Articles Posted in Insurance Claim Denials

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There have been a rash of cases filed lately by auto insurance companies in Florida attempting to escape liability following a car accident.  The insurers accept premiums for months or years, yet, when a crash occurs, they look for ways to avoid paying for the losses.  To do so, the insurers try to rescind insurance policies, meaning that, legally speaking, the customer never had insurance on his or her vehicle.

The result is nothing short of devastating for the consumer.  He or she will be: denied personal injury protection benefits to pay medical bills or lost wages resulting from injuries; denied coverage for damages caused to another vehicle; denied coverage for damage done to his or her own vehicle; denied coverage for bodily injuries suffered by someone else hurt in the collision; and denied uninsured motorist coverage for his or her own injuries.

As Jacksonville car insurance lawyers, we often hear from our clients that, among the first questions asked by an insurer following a crash, is  whether application questions were filled out correctly.  One of the most common methods used by these insurers is to claim that its customer failed to list all of his or her family members when completing the application.  Yet, the application itself may be extremely confusing about who is to be listed.

For example, we have a case pending now in which the application reads as follows:

Driver Information: Names of all drivers in household, all children and all persons that use the vehicles.  Coverage is provided only for the drivers listed below: 

Six pages later, the application contains a place to initial that reads:

I hereby certify that I have listed all persons in the household and all drivers of the vehicles, whether in my household or not, as well as all children, whether living with me or not.

These two provisions do not match.  The “Driver Information” section, the only place where names can be listed, does not request the applicant to list “all persons in the household.”  Further, it is very confusing as to whether children who do not drive need to be listed as it is titled “Driver Information” and merely specifies that “Coverage is provided only for the drivers listed below.”  It does not provide that “coverage will be denied if you fail to list all persons in your household.”  The insurer preys on people who list all drivers in this part of the application, but fail to list members of the household that do not drive.

Unfortunately, many of the affected policyholders do not know that the insurer’s position can be challenged in court.  Instead, they end up with a mountain of debt that should have been paid for by the insurance company.  If enough people challenge this type of conduct, the insurers will be forced to stop.  This is largely because, in Florida, if you sue your own insurance company and win, the insurer has to pay all of your attorney fees.  As a result, the insurers end up having to pay much more than just the covered damages, giving them incentive to act fairly in the future.

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Yesterday, the Florida Supreme Court affirmed Florida’s longstanding legal principle that an insurer may have to pay as much as 2.5 times the usual attorney fee when a homeowner has to sue his or her own insurance company and wins.  The basis for this rule, called a “multiplier,” and its effect on homeowner’s claims is especially timely given the recency of Hurricane Matthew and Hurricane Irma.

The case involved a St. Augustine couple who suffered water damage to their home and presented a claim against their homeowner’s insurer, Federated National Insurance Company.  The insurance company denied their claim based on its position that the homeowners failed to accurately list prior claims when they completed the application for insurance.  The homeowners retained an attorney on a contingency basis, meaning that the attorney agreed she would only get paid if she was successful.

After litigating the case for months, it was determined that the disputed prior claims were disclosed by the homeowners to Federated National, and, as a result, it agreed to pay the claim.  The homeowners’ attorney was to be paid a reasonable fee to be determined by the St. Augustine court pursuant to Florida Statute 427.428.  The judge determined that the attorney’s time at a customary hourly rate came to $38,150.00.  Then, the judge applied a “multiplier” of 2 and thus, doubled the fee to $76,300.00.  The insurance company appealed.

The use of fee multipliers in contingency cases has been part of Florida jurisprudence for decades.  The rationale for awarding a multiplier is to encourage attorneys to accept these types of cases on a contingency basis which provides access to the courts for people who cannot afford to hire an attorney.

From the attorney’s perspective, taking these cases on a contingency basis involves a big risk of time and money.  The attorney is not going to win every case.  As such, if the attorney is awarded only a normal hourly fee when he or she does win, then, with respect to the caseload as a whole (with some cases being lost), the attorney would be working for a less than a reasonable wage.  As a result, few, if any, qualified attorneys would agree to handle cases against insurance companies.

The multiplier can range from 1.1 to 2.5 depending on the likelihood of success at the outset.  A low multiplier is to be applied to cases where winning at the outset was likely – meaning that the attorney had a strong incentive to take the case.  The higher multipliers are to be applied where the likelihood of winning at the outset was low.

On appeal, the Fifth District Court of Appeal struck the multiplier portion of the attorney fee award citing federal law for the proposition that multipliers are to be applied only in “rare and exceptional circumstances.”  The Florida Supreme Court rejected this holding and explained that it never limited the application of multipliers to “rare” or “exceptional” circumstances.

In the wakes of Hurricanes Matthew and Irma, this is very good news for homeowners in the St. Augustine and Jacksonville areas.  For one, it makes insurance companies more likely to fairly evaluate claims at the start even before an attorney is hired.  This, of course, is because the insurer is aware that not adjusting the claim fairly could result in a significant financial loss if the homeowner later hires a lawyer to sue the insurance company.  Second, it helps homeowners hire an attorney without having to pay out-of-pocket, an important consideration as many of these homeowners are already financially distressed due to the costs associated with dealing with hurricane damage. Continue reading

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When Hurricane Irma plowed the length of Florida on September 10 and 11, it left a surprising amount of damage throughout the Jacksonville area given that the eye of the storm passed more than 60 miles to our west.  Heavy flooding occurred in downtown Jacksonville, Doctor’s Inlet, St. Augustine, San Marco, Jacksonville Beach, Orange Park and Middleburg.  Wind damaged thousands of roofs.  Falling trees damaged houses, fences and cars.  Rising waters flooded homes and destroyed bulkheads and docks.  In Vilano Beach, at least one home fell into the ocean.

