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Articles Posted in Insurance Issues

sodessThe firm’s Susan C. Odess authored an article that appeared as a “My View” guest column in the Business Monday weekly supplement of today’s Miami Herald.  The article, which is titled “Clients Must Use Insurer’s Contractor or Face $10k Cap,” focuses on a new rule from Citizen’s Property Insurance that limits claim payouts to $10,000 unless policyholders agree to use the insurer’s preselected contractors.  The article reads:

Beginning in February, Citizens will be able to force commercial and residential property policyholders who file claims for all non-weather water losses to use the company’s preapproved contractor or agree to limit their total payout to $10,000. This arbitrary figure is artificially low, as many claims involving water losses often cost much more to repair.

It is no surprise that Citizens and other insurance carriers would seek to impose such a measure in order to keep their claim payouts as low as possible. By forcing policyholders to use carrier-preferred contractors, insurers would be able to negotiate deeply discounted rates from their selected vendors, which will always be incentivized to acquiesce to the insurance companies in order to maintain their preferred status.

Property owners with damages in excess of $10,000 will be unable to vet and select the contractor of their choice unless they are willing to pay the additional expenses. Those who have relationships with companies in the construction field will be unable to turn to their most trusted sources unless they agree to the $10,000 cap.

MHerald2015-300x72For the policyholders, the fact that the insurance company and the contractor’s goals for keeping costs as low as possible would be completely aligned will create a significant conflict of interest between them and the contractor. This naturally leads to issues involving shoddy work and construction, which could easily leave property owners with no other recourse but to resort to litigation.

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bmclarkFirm partner B. Michael Clark, Jr. authored a guest column that appeared as a “Board of Contributors” feature in today’s edition of the Daily Business Review, South Florida’s exclusive business daily and official court newspaper.  The article, which was titled “Court Upholds Concurrent Cause Doctrine in Win for Property Policyholders,” focused on the positive ramifications for Florida commercial and residential insurance policyholders of the state Supreme Court’s recent decision in the case of Sebo v. American Home Assurance.  Michael’s article reads:

The recent Supreme Court of Florida decision in Sebo v. American Home Assurance rejecting the “efficient proximate cause doctrine” in favor of the “concurrent cause doctrine” for property insurance claims represents a significant win for residential and commercial policyholders.

The state’s highest court has determined that the appropriate theory of recovery for claims in which two or more perils contribute to a loss but at least one of the perils is excluded from coverage is the concurrent cause doctrine. Under the rejected efficient proximate cause theory, when multiple perils cause a loss, it is the efficient cause — the one that sets the other in motion — to which the loss is attributed.

For the insurance industry, the efficient proximate cause doctrine has always been preferred. If the carriers are able to demonstrate that the efficient cause behind a loss is excluded from coverage under the policy, then the entire claim may be denied.

dbr-logo-thumb-400x76-51605-300x57Sebo makes the concurrent cause doctrine the legal standard to be applied for property insurance claims in Florida. Now insurers must cover a loss even if the covered peril is the secondary cause of the loss, which was concurrent with but not the primary or efficient cause.

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sodessbmclarkThe firm’s B. Michael Clark, Jr. and Susan C. Odess wrote an article that appeared as the “My View” guest column in today’s Business Monday section of the Miami Herald.  The article, which was titled “Insurers Make Mockery of Work Product Privilege Laws,” focused on the abuse by insurance companies of the state’s untenable work product privilege laws shielding their entire “claim file” from discovery in litigation.  The article reads:

A series of misinterpreted and sometimes contradictory court rulings during the last decade have created a situation in which the state courts and federal courts in Florida disagree on whether insurance carriers’ claim files are subject to discovery by plaintiffs in first-party property litigation. As a result, insurers are now afforded greater work product protection than any others in Florida’s state courts by being allowed to shield important reports, estimates, communications and photographs that would be subject to discovery in the state’s federal courts as well as in many of the other courts in the country.

The work product doctrine, which is incorporated into both the Federal and Florida Rules of Civil Procedure, is intended to shield from discovery documents and communications that are created in anticipation of litigation. It has been extended by Florida’s state courts to include all insurance company reports, communications, correspondence and routine claims investigation documents simply because the companies deem these materials to be part of their claim file, regardless of the fact that these documents were not generated in anticipation of litigation but rather during the routine course of claim investigation.

This has created a de facto new “insurer claim file” privilege that exists solely to enable insurers to exempt relevant documents from discovery, and it has quickly become the most confusing and arbitrarily enforced privilege in the state’s legal system. Insurers routinely invoke this privilege to avoid divulging everything except for copies of the actual policy and any written communications they had previously sent to the policyholder.

miamiheraldlogojpegIt seems preposterous to identify all pre-loss reports, photographs and emails starting from the moment when an insurer first issued a policy to have been generated in preparation for litigation. Yet somehow the state courts in Florida have (mis)interpreted several rulings and created an all-encompassing work product immunity for everything that insurers deem to be a part of their sacred claim file, regardless of whether litigation was actually being contemplated.

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Oscar Rivera 2014.jpgThe firm’s Oscar Rivera contributed a guest column that appeared in today’s edition of the Daily Business Review about the instability in the real estate and insurance industries that will be caused by the failure of the U.S. Senate to reinstate the Terrorism Risk Insurance Act. Our firm congratulates Oscar for drawing attention to this vital legislation and calling on the Congress to make it a priority when it reconvenes in January.

Founded in 1957, the International Council of Shopping Centers (ICSC) is the global trade association of the shopping center industry with more than 60,000 members in the U.S., Canada and over 90 other countries. I have had the honor of leading numerous courses and seminars at the organization’s events in recent years, and in the next few months I look forward to continuing these presentations at two of ICSC’s professional development events.

Landlords and tenants are business people, and as such they are always trying to minimize costs. One expense that can have a significant impact is that of insurance. For landlords, insurance costs generally are passed through to tenants as part of operating expenses. However, even though a landlord doesn’t absorb those costs, to remain competitive in the rental market it wants to keep them as low as possible.