Monthly Archives:' June 2016

June 10, 2016

HURRICANE SEASON 2016 KICKS OFF with TWO MANAGED REPAIR TOUCHDOWNS FOR POLICYHOLDERS

Published by AAPIA on June 10, 2016 http://www.aapia.org/

Florida Policyholders kick-off the 2016 Hurricane Season with two ball-spiking, celebration dancing, pro-policyholder rulings from Florida appellate Courts.  While these decisions fall far short of protecting Policyholders from the oppression of Managed Repair, they do arguably salvage some Policyholder rights and indicate that Florida courts may be willing to take a hard look at Insurers’ Managed Repair options and obligations before the repairs are forced on the Insured.

hurricane

In sum, Florida appellate courts in the second and fourth district court of appeals held, respectively, that:

TOUCH DOWN #1

  • Insurers’ “[w]e may repair . . .” language precluded Insurers from requiring Policyholders to sign contracts with Managed Repair Contractors.  The Court explained that the plain language of the Policy required the Insurer to “repair” and requiring the Policyholder to enter into a contract with the Managed Repair contractor was not the proper exercise of the option.  Florida Peninsula v. Wagner, Cases No. 2D150-1152; 2D15-1790, June 1, 2016 (2d DCA 2016) (non-final until the rehearing time expires or rehearing is determined).

TOUCH DOWN #2

  • Insured may contest the scope of repairs before the repairs are completed.  The Fourth District Court of Appeals on a Writ of Certiorari quashed an Order abating the Policyholder’s lawsuit filed after the Insurer DENIED his claim for refusing to sign a work authorization because of a dispute over the scope of the repairs.  Specifically, the Court found that: 1) the abatement departed from the essential requirements of law because it precluded a determination concerning whether the Insurer had properly exercised its right to repair; and 2) that a homeowner is entitled to dispute the scope of repairs before the repairs are completed.  Diaz v. Florida Peninsula Insurance Company¸ No. 4D15-3283, June 1, 2016.

So, as a practical matter, what does this mean?  First, Policyholders cannot be forced to sign contracts obligating them to pay Managed Repair Contractors where the Policy uses the common language “at our option” . . . “we may repair . .”  This is important as many Managed Repair contractors may attempt to disclaim warranties and separately obligate the Homeowner for payment of some or all of the amounts required to complete the Managed Repair.  Policyholders should not sign contracts with Managed Repair contractors; and Insurers’ insistence that they do so is the improper exercise of the Managed Repair option.

Second, Policyholders now have appellate authority for the position that Insurers cannot force repairs down the Policyholder’s throat when there is a dispute over the SCOPE of the repairs required to return the Policyholder’s property to its pre-loss condition.  The Policyholder will be permitted to proceed under the Policy to seek a determination of the appropriate scope of repairs without breaching its obligations under the Policy.  Policyholders need not permit repairs to be completed and wait to sue until after the inadequate scope of work is completed.

For the time being, at least, trial courts will be bound by these decisions and should allow these type of declaratory judgment and scope based cases to proceed.  See, Nader v. Fla. Dep’t of Highway Safety & Motor Vehicles, 87 So. 3d 712, 724 (Fla. 2012) (explaining the hierarchy of district appellate court decisions and explaining that a holding by an appellate court in another district is controlling on the trial court in another district if that district has not spoken on the issue).  Notably, in Nader the Florida Supreme Court also describes additional limitations on Certiorari review where there is a requirement that the appellate court find that the trial court departed from the essential requirements of law.  Put another way, Diaz stands as a buffer against other jurisdictions even reviewing the matter at the beginning of a case.

Policyholders and their advocates should not be shy about using these new tools to challenge Managed Repair and require Insurers’ to provide Policyholders with the benefits they are entitled to under their Policies.

