Valued Policy Law case in Florida overturned- Update on Mierwza /Safety Concerns-Part 2/Fl Insurance Crisis update-Go Jeb!

September 21, 2007

I’ve got quite a bit of blogging to catch up on after extending my business trip this week to 5 days versus the 3 we expected to be out for as there were many developments in the claims industry during my trip.

For starters- we were discussing adjuster safety in one of our last blogs here and the fact that insurance carriers do not define a weapon in their Code of Conduct forms although they forbid adjusters to carry them. Well, I’m sure glad they did not define it as FAA regulations do! Flying up for our business meeting, the mascara and lipstick were confiscated and coming back the cigarette lighter was! So- I guess things could be worse if we had to live by those restrictions! (Smile) If your an adjuster reading this, you might want to catch up on numerous reply postings over on the topic we posted on CADO (here)about the next opportunity to view “Muffled Cries” on Forensic files which is 9/22/07 at 6:30 PM EST. This is the show about Tampa adjuster, Katie Froeschle ‘s murder while handling a rental dwelling claim. There have been a significant number of replies from adjusters on the Cado forum topic by experienced adjusters who have also faced some pretty tough situations while working claims indicating this was not an isolated situation with Katie but a situation many of us have faced (yes, I have many of my own war stories from my years in the field). The thing that surprises me the most is that many of these incidents happened to male adjusters contrary to my thought that had a male adjuster gone out on the claim Katie did that a murder may not have happened.

The most important breaking news applicable to settling claims comes out of Florida where the Valued Policy Law settlement guidelines for total losses established in the Mierzwa case were overturned. We wrote about valued policy laws and recent decisions in this blog here. If you read this blog, it contains an explanation of the Mierzwa case and how that applied to the FL Valued policy law so just take a minute to read that blog if your not familiar with the case.

While we were out, this case was overturned. Here is a link to the Supreme Court decision on this Florida Farm Bureau vs Cox case. Rather than reinventing the wheel, I’ll refer our readers to the Insurance Coverage blog entry of 9/21/07 here which explains the new decision. Basically, this was a win for the insurance industry as described here in this news article also which in part states:

“The unanimous opinion written by Justice Charles Wells said Florida’s 108-year-old valued policy law was intended to prevent haggling over the worth of destroyed property, not to be used to cover perils that were not insured”

According to this article, this takes the case for the insured back to court now to decide what damage was attributed to wind vs what is flood damage since this decision would no longer allow them to collect policy limits since the major damage was caused by non covered flood damage. The policy limit was 65K and Florida Farm Bureau had evaluated the building damage at less than 12K. The way the Mierwza case stood, the carrier would have had to pay the limits under Valued Policy laws even though the majority of damage was from a non covered loss (flood ..and note the insured did not have a flood policy which amazes me having handled many flood claims myself back in my days as a Santa Rosa County, FL staff adjuster dealing with repeated flood claims on Blackwater river there).

I’m glad to see these recent court decisions both in LA and FL where the courts are upholding policy provisions and the intended purposes of valued policy laws. I wonder how much has been paid by carriers in FL on the Mierzwa case ruling and what this will do to the many other pending cases on these very type of issues.

Wind and water decisions will continue to be tough for all adjusters to evaluate. The consumer groups are being very active pushing for passage of the 2007 Multiple Peril Act being pushed by MS Gene Taylor. It is unfortunate they do not begin to realize what they are pushing for and the ramifications of having wind handled by the government similiar to the Flood policies. I’m going to try to get a blog entry in next week explaining just some of the horrors in the flood policy exclusions such as the 12 square foot of deck landing coverage,etc. I think if policyholders understood the  coverage available in a flood policy better and the extreme limitations in coverage they might be much more hesitant about moving the wind to the government if the wind coverage would be as restrictive. It is definitely NOT consumer friendly nor is it adjuster friendly to understand the flood policy or the many unnecessary forms and procedures by NFIP to handle those losses. I don’t think many pushing for it even realize the flood policy has had a 250K limit on a residential building. In layman’s terms just ask yourself this question- how many homes on the beach can you buy for 250K? Give me a break! I sure hope the wind policy won’t contain such unrealistic coverage limitations. These consumers probably also do not know anything about the news releases last year when the powers that be ran out of funding on the flood claims? I’ll post some of those articles in next week’s blog. 

