It doesn’t happen as often as it does with personal injury claims but slowly we are starting to see insurance companies ask for releases from sinkhole claims directly from the homeowners. With personal injury cases it is not uncommon at all for the insurance adjusters to offer a minimal amount of money, usually $500 or $1,000, to the injured parry if they agree to sign a release. Usually they want to do this at the very earliest possible moment before the injured party gets to an attorney or to a doctor. Insurance companies on first party claims such as a sinkhole don’t really have the ability to offer such deals as they are obligated to repair the house. But, what they may do is once the repairs are completed, they may try to offer the homeowner a little extra money to sign a release. They will seek a release of any existing problems as well as any future sinkhole related problems, known or unknown, that you may have. The real dishonest part is when the insurance company continues to collect premiums from the homeowner for sinkhole coverage even though the homeowner released them. We saw this in a recent case against Mercury Insurance.

As a homeowner, you have the right to have your home repaired and nothing requires you to sign a release after the repairs are done. (Of course if some portion of the case is challenged and litigation ensues you will always be required to sign a release). Under Florida law if something goes wrong and the repairs do not take or if they fail, your insurance company could still be liable for any additional repairs that are needed. Don’t let them off the hook and give them the easy way out. It could be a very costly mistake for the homeowner. If you don’t have representation through an attorney or a public adjuster assisting you, refuse to sign a release if they present it to you.

New reports indicate that Citizens has started the slow decent into fewer policies and currently is down by 18. It doesn;t sound like a lot but Citizens is happy to actually be downsizing compared to upsizing for the first time in a long time. Currently Citizens insures nearly 1.5 million homeowners in Florida. The goal is to downsize to about 800,000. Citizens figures this could cut as much as 1 billion dollars in risk. The hope is that more private insurance carriers will assume more of these policies and take them off Citizens’ hands. Several proposed Bills announced recently will assist Citizens in this mission. The proposals include, amongst others, a mandatory 10% deductible for sinkhole claims, reductions in coverage limits for the home and liability policies, exclusions on detached structures or screen enclosures from coverage and prohibiting Citizens from accepting non-residential commercial risks. Furthermore, Senator Richter (one of the architects of the disastrous Bill 408 passed last year) is proposing that Citizens release more confidential information to private carriers in hopes that it will entice them to assume more Citizens’ policies. Rick Scott has always been a huge proponent on downsizing, if not eliminating, Citizens. We are now seeing some of the first steps to achieve this goal. In the meantime, Scott Wallace, the CEO of Citizens has announced that he is stepping down effective April 6, 2012. He has been the CEO for over six years and claims hat he is leaving the company in good shape and with solid management in place. There’s no reason to believe his resignation will have a significant impact in the direction Citizens wants to move.

One, almost comical, issue that has arisen with many of my clients recently is that insurance companies are requiring homeowners to repair homes with denied sinkhole claims. Yes, you heard that right. Homeowners will file a claim for sinkhole related damages. The carrier will investigate. The engineer will determine that sinkhole activity does not exist at the property. In many instances the homeowners will undergo a neutral evaluation to have that expert also agree there is no sinkhole activity causing damage to the home. The next letter that comes in the mail is incredibly surprising. The same insurance company who is so adamant that there is not a covered loss, i.e. sinkhole activity at the house is now requiring the homeowners to repair the damage to the home or they will drop their coverage. In short, the insurance company is telling insureds that they have no sinkhole issues, will not be paying them anything to repair the damage but, they want, actually insist, that the homeowners come out of pocket to pay cash to repair the damage. My personal belief is that this tactic is nothing more than a retaliatory tool to punish the homeowner and get off the insurance policy as quickly as they can. It is incredibly unfair but difficult f0r a homeowner to prove. Florida law does state that a carrier should not non-renew an insured on the basis of the homeowner filing the claim but also indicates that this rule shall really only apply if and when the homeowners have repaired the property. We are taking a hard look at this rising issue to determine what is the best way to protect homeowner’s against this dirty tactic.

