Miami insurance claims attorney J.P. Gonzalez-Sirgo recently reported that Florida insurance regulators imposed a $1.26 million fine on the state’s largest private insurer, Universal Property & Casualty. The fine was related to unfair post-claim underwriting practices. One of these practices involved accepting premiums over a period of months or even years prior to indicating that coverage was being denied only after a claim was made by the insured. Many of these post-underwriting denials of coverage were based on omissions or inaccuracies in background information, including a homeowner’s failure to disclose an out of state tax lien that had been resolved several years prior to applying for the policy.
The Florida legislature has taken action to further protect homeowners from these types of sharp practices. The Florida legislature passed a bill that provides a bill of rights for homeowner’s and that prohibits this type of unethical sandbagging of policyholders. SB 708 passed unanimously in the Senate and passed 115-0 in the House, so the proposed legislation will become effective July 1, 2014 if the governor signs the bill into law.
While insurance companies clearly have the right to request background information that might be contained in a credit report, criminal background check and similar information, Universal failed to investigate such information in applications for coverage until after the insured filed a claim following a fire, storm or other peril. By the time the claim was actually filed, many policyholders had faithfully been making premium payments for years with an understanding they had been issued homeowner insurance coverage. The insurance company only investigated the so-called discrepancies or omissions in the application after the insurer sought to have the insurance company cover a loss.
The new law would prevent this practice by forcing insurance companies to make coverage decisions and provide premium rates in a timely manner. If the legislation becomes effective, insurance carriers will have 90 days to investigate the information provided in an application before making a decision about coverage. Once this investigatory period has elapsed, the insurance company would not be permitted to cancel or terminate coverage based on credit information available in public records like credit reports or court documents.
Because insurance companies essentially provide no product or services to consumers in exchange for premiums until a claim is made, these types of practices are extremely unfair for consumers. The insurance company can essentially collect premium payments indefinitely even though the carrier will ultimately deny any claim under the policy based on the inadvertent non-disclosure of a debt on a credit report. Because this information is readily available to the insurance company prior to deciding whether to provide coverage and calculate an appropriate premium based on the level of risk, insurance companies that engage in this form of unethical practice essentially provide nothing for the premiums collected.
The proposed law will also require insurance companies to provide homeowners with a one-page bill of rights when the insured files a claim. This resource will provide policyholders with information about their right and responsibilities when filing a claim.
If you have questions about your homeowner insurance claim, experienced Florida insurance attorney J.P. Gonzalez-Sirgo can analyze your situation and advise you of your options. Mr. Gonzalez-Sirgo handles disputed claims in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.