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Task Force on Citizens Property Insurance Claims Handling and Resolution

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Posted on Sat, Jul. 14, 2007

Unsettled claims lead to legal action

BY BEATRICE E. GARCIA

The hurricanes of 2004 and 2005 should be a distant memory for South Florida, but some residents are still living under blue roof tarps and contending with leaks, mold and unfinished repairs.

There are several thousand homeowners who have open claims -- and lingering damage -- because they say they haven't collected enough money from their insurers.

''For a lot of people, there seems to be no end in sight,'' says Michael Virkaitis, who is helping his in-laws in Coral Springs settle their claim with the Florida Insurance Guaranty Association, which handles claims for defunct insurers.

Joy and Frank Vernoia were insured by one of the Poe Financial Group companies, which were taken over by state regulators last June. Their roof was damaged during Hurricane Wilma in October 2005, and there's water damage in every room except the bathroom.

Virkaitis and the couple's attorney, Paul Berger of Boca Raton, are miffed that FIGA is willing to pay about $8,000 to repair the internal damage but refuses to pay to replace the roof, roughly a $30,000 job. A blue tarp covers the Vernoia's roof.

According to Michelle Lovern, deputy director of the guaranty association, FIGA ''has settled the vast majority of claims'' transferred to the agency after the Poe companies -- Atlantic Preferred, Florida Preferred and Southern Family -- were seized by state regulators a year ago.

FIGA has settled 40,786 claims from the Poe companies, paying out some $811 million. But there are about 2,700 Poe-related claims still open.

After Wilma's romp through South Florida in late October 2005, roofs have become a big point of contention between homeowners and their insurers.

''About 70 percent'' of the problems with open claims revolve around roofs, says Berger, who says he has been seeing three to five new clients each week for the past six to nine months.

''Insurers often refuse to pay for a new roof even though four or five contractors have told the homeowners that they need to replace the entire roof,'' he says.

And there's a complicating factor: The Florida Building Code requires that an entire roof be replaced if 25 percent or more of it has been damaged.

That's the bind that Howard Friedman of Hollywood is in. His insurer, The Hartford, won't accept the roof damage and subsequent water damage inside his house. An engineer sent by the insurer said the roof was damaged because it was more than 40 years old, and the storm's relatively weak winds of about 34 mph couldn't have caused the damage.

That probably wasn't the best reason to deny a claim from Friedman, who is the deputy director for hurricane research at the National Oceanic & Atmospheric Administration outpost in Miami.

''I have access to all sorts of data to show that winds were in excess of 34 mph at my house when the storm came through,'' says Friedman, who also says his roof was replaced about 14 years ago. He has found a roofer who is willing to take a down payment to begin the repair work and wait for the insurer to resolve the claim for this final payment.

DETERMINING CAUSE

State Farm, says spokesman Chris Neal, has had problems determining how damage was caused as it worked to settle Wilma claims. For instance, adjusters had a hard time determining if damage to roof tiles existed before the storm or if it was caused by the high winds.

State Farm now has just under 900 claims open, though claims can be reopened by policyholders at any time, says Neal.

The company, the largest private insurer of homes and autos in Florida, says it handled 100,000 claims from Wilma and a total of 300,000 claims from the four storms of 2004. Neal adds that it's State Farm's goal is to settle claims as quickly as possible.

The initial problem was homeowners often received settlement offers that didn't cover the actual costs of repairs because insurers weren't taking into account the rapid rise in the cost of labor and materials that often occurs after a storm. But now insurers have updated prices used in the software that calculates the costs, insurers and adjusters say.

Lawyers say many of the still-unresolved claims are the larger, more complex cases. ''As the size of the damages goes up, the ability to settle quickly goes down,'' says Berger.

However, at a recent meeting of a state task force studying how Citizens Property Insurance was handling claims, many homeowners complained of still dealing with poorly trained adjusters after the 2004 and 2005 storms. Some have dealt with multiple adjusters, each one coming up with a different assessment of the extent of damage and cost of repairs.

THOUSANDS OF CLAIMS

Citizens, the largest insurer of homes in the state with more than 600,000 policies in South Florida, has 700 open claims from the 2004 storms and some 2,630 claims from the 2005 hurricanes. Of those, 789 are in litigation.

The task force recommended Citizens ''take extraordinary action'' to close as many claims as possible by Sept. 30.

On a positive note, Mark Pritchett, executive vice president of the Collins Center, which is handling the mediation process for the state, says that in the past month Citizens has been settling most of its claims in mediation -- an about-face from the prior 11 months, when many of its cases ended in an impasse.

Richard Benrubi, an attorney with Liggio, Benrubi & Williams in Boca Raton, says he files a lawsuit on just about every case he handles from homeowners who have had claims denied or insufficient settlements. But only once has he had to go to trial on a hurricane-related suit.

Benrubi says most lawsuits are settled out of court through mediation or appraisal, a court-supervised process where an appraiser for the homeowner and one for the insurance company hash out the claim.

While Benrubi isn't surprised many insurance companies drag out claims settlements, he is 'surprised homeowners wait so long. They get to their wits' end and then seek counsel.''

 

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TASK FORCE ON CITIZENS PROPERTY INSURANCE CLAIMS HANDLING AND RESOLUTION  - Staffed by FLORIDA DEPARTMENT OF FINANCIAL SERVICES