September 26th, 2017
By Justin M. Thomas, Esq.
Earlier this month, majority of Floridians experienced the passing of Hurricane Irma. Unfortunately, the risks associated with living in the state of Florida include tropical weather such as hurricanes and tropical storms. In Southwest Florida, those risks and the ensuing damaging resulting from those risks are now readily apparent. As the area and the state begin to recover, it is important not to forget about the steps commonly taken to insure against the losses associated with unexpected and catastrophic events, like Hurricane Irma. Namely, insurance for real property, personal property and loss of business or business interruption.
A large majority of Floridians have purchased an insurance product to protect their most valuable investment, their home. In addition to insuring the structure from loss, the property contained inside is also likely insured up to a certain limit. If structural or property damage was sustained, the following steps should be taken:
- Locate your insurance policy and read the coverages afforded under it.
- In the event of recognized damage, immediately place your insurer on notice of the loss.
- Document all damages to your home and property, as this will be requested from your insurer. Photographs and an inventory of damages are a simple way to keep track of the loss and quickly provide to your insurer when requested.
- Follow up with your insurer to make sure that your claim is opened and being processed so as to quickly begin the steps forward to recovering from this unfortunate event.
- If your property is in danger of sustaining further loss, seek the permission of your insurer to employ efforts to mitigate further loss.
- In the event that your insurer fails to respond to your attempts to initiate a claim or respond to your inquiries, contact the state of Florida Department of Insurance Consumer Helpline at (1-877-693-5236) and consider seeking the advice of competent legal counsel experienced with handling similar claims.
Commercial Property and Business Interruption Coverage
The losses associated with serious weather events, such as Irma, do not just damage homes and impact the personal lives of Floridians. Mother Nature’s powerful force has unyieldingly damaged the property of Florida’s economic base of small businesses as well. Commercial property insurance is the product device to protect a business’s real and personal property. An additional coverage available for businesses is that of business interruption insurance. This insurance provides coverage to a business for the losses sustained due to the inability or reduced ability of a business operate in the event of disaster or loss.
While no business owner can forecast the future, those that have purchased commercial property insurance and business interruption insurance are not without support to recover from Irma’s recently inflicted loss. The steps outlined above with respect to homeowners insurance will apply equally to a commercial property claim. In addition, consider the following:
- Identify all available coverages for both property and if applicable, inventory maintained by the business.
- Confirm the notice requirements in the policy in the event of a loss and immediately report the loss or potential loss to your carrier.
- Maintain accurate records of the events leading up to the disaster, during the disaster and following the event so as to be able to provide the insurer with the necessary information to evaluate and adjust the loss.
In closing, although the recent events associated with Irma have inevitably disturbed the lives and damaged the property of many Floridians, recovering for those losses from your insurer is one positive step towards returning to some sense of normalcy.
June 5th, 2017
Insurer Fails in Attempt to Escape Its Obligation to Pay An Insureds Attorneys’ Fees Under §627.428, Florida Statutes
By, Justin M. Thomas, Esq.
In W&J Group Enterprises, Inc. v. Houston Specialty Ins. Co., the insureds, W&J, appealed an order denying their motion for attorney’s fees under section 627.428, Florida Statutes, following a settlement that was comprised of $650,000.00 payment from the insurer and $3,000.00 paid by the insured. 2017 WL 1279045 (11th Cir. April 6, 2017) (Unpublished). Florida has extended the statutory entitlement to attorney’s fees under section 627.428, Florida Statutes, to apply beyond the obtaining of a judgment by an insured against an insurer. Such entitlement also applies under a theory referred to as the “confession of judgment rule” which arises based on the conduct of an insurer prior to a judgment. See Wollard v. Lloyd’s & Cos. of Lloyd’s, 439 So.2d 217, 218-19 (Fla. 1983).
Though Wollard involved a first-party coverage dispute, Florida’s intermediate appellate courts have expanded the “confession of judgment rule” to the third-party context. E.g., Mercury Ins. Co. of Fla. v. Cooper, 919 So. 2d 491 (Fla. 3rd DCA 2005); Unterlack v. Westport Ins. Co., 901 So.2d 387 (Fla. 4th DCA 2005); O’Malley v. Nationwide Mut. Fire Ins. Co., 890 So.2d 1163 (Fla. 4th DCA 2004). Cooper, Unterlack and O’Malley all stand for the principle that when an insurer settles a third-party liability claim, which is contrary to the coverage position taken by the insurer against its insured, the result amounts to a confession of judgment sufficient to trigger the operation of entitlement under §627.428, Fla. Stat., for the insureds to recover their attorneys’ fees.