I am a proponent of having the coverage by private carriers to end this ridiculous necessity for an adjuster to have to determine what is wind and what is water damage providing the appropriate rates can be charged for this coverage. This would also satisfy the politicians and the insurance consumer. None of us …..adjusters or insureds …….like the current exclusions under the homeowner policies. Just think how much easier the life of an adjuster would be to go in and assess all damage and close the file. Better time service on claims and more income to independent adjusters who can close more files! Chubb insurance is one of the carriers already doing so. See their press release from last spring here about their coverage. Why can’t other carriers do the same? I imagine this is a mute question at the moment with the mass exodus of coverage as they non renew and send out policy cancellations by carriers in coastal communities. I’d imagine the need by insurers for engineer’s who help assess the cause of each type of damage would be greatly reduced, the cost to defend litigation on the wind vs water would be eliminated, less claim managers would be needed to manage the litigation and coverage issues, and reduced claims costs for such huge expenses should lead to greatly reduced policy premiums so it would be a win win for all parties. Think of the reduction in Insurance Department complaints when consumers no longer have to argue over the coverage assessments for wind vs water damages! Makes sense to me!  You can’t blame them(carriers)if they don’t want to write the combined coverage no matter how much the public (myself included as a coastal resident) protests with the recent political developments in LA and MS on litigation for non covered flood losses and actions by MS Congressman Gene Taylor and Senator Trent Lott as well as Charlie Crist  in FL who has been a one man torpedo destroying insurance relationships in FL by his anti carrier policies while at the same time throwing out all rating rules for his big push for the growth of Citizens of FL with his rate freezes on their premiums……don’t even get me started on that but watch for a blog next week on more about this issue! For now I’ll leave you with a referral to another Rossmiller Insurance Coverage blog that addressed Jeb Bush’s recent comments about the insurance crisis in FL which also happened while we were gone this week! I’m very glad to see Jeb Bush speak out as he was so respected while in office here. Oh for a return to those days!

Valued Policy Law Katrina decisions in the news this week and Fl Valued policy law updates since the 04/05 seasons

August 31, 2007

I wasn’t expecting to create a new blog entry until the holiday was over but we’ve had developing news this week on the LA Valued Policy law cases going through the court systems there. We also have several storm disturbances mentioned in the news so I want to be sure to distribute these updates before folks are going running out on any hurricane losses this season.

Here is a news article from the Associated Press put out by Advisen regarding the Landry vs Lousiana Citizens Property Insurance. This case originally went to court in December 2006 and ruled Citizens did have to pay policy limits on the case because of the valued policy law although it was another wind vs water case of attributing damage between these perils. However, Tuesday of this week, the 3rd Circuit Court of Appeals stated the following according to this news release:

“But the state 3rd Circuit Court of Appeal on Tuesday, in a 3-2 decision, set down this standard: if the Landrys can show that the “efficient or proximate cause” of the destruction was such covered perils as wind, rain or hail, Citizens would have to pay the full value of the property _ without a deduction for flood waters. To avoid that, Citizens would have to show the main destruction was caused by floods. ”

The article goes on to say that 3 weeks earlier a federal appeals court in NOLA affirmed a lower court ruling in favor of insurance companies saying the LA Valued Policy Law does not apply unless the damage is wholly attributable to a covered peril such as wind. I found the case referred to in this Claims Journal article citing the Chauvin vs State Farm Fire and Casualty case here. Here is another outstanding paper by the Tort Trial and Insurance Practice Law Journal (Winter 2007) which provides a short summary on the Chauvin case found on the Zelle firm’s site where you’ll find other excellent information on their articles page. This article is worth the time to read all 36 pages. You’ll find the Chauvin cases discussed on page 35/36 as well as other cases in FL we’ll discuss below. This Times-Picayne article also provides more details on the Chauvin’s case and comments from trial lawyer spokesman, Allan Kanner, hoping other cases will make it to the state Supreme Court for more favorable decision for policyholders. Here is also a “public opinion” blog on the ruling by an angry consumer over the issue here.

