Over the past few years there has been an explosion in the amount of publicity regarding homeowner’s insurance claims. A large amount of this publicity has come from the side of the property insurance companies in Florida. But what is rarely discussed is one of the main drivers of why litigation costs have risen to the levels that they have, that being the improper claims handling and litigation tactics of insurance companies themselves.
Prior to becoming an attorney, I was in the market to purchase insurance for my first home. I believed that any insurance company I chose would be there for me and would have my best interest in mind if I should need to make a claim. I believed that my insurance company would readily assist me in finding coverage for that claim. I have since learned that is rarely the case. Instead of insurance companies zealously searching for a reason to cover the claim, they often respond negatively to those claims with the purpose of finding a reason or an exclusion to deny or underpay those claims.
Insurance has become one of the largest conflicts of interest in the State of Florida. Think about this, your insurance company makes their profit on the premiums that are paid. Any claim that they pay comes out of the profit that they make. In the process of deciding if a claim is valid, there should be checks and balances in place to ensure the claim is viewed impartially. When the person / entity that is making the claim determination is the same person / entity that is making the profit, there is no impartial review of the claim. An insurance company is a business – not a service. The purpose of a business is to make a profit. Paying a claim decreases the profit. What is the incentive for an insurance company to decrease their profit? Frankly, there isn’t any.
I have participated in depositions of insurance company representatives where it is admitted that the claim was either underpaid or the insurance company should have covered the claim but didn’t. Even in instances where it can be simply proven that one of these two occurred and that the insurance company should cover or pay the claim, the insurance company continues in litigation, driving up attorney fees and costs for all parties, in the hopes that the homeowner will either give up or run out of funds to continue the fight. Unfortunately, insurance companies have the leverage. You as a consumer have extremely limited options when attempting to negotiate an insurance contract. If you have a mortgage on your property then you are likely required by that mortgage company to carry some level of insurance on that property. Although you can shop different insurance companies for pricing, you don’t have many options in the way of actually negotiating the language contained within the policy.
Remember, most publicity relating to property insurance is information that is put out by insurance companies who have profit margins to maintain. Many of these companies continue practices unchecked, that undermine and deteriorate Floridian’s rights under property insurance policies. They persist until they don’t actually have to cover anything, but you will still be required to pay the premiums. Do not fall victim to the skewed reports that are flooding the news. Do not be afraid to file a claim on a policy that you have paid for. Do not allow the insurance companies serving our good State to bully you into padding their profit.
Brandon Pharis, ESQ.
