Court Ruling: Citizens Wind Policies to Pay for Flooding

Circuit Court Judge Kevin Davey ruled in a class-action lawsuit in Tallahassee, Fla., that Citizens Property Insurance Corp., Florida’s insurer of last resort, must pay the full amount of damage homes were insured for, even if they were primarily damaged by flooding and not wind.

The decision supported contentions by homeowners that state law requires insurers to pay the full amount of a policy even if an uncovered catastrophe causes a portion of the damage.

“We will continue to assert that Citizens should not be paying for losses caused by flood,” Justin Glover, a Citizens spokesman told the Associated Press. He said Citizens will appeal the decision.

Hundreds of residents of the Florida Panhandle, whose homes were destroyed by 20-foot waves during Hurricane Ivan, could receive payments if the decision is upheld.

Citizens maintains it is legally prohibited from paying flood claims and believes the judge’s ruling essentially means it could have to pay for the full value of a house even if 99 percent of the damage is caused by flooding, Glover said.

“These people paid their premiums month after month, they deserve to get their policies paid so they can rebuild their homes and go on with their lives,” said Scott Maddox, one of the lawyers suing Citizens. Maddox is also a Democratic candidate for governor.

About 350 homeowners demanded Citizens make full payment on their policies. Others who may not have contested Citizens’ decision not to pay flood damage may do so now, Glover said.

The Legislature recently passed a bill to protect insurance companies from having to pay flood damage when policies only cover wind. The bill, however, isn’t retroactive, so it won’t affect this case.

Expansion planned

In a related announcement, Citizens plans to open a new claims processing center in Miami, where it has more than 25 percent of its policyholders. It plans to beef up its claims-handling facilities in Tallahassee and Jacksonville, and to open new claims centers in Central Florida and the Panhandle in 2006. The site for the Miami-Dade County office has not yet been chosen.

Citizens has also taken steps to manage its claims operations internally. Last year it relied solely on outside adjusters and contractors to handle claims and customers-it wasn’t prepared to deal with the more than 119,000 claims generated by 2004’s four storms.

“This new model for adjusting will allow us to better manage the claims process to make sure our policyholders receive the quick and complete service they deserve,” Ricker told the Miami Herald.

Citizens has about 50 percent of its exposure in the South Florida region, which includes the Keys, Broward and Palm Beach counties. The exposure includes individual homes and a large concentration of condominium buildings and commercial properties.

Citizens’ most crucial change involves an overhaul of adjuster management. Citizens previously relied on outside, contractual adjusters to handle all aspects of hurricane claims, including customer service. It will now directly manage both company employees and adjusting firms in the processing and payment of claims. It envisions two fully operational Catastrophe Centers in Jacksonville and Tallahassee will improve its service.

Topics Florida Legislation Claims Flood