I checked the Insurance Coverage blog to see if there are any mentions of the new rulings and found this June 06 blog with links to both the FL Valued law and the LA valued law which also mentions another case I’m not familiar with. I’m curious what they’ll have to say now if they provide new information now that we have these additional new LA nd FL cases providing other new decisions.

Fl has also seen much news on the FL Valued policy law as a result of Hurricanes Ivan and Dennis. This article summarizes the well known Mierzwa vs Fl Windstorm case as well as the subsequent decisions by the courts on the FL 1st DCA 2006 cases of Vanguard Fire and Casualty Company vs Golman. That case involved allegations of breach of contract and bad faith and this article provides interesting reading to understand FL valued policy law changes. This is important as many independent adjusters have not worked cases in FL since Dennis in 05 and this is an 06 decision. (Vanguard is now in receivership by the way) The Zelle Property coverage update referred to above and again here reviews the Citizens Property Ins Corp vs Ceballo case holding that although the FL Valued policy law covers policyholders, they are not entitled to 25% of limits for Ordinance and Law coverage without proof of incurred expenses. This is found on page 35 of this document. Note that the information in this document goes on to say “that the court certified it’s opinion to the FL Supreme Court realizing that it’s opinion may be in conflict with another appellate court decision”..referring to the Mierzwa case.

It should be an interesting season with the continual new decisions coming out of the courts. From what I can best assess at this time, these decisions do seem to be upholding the intent of the policy contract provisions. I do wonder how many cases were settled on these valued policy law initial decisions as many of the articles linked to above indicate carriers did settle some of these cases out of court over the initial decisions. Hopefully, one of these great legal blogs we follow will address these decisions and provide their opinion as to what this all means for the 07 storm season in LA, FL, TX, and other storm prone regions. I hope adjusters will take the time when looking at these links to observe and read some of the many great blog entries and news articles free for our reading to better understand the claim issues.

Speaking of developing information- take a look before you sign off the blog at this new Ordinance and law information coming out of FL which indicates a new statute may be in effect in October 1, 2007 requiring extensive wind mitigation measures be done to homes in excess of $300,000 in designated zones. It sounds quite expensive as a roofing trade association is quoted as saying the extra cost to replace a roof would run about $6,000. I am very curious if the insurance agents are aware of this new potential expense and are offering increased Ordinance and Law coverage in the event an insured in a designated area must replace their roof subjecting them to this new requirement to do so. This will have a major effect on insurance damage estimates if carriers have to incur this cost. The trade association says they are working with Crist to try to postpone this. I sure hope so, the last thing we need in FL is another expense right now on top of the skyrocketing insurance premiums. This article I just came across today says that the majority of carrier rate increases have come in prior to the upcoming deadline and are averaging about 28% rate increase requests and some of the major carriers have not filed their requests yet. (Could this be due to Crist taking them all in for rate increase hearings as he recently tried to do ??? )You can imagine what the passing of this rule would do to Floridians in addition to the current rate hike proposals should this pass. It is still amazing that Citizens has a rate freeze through 2009. I’m running to Tn when those rate freezes are lifted! We’ve had the same neighbors going back 10 years and have lost several neighbors who have moved out of state after witnessing Katrina damages combined with what is going on in this state with property taxes and insurance for coastal residents.

I updated the stats on the earlier blog this week on new suits on the 2 year statute of limitations cases. According to the articles coming in, thus far about 2, 964 new cases were filed this week in LA. Here’s that blog if you want to read the updates.

**Update 9/1/07- After writing this blog I did in fact locate an updated opinion on the Insurance Coverage blog on the new decision in LA on the Valued policy law (it just wasn’t showing up in an internet search when I was researching earlier today). Here it is and it’s highly recommended reading for a legal opinion as to how this attorney feels this confuses the anti concurrent cause provision and what this this means to us. You read it and form your own opinion.