 

 

Read More..
June 01, 2016

HOMEOWNERS - HOSTAGES IN A HOSTILE CLAIMS ENVIRONMENT

 

Published by AAPIA on June 1, 2016 http://www.aapia.org/aggregator/sources/2

     Florida Insurers, including Citizens Property Insurance Corporation, are flocking to “Right to Repair” Managed Repair Programs claiming that to fight off fraudulent or inflated Assignment of Benefits (“AOB”) claims, insurance companies themselves must hijack their own policyholders’ claims before anyone else can do it.  See, “Citizens negotiating managed repair program” by Ron Hurtibise, April 19, 2016, Sun Sentinel, http://www.sun-sentinel.com/business/consumer/fl-citizens-contractor-referral-service-update-20160419-story.html.   The two part series, Managed Repair – Buyer Beware, discussed the economic fallacies underpinning the concept of broad-scale Managed Repair – including how the homeowner (the real party in interest) is cut out of the repair/decision process and how it places potentially limitless liability back on the insurer for failed, inadequate, substandard, incomplete, or incompetent repairs.  Bottom line, Insurers presently reveling in Managed Repair short-term savings have the real potential to be subject to protracted and significantly more expensive supplemental claims and litigation.

Nevertheless, Insurers seem to have decided to combat AOB and frankly undermine homeowner representation by waging war through Managed Repair programs.  Such tactics can be boiled down to a simple and absolute truth: Two Wrongs Don’t Make a Right.  Homeowners should not be hostages caught in the middle of rival repairers both vying to usurp the homeowners’ rights and cut them out of the claims process like irrelevant collateral damage.  To the contrary, Homeowners, NOT AOB contractors or insurers, should be the ones making claims, hiring contractors, and repairing their properties.  While this lawyer agrees that AOB abuse is real and problematic, Insurers’ Managed Repair programs are NOT designed to protect homeowners from unscrupulous contractors – they are designed to give insurers control over those contractors.  Insurers through Managed Repair are simply engaged in classic combat – if you cannot get the legislature to act – hijack homeowners’ claims for yourself thereby cutting off supplies, freezing accounts, and starving AOB contractors out.  But, it will not work and homeowners caught in the cross-hairs are the ones who suffer – including suffering the loss of control over what happens in their own home.

Homeowners must remember or be reminded, Insurers are not in business to provide humanitarian relief; Insurers do not wear white hats; Insurers do not rescue homeowners in distress; rather Insurers make money for shareholders.  Put another way, Insurers, by their nature, are designed to market a product they hope homeowners never use, collect premiums, and pay as little out in claims as possible.  Yes, they provide a valuable product.  But, their mission is not benevolent and insurers themselves through the years have proven to be notorious for engaging in bad faith type conduct to protect their own self-interests.  This is why Florida enacted a first party bad faith statute.  See, Florida Statute Section 627.155.

That said, AOB contractors are possibly worse; taking advantage of Homeowners facing the crisis of a loss.  Homeowners should not be duped; AOB contractors may exploit their claims impacting Homeowners’ future insurability and premiums.  Most importantly, Homeowners CAN get remediation and repairs completed without needing to assign their claim.   Contractors do not need an assignment to get paid; a simple direction to pay is sufficient and the longstanding practice of reputable contractors throughout Florida.

So, does a Florida homeowner’s choice really boil down to the lesser of two evils?  The answer is Maybe Not Yet!  But then, how can Homeowners protect themselves from this hostage situation?  First, Homeowners need to determine whether their own insurance carrier is regularly exercising its “right to repair” and how best to protect themselves including moving their business to a different carrier.  (If Citizens gets approval for their Managed Repair Program some Homeowners will have no choice).  Second, Homeowners should insist that the Florida legislature make the “right to repair” optional and require it to be specifically selected by the insured when the Policy is obtained with full disclosure of what will happen if they accept “right to repair” and later elect to use their own contractor (denial of the claim; cancellation and/or non-renewal based on a breach).   And, finally Homeowners should NOT sign over their rights under any Policy in exchange for remediation or repairs.

Hurricane season starts Today!  Homeowners must do what they can now to avoid becoming Hostages in Florida’s hostile claims environment should a claim become necessary.

Read More..