This is a story that came out in December but for those that have not heard or read about it, it does show how scary and sudden sinkholes can be. A large sinkhole opened up at a rest stop near Polk City, on I4. The hole appeared in the morning of December 29, 2011 and grew quickly to about 12 feet deep and 30 feet wide. The hole opened up in the parking lot area directly beneath several cars and ended up swallowing an SUV and almost got a second one that was lucky enough to be pulled from the hole before it grew. This car was still drivable but both were towed away later that afternoon. The sinkhole, which occurred around mile marker 46, was still growing and no one knew how large it would get but the rest area remained open.

Q: I have a pending sinkhole claim with Homewise and now the Florida Gauranty association is on the job. Received a letter today confirming their involvement, and that any payments made on the claim will be paid directly to contractors performing the repairs. The insured will be resposible for the any amounts over the policy limits. I read that the new bill specifies that if a covered building suffers a sinkhole loss or catastrophic ground cover collapse, the insured must repair such damage in accordance with the insurer’s professional engineer’s recommended repairs. However, if repairs cannot be completed within policy limits, the insurer has the option to either pay to complete the recommended repairs or tender policy limits. Does the Florida Gauranty association have another set of laws or what?

I have received the same letter in the past several days on all my Homewise client’s files. Frankly, we are happy to see some movement, any movement on these files. What FIGA, or the Florida Insurance Guaranty Association, is citing in their letters is, and has been, the law here in florida for some time so I would not expect anything contained in the new law to play a role in these cases. To answer your question in short, yes, FIGA does play by different rules  than insurance carriers. It abides by a separate set of Statutes and has numerous protections afforded by the State contained in these statutes. For example, FIGA has a limit of liability of $300,000. It will never be required to pay more than that. FIGA also can not be threatened with attorney fee exposure like we typically see with insurance carriers. For Homweise insureds who receive these letters the most important point is that you only have one year to either get the claim resolved with FIGA or to file a lawsuit so pay attention to your timelines and don’t get lost in the shuffle, be proactive.

This office has been handling a travesty of a case for several years now. The factual scenario is that an insured who does not speak, read or write English was provided a Citizens policy after she was told it contained sinkhole coverage. Of course, not being able to read the policy she assumed she did have coverage as she was told. As a side note, Citizens does not offer any forms other than in English. This places a huge emphasis on the importance of the insurance agents selling these policies as the homeowners have to rely on their word when purchasing coverage.

Some time later, the homeowner reported a potential sinkhole claim. Citizens investigated it, took the examinations of her and three of her family members, did a full geotechnical investigation and eventually even paid her a sum of money to begin the cosmetic repairs to her home. For eighteen months Citizens told her she had coverage for sinkhole activity and at every stage represented to her she would be ok. Eighteen months later, Citizens for the first time, advised her that she actually did not have coverage under her policy and demanded the cosmetic money back. Money she had already spent to fix her house.

The real issue here is that under Florida law when you have a confirmed sinkhole, the report is filed with the county property appraiser office to avoid any potential fraud. So this lady has a publicly known confirmed and un-repaired sinkhole at her house. She does not have the money to repair it and it has lost approximately 80% of its market value. What does Citizens do? They walk away and when we bring a lawsuit, they not only offer nothing to compensate her, they sue her for the money back they paid her previously.

This case was set for trial this Monday morning and due to Citizens procedural posturing it had to be continued to a later date just before the jury was ready to be selected. The real headline of this story is that Citizens openly admitted they made a mistake, the damage to my client is as clear as can be and Citizens response to the judge was that it is protected from having to pay this lady anything because the State of Florida provides Citizens immunity from bad faith or punitive damages. This issue has to be addressed by the State and our court system. Citizens is an insurance company and a corporation. It should be allowed to simply get away with everything. There will undoubtedly be much more to come on this case as it appears to be postured for several more years of litigation and appeals. Citizens has refused to back down and neither will we. Its the right thing to do.