do not take the time to read–or follow–the terms of their homeowner’s insurance policy. Many insurance contracts require advance notice or approval before undertaking even emergency repairs to a property. Such provisions help protect insurers against fraudulent or exaggerated damage claims.

A recent decision from the Florida Fourth District Court of Appeals, Restoration v. Citizens Property Insurance Corporation, provides a case in point. A condominium unit in Palm Beach County sustained some water damage. The homeowners hired a restoration company to provide water removal and remediation services. Under the terms of the homeowner’s insurance policy, coverage for “reasonable emergency measures taken solely to protect covered property from further damage” was limited to $3,000 or 1 percent of the policy’s liability limits. The owners could ask to exceed the limit of the cap by asking for approval, which the insurer was required to grant or deny within 48 hours of receiving such a request. If the insurer did not answer the request within the 48-hour period, the homeowner was entitled to reimbursement for the full amount of any reasonable emergency measures.