Interestingly, in the face of the foregoing decisions, the insurer, Houston Specialty Ins. Co. (“HSIC”), advanced the position that the court’s use of the word unilateral in Cooper was to be viewed in such a manner as to limit the confession of judgment theory to only those circumstances when it is solely the insurer who contributes to the settlement. W&J Group at 2. The court recognized HSIC’s position as inconsistent with the progeny of cases recognizing confessions of judgment in the third-party context. Id. The crux of the court’s holding was twofold. First, an insured’s contribution to the settlement was so infinitesimal that it was insufficient to meaningfully constitute a basis to depart from the sound reasoning in Cooper, Untlerlack and O’Malley. Id. at 3. Second, to take HSIC’s position all the way through to its logical conclusion would require that the insured reject the facially reasonable settlement for purposes of preserving its rights under section 627.428, Florida Statutes. Id. Such a requirement, as the Court recognized, flies directly in the face of the intent of the statute and the policy concerns that have been previously discussed by the Florida Supreme Court. Id. After all, the instant statute exists to provide an avenue to level the playing field between insurers and insureds.
The takeaway seems to leave a sense of the pro-policy holder stance that has long been recognized in Florida jurisprudence. Notably, however, one cannot help but wonder what effect that this decision will have on settlement positioning in the frequent dynamic of liability actions with the commonly filed companion coverage litigation.
November 6th, 2015
By, Justin M. Thomas, Esq.
Recently, Security First Insurance Company sought administrative review of the Florida Office of Insurance Regulation’s (“OIR”) denial of requested changes to their homeowner’s insurance policies issued in Florida, which operated to prohibit post-lost assignments without the company’s approval. Security First Ins. Co. v. State of Florida Office of Ins. Reg. 2015 WL 36446925 (Fla. 1st DCA June 22, 2015). The Court affirmed the decision of the OIR relying primarily on the storied history of Florida jurisprudence that approved of the exact conduct Security First sought to eliminate.
On rehearing, Security urged the First District Court of Appeal to certify conflict to the Florida Supreme Court. Security First Ins. Co. v. State of Florida Office of Ins. Reg. 2015 WL 36446925 (Fla. 1st DCA October 26, 2015). The court declined this request based on Florida’s existing authority that permits assignment of post-loss rights. In doing so, however, the court acknowledged the existence of a narrow statutorily imposed exception to this general rule with regard to health insurance claims. In the healthcare context, both Florida Courts and Legislature have acknowledged the existence of significant public policy considerations require a prohibition on the assignment of health care claims. The Security First Court, however, recognized the distinction and elected not to extend the exception beyond the health insurance arena.
The Security First holding is consistent with the recent Fifth District Court of Appeal of Accident Cleaners, Inc. v. Universal Ins. Co. 2015 WL 1609973 (Fla. 5th DCA April 10, 2015), which also recognized approved of the assignability of post loss claims. However, the Accident Cleaners Court went further in acknowledging that assignees are not required to have an insurable interest at the time of loss in order to sue the insurer. In doing so, the Accident Cleaners Court pronounced Florida’s long history in approving post loss assignments of insurance rights and the entitlement of the assignee to enforce the same:
[d]ating back to 1917, the Florida Supreme Court recognized that provisions in insurance contracts requiring consent to assignment of the policy do not apply to assignment after loss. W. Fla. Grocery Co. v. Teutonia Fire Ins. Co., 74 Fla. 220, 77 So. 209, 210–11 (1917); see Cont’l Cas. Co. v. Ryan Inc. E., 974 So. 2d 368, 377 n. 7 (Fla. 2008) (reaffirming the principle from W. Fla. Grocery Co. that the law is well-settled that anti-assignment provisions do not apply after loss); Lexington Ins. Co. v. Simkins Indus., Inc., 704 So. 2d 1384, 1386 n. 3 (Fla.1998) (“[A]n insured may assign insurance proceeds to a third party after a loss, even without the consent of the insurer.” (citing Better Constr., Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 651 So.2d 141, 142 (Fla. 3d DCA 1995)). Furthermore, the right to sue for a breach of contract to enforce assigned rights was recognized early in Florida history. See Nationwide Mut. Fire Ins. Co. v. Pinnacle Med., Inc., 753 So.2d 55, 57 (Fla.2000) (“The right of an assignee to sue for breach of contract to enforce assigned rights predates the Florida Constitution.” (citing Robinson v. Nix, 22 Fla. 321 (1886)).
Id. at 2. Interestingly, the utility of a policyholder’s post-loss assignment of policy rights hinges on the ability to enforce those acquired rights. This importance is highlighted when an insured suffers a sudden loss from a covered peril, such as damage to an insured home from a severe storm, and in turn is able to use an assignment of rights under the policy to assign those rights to a contractor, that will assist the policyholder in repairing the loss.
In closing, Florida policyholders in accord with the decisions in Security First and Accident Cleaners, may still employ the assignment of post-loss rights under their insurance policies as an effective method to resolve and recover from an insured loss. Further, the foregoing decisions should provide comfort to assignees with respect to the validity and enforceability of assigned post-loss policy rights. Lastly, it should be noted that the Court in Security First, unequivocally stated that the Florida Legislature should consider, and if necessary address, the public policy arguments raised by insurers—not the judiciary. . Only time will tell if Florida’s Lawmakers accept the invitation.