Florida’s governor awarded People’s Trust Insurance Company an award not so long ago for the insurance carrier’s innovative business design. Less than a year after receiving this award, People’s Trust decided that their groundbreaking business plan made it necessary to dump thousands of policyholders immediately prior to the start of hurricane season. After widespread disappointment and criticism involving Florida’s homeowner’s insurance carrier of last resort, Citizens Property Insurance Corporation, many Florida homeowners had high hopes that People’s Trust could provide a viable homeowners insurance solution for Florida property owners. Unfortunately, the decision by People’s Trust to drop coverage for thousands of customers means that property owners were left unprotected during hurricane season.
While the business design of People’s Trust was indeed innovative and enticing, something has been lost in translation from the concept to implementation of the company’s vision. The general idea was that the insurer would use a construction company that the insurer was affiliated with to make repairs rather than make monetary payments. Despite the fact that this is an interesting concept, homeowners have been frustrated by failure to complete the work and poor quality craftsmanship. Insult was added to injury when the insurer began canceling many policies for homes located primarily in Broward County, Palm Beach County and Miami-Dade County. The decision to shift the geographic focus where policies would be provided seems to have been spurred by the death of the company’s founder Michael Gold in January 2014
The decision to cancel five percent of policies in the affected counties placed homeowners in a terrible position immediately prior to hurricane season. The Palm Beach Post reported that many of the homeowners who were canceled had purchased their coverage less than ninety days prior to cancellation. The Office of Insurance Regulation does permit cancellation of policies within ninety days of issuance based on underwriting issues. However, People’s Trust reportedly has failed to indicate the specific reason for the cancellations as required by Florida law. Florida insurance law does not clarify what constitutes a “specific” reason. Explanations that have been provided include home location, home age, and other factors.
Given the South Florida counties where the policyholders were dropped, it may be that a reassessment of risks persuaded the insurer to avoid many homes located in high risk hurricane areas. The insurer left policyholders in the position of purchasing homeowners insurance when coverage would be at a premium or face the risk of potential hurricane loss. The insurance company essentially indicated that it reevaluated its exposure and concluded that it needed to cancel a significant number of policies to balance its risk portfolio.
While this type of conduct by insurance companies can work enormous hardships for policyholders, improper cancellations, unjustified denial of claims and unexplained delays are common tactics used by insurance companies to increase profits. While such conduct can expose an insurer to insurance bad faith claims, the insurer knows that a significant number of policyholders will simply give up, so it may be worth paying the claims of aggrieved policyholders who file bad faith lawsuits and win in court.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].