Why Citizens Aggressive Pattern of Denying Claims Is Making Your Insurance Premiums Rise

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

If you are one of the unfortunate individuals forced to seek insurance coverage from Florida’s insurer of last resort, Citizens Property Insurance Corporation, you may have noticed an ongoing wave of premium increases.  While the insurance industry and tort reform advocates often are anxious to attribute rising insurance premiums to people being overly litigious, Citizens premium increases demonstrate that higher premiums can result from an insurance company’s practice of frivolously denying insurance claims. 

Citizens practice of denying claims and refusing to utilize the appraisal process has caused Citizens’ liability for the attorney fees of policyholder to rise along with its own litigation costs.  A case reported by the Miami Herald provides a telling example.  A homeowner’s property was badly damaged when someone broke into the home and attempted to steal the refrigerator by ripping out the waterline that connected the appliance to the wall.  The insured submitted a claim for $5,000 for water damage to the floor of the home.  Citizens rejected the claim arguing that the damage was the result of “neglect” of the property.  The property owner racked up $20,000 in attorney fees while Citizens was believed to have been billed $35,000 in attorney fees all prior to trial.  When Citizens loses a case like this, the Florida insurer of last resort not only incurs its own legal fees but must pay the attorney fees of its insured.

According to the Miami Herald, Citizens spent over $16 million paying the attorney fees of policyholders who successfully challenged Citizens in court between January 2011 and June 2013.  Citizens is paying approximately $2 million per month to attorneys of policyholders battling to get Citizens to settle their claim.  The data regarding Citizens expenditures on attorney fees was assembled based on a request by Rep. Frank Artiles, R-Miami, who is an appraiser and harsh critic of Citizens handling of claims by its policyholders.  The data also suggests that Citizens has paid a comparable amount for its own attorney fees.

Some are suggesting that Citizens policy of aggressively rejecting claims and tenaciously litigating insurance disputes against policyholders calls into questions continued requests for premium increases to cover avoidable attorney fees and litigation costs.  Critics of Citizens contend that the insurer should pay more claims to avoid the costs of extensive costly litigation of claims.  This argument is particularly compelling given the dollar value in attorney fees being paid to attorneys of policyholders who win in litigation against Citizens.

According to the CEO of Citizens, 87 percent of new litigation has originated in Palm Beach, Miami-Dade and Broward counties.  Further, 56 percent of these claims involved disputed water damage because Citizens covers only sudden water damage rather than damage from leaks that occur over a longer time period.  Another Citizens’ representative attributes part of the rise in attorney fees to an increased number of sinkhole claims. 

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].

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