Within a few days of Hurricane Irma, our phones starting ringing with people concerned that their homeowners insurance companies were not treating them fairly.  At least one caller was shocked to learn he did not have flood insurance after his broker assured him that flood coverage was in place.  Others have already received woefully insufficient offers to address their storm damage.  In one Hurricane Irma claim, our client was offered $9,000.00 by his homeowners insurer for repairs that are estimated to exceed $50,000.00.

The most common insurance disputes our lawyers handle following hurricanes or major storms include: whether damage (especially interior water damage) existed before the storm; whether out-buildings are covered under the insurance policy; whether docks, decks, boatlifts or bulkheads are covered under the insurance policy; whether appropriate mold remediation has been completed; whether the hurricane deductible has been applied correctly; whether the value of damaged personal property has been fully evaluated; and whether the full extent of required repairs have been determined.

Often, our attorneys resolve insurance claims without filing suit; however, when suit is necessary, we do not hesitate.  We find that proper preparation and using appropriate experts and contractors usually convinces an insurer that paying the claim in entirety is its best course of action.

If you have a dispute with your own insurance company regarding damage from Hurricane Irma, we recommend that you speak with an attorney experienced in hurricane damage claims without delay.  If your insurer asks you to submit to an examination under oath, we cannot stress highly enough the importance of discussing the matter with an attorney before the statement is taken.  These statements can be used by the insurer to deny or limit the claim.


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2016 is expected to be a year of significant changes in Florida’s homeowners’ insurance market.  The insurance market in Florida is changing quickly resulting in a lot of new insurers springing up, leading to the likelihood of a greater number of insurance disputes.

The shift was covered in a special report from A.M. Best. It noted how the market is shifting in Florida as Citizens Property Insurance Corp. (Citizens) – the state-run property insurance company- depopulates and moves its policyholders to the private market, which has resulted in the emergence of many new and untested, in-state insurers.

The A.M. Best report noted that while these new companies have seen sudden and fast growth as Citizens’ has shifted its market position, there is “significant risk as proper risk management, risk analytics and overall infrastructure to manage the growth are in some cases untested.”
This certainly raises the prospect of more inconsistencies and insurance disputes for the payment of insurance claims in Florida.

While Florida has not had many major storms in the past few years, it has been hit by other unique issues, including a rash of sink-hole claims. The Best’s Special Report, titled, “Florida Property Insurers Remain Untested: Will 2015 Be the Year?,” highlights how sink-hole losses, fast rising reinsurance costs and overall market conditions have prompted many larger, national carriers to reduce Florida property exposures. This may not be good news for policyholders. The increased involvement of smaller and less-experienced insurance companies has been seen since 2007.

The report identifies that a key component of how insurance companies analyze risk remains their exposure to hurricane loss and the recoveries of reinsured losses. A.M. Best stated many companies have a very high gross probable maximum loss. A stress test is also performed on the company’s capitalization that “measures the capital position post an event and its ability to absorb a subsequent event on its capitalization.”

In 2004, a series of four hurricanes caused significant insured property losses in Florida, with two of them causing damage in Jacksonville and Northeast Florida. In the wake of hurricanes, insurance companies often seek to limit their exposure by denying or underpaying claims, leading to a spike in insurer bad faith and breach of contract lawsuits, as seen after Hurricane Sandy hit New Jersey in 2012.

Florida’s new insurers will be tested if and when Florida is next hit by a major hurricane. Jacksonville has not suffered a direct hit from a hurricane since Dora in 1964, but its rapid development in the 50 years since, means considerable property damage would be likely if another storm came ashore here.

There are many scenarios that can lead to disputes. Often an insurer will not offer fair value for property damage under a homeowners or an auto policy. An insurer may claim a policyholder intentionally caused a loss or has exaggerated the value of items destroyed.

In the aftermath of Hurricane Sandy, insurers found a number of ways to reduce claim payments. For instance, commercial property insurance policies provide for higher “named storm” or “hurricane” deductibles than standard deductibles. While Sandy at one time possessed hurricane characteristics, it lost those traits before making landfall, and the National Weather Service downgraded it to a post-tropical cyclone hours before it hit New Jersey. Some of the insurance companies tried to apply so-called “hurricane” or “named storm” deductibles to cover Sandy losses, despite the National Weather Service’s official classification of Sandy as a post-tropical cyclone when it hit land.

As with any purchase, consumers should make sure to do thorough research before buying an insurance policy. Always make sure to read the fine print. Because insurance disputes are normally resolved based on the language contained in the policy, you should be clear about the details of the policy and thoroughly understand your obligations as well as your rights.

Written by David Macauley
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A transportation company purchased insurance for its tractor trailer from a large international insurance company. However, before the insurer provided the company a copy of the insurance policy, the eighteen wheeler was stolen.

The insurer then denied the claim because the policy required that the truck be stored in a secured facility when not in use; however, the company that owned the truck was not given the policy prior to the theft and had no knowledge of such a requirement.

The trial court ruled that the insurer was not allowed to deny the claim on this basis, because the transportation company had no idea the truck had to be stored in a secure location. The District Court of Appeals upheld the trial court’s ruling.

Our Jacksonville insurance dispute attorneys handle insurance claim denial cases frequently. Often insurers are happy to accept premiums but reluctant to pay losses. In Florida, if you have to sue your own insurer and you are sucessful, you are entitled to recover the attorney fees spent on the case.

In many such instances, we agree to handle cases on a contingency basis, meaning we only get paid if we are sucessful and we get paid in addition to the value of your claim. In this manner, you can hire an insurance claim denial attorney without paying anything out of pocket and, if we are sucessful, you get 100% of the value of the insurance benefit.
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