60-Day Notice of Claim Form

It's that time in the Hurricane Ivan cycle when those who haven't yet achieved a satisfactory settlement with their state-regulated property insurance company are contemplating filing a lawsuit. More than four months have gone by since Hurricane Ivan devastated the Pensacola area, yet thousands of local homeowners still haven't had their claims properly adjusted.

Be aware that before filing a lawsuit, Florida Statute 624.155(3) requires that you file a 60-Day 'Civil Remedy Notice' on a form provided by the state's Office of Insurance Regulation. Directions as to how to fill out the form and the places to send it are on the final page of the form, which is formatted for Adobe Acrobat.

The required form can be downloaded by clicking directly on this url: DI4-363.

Or, copy-and-paste this url in your browser:
http://www.fldfs.com/Consumers/Forms/DI4-363.pdf

Tax Update

The Beach Tax Committee has posted an update on the tax lawsuit. The Committee hopes soon to post a Q & A on its web site and "a mailing to all parties to the suit."

Prowling Perdido

It was predictable. It was preventable. It happened anyway.

The first reports of burglars on area barrier islands surfaced in the Pensacola News Journal Saturday. Stolen items include "a sofa, a microwave oven, some hand towels and a few kitchen utensils."

Just the sort of thing a lot of people in Pensacola don't have anymore. Just the sort of stuff they want.

Don't mistake it: this is a problem created by your Escambia County Commissioners, as Linda L. wrote here a few days ago.

Sean Smith has a brief account reporting that Perdido Key residents are complaining of burglars.

Three residents from condos at Perdido Towers, Old River Landing and Rolling Surf on Thursday reported thefts of ... unlikely burglary items from hurricane-battered Perdido Key homes.

The three condo communities are on Perdido Key Drive, west of River Road, and remain without electricity. Residents believe they are more vulnerable to thieves because they lack basic utilities and cannot live in their homes.

"You look at these streets, and it is dark. How inviting can that be? Without protection, we are at the mercy of burglars," said Mary Alice Marston, Old River Landing condominium association vice president.

One man has been arrested. He was apprehended in a "pickup pulling a trailer." The county sheriff's response is to begin random "bike patrols" on Perdido Key and Pensacola Beach "as manpower allows."

Bike patrols? Aren't bike patrols used to bring law enforcement closer to the people who live in neighborhoods?

With 80% or more of area beach houses and condos standing dark and empty, that hardly seems like the police vehicle of choice. More appropriate to the circumstances might be something along these lines.

Parsing of the Peril

Today's Pensacola News Journal devotes its spare 'one-a-day editorial' to the bonehead move by Citizens Property Insurance to file a 'test' suit against a disabled war vet. The title is 'Insurance Company Lawsuit Unfairly Changes Playing Field'.

The editorial makes several of the same points we also mentioned the other day down thread. As the newspaper says --

'This litigation could take years. That creates an untenable situation for people already frustrated by delays... . * * * [I]f the law is to be changed, it should be done after all current claims are settled and it should include strong provisions guiding how the determination will be made on dividing responsibility for the damage.'

That last point about "dividing responsibility for the damage" is a good one, well informed by the reality of what's happening here on the ground in Pensacola. Virtually every homeowner with hurricane damage knows it, too.

Many insurance adjusters working the Panhandle, it seems, have been trying to attribute as much 'damage assessment' to flooding water as they can. This undoubtedly is because for most home owners in a flood plain, insurance policies covering surging water are less generous (other than, perhaps, when it comes to the deductible) than most other forms of property insurance. The National Flood Insurance Program arbitrarily imposes a fixed maximum on policy limits that bears little relation to actual market value or replacement costs of a damaged structure. Furthermore, payments for flood damage ultimately come straight out of the federal treasury instead of a private insurance company's reserves.

Consequently, all windstorm insurance companies have what might be called a personal interest in parsing the cause of storm damage to see that as much as possible is attributed to flooding water rather than high winds. As George Kehrer, executive director of Community Assisting Recovery told The Street.com just before the hurricane season began last summer:

insurance adjusters ... are likely to appear helpful. But don't confuse their interests with yours... . * * * "They're friendly, but they're not your friend," he says. "Their job is to save money for the company."

In fact, Pensacola could be the poster child for that aphorism. A month ago, we made national news again when USA Today reported:

A legal aid center set up in Pensacola after Hurricane Ivan hit Sept. 16 fielded more than 1,500 complaints during its first month. Among concerns: Homeowners... were told that their policies cover wind storms —- but now find that they won't pay for all damage because most of it was caused by flooding.

As many locals in the Pensacola area are learning, when peak hurricane forces of both wind and water rage together for more than 18 hours, arbitrarily parsing the cause of damage between two forces of nature becomes a highly subjective art. Not surprisingly, confusion over attributing that damage to wind or water ranked high in public concern throughout Florida , according to last fall's poll by Gannett Corporation's media outlets.

It ought to rank high with our state legislators, too. As everyone who has lived through one knows, by definition a hurricane involves both high wind and surging water. FEMA's own web site explains, "As a hurricane nears land, it can bring torrential rains, high winds, and storm surges."

Policies promoted, marketed, and sold as 'hurricane insurance' ought to cover all hurricane storm damage, whatever the immediate physical engine of destruction may have been. It makes no sense to micro-parse the peril of a hurricane by physical causes which are inherent in every named tropical storm and which so closely interact with each other. One might as well allow insurance companies to sell "fire policies" that don't cover damage from smoke or high heat.

Set Up To Fail

"Citizens Property Insurance, Florida's insurer of last resort."

How many times have you read that appellation attached to the name of the state-owned insurance company? In media accounts about Citizens, it's as common as mold. If I didn't know better, I'd think that was part of the company name. As in, "Citizens Property Insurance Of Last Resort, Inc."

Might as well add a logo: You deserve the worst because no one wants you.

Few news reporters (or insurance customers, for that matter) know the reality behind that too-easy characterization of Citizens. Yesterday, however, Melanie Payne of the News-Press in Southwest Florida gave rich and informative context to the story of the rate increase request expected from Citizens. Along the way, she tossed off a great line.

The line:

: "...many of Citizens 882,000 customers wonder why they are paying boutique prices while being treated like discount shoppers."

The context:

Citizens Property Insurance Corp., the state-run insurer of last resort, has applied for an increase that would raise rates for inland Lee County homeowners with Citizens wind insurance an average of 59.9 percent. The rates for some Florida customers will almost double.

Here's the zinger (emphasis added):

According to Citizens spokesman Justin Glover, the agency had no choice but to respond with rate increase requests once private insurers began to file theirs. By law, Citizens is required to charge the highest rates in any county, Glover said. So far, a dozen private insurance carriers have filed for rate increases with the Office of Insurance Regulation.
* * *
[T]he Citizens increase requests were a result of an order by the state to revise upward some of their prices, which were found to be below the rates of private insurers in certain counties.

Citizens is not supposed to compete with private carriers, instead offering insurance to those turned down by regular carriers.
* * *
But if Citizens doesn't need the money to pay claims, why raise the rates, asks Bill Newton, executive director of the Florida Consumer Action Network in Tampa.

"When Citizens is forced to make unnecessary rate increases it keeps prices high for everybody," Newton said.

If private companies were forced to compete with Citizens it might restrain companies like State Farm and Allstate from raising their rates, he said.

The state politics-oriented blog Florida News has been covering downstate privatization scandals. Citizens Property Insurance is the other side of the coin: A state-owned business set up to fail by the legislature.

Well, they're doing a great job of it. Also yesterday, the much-heralded Citizens 'report' about hurricane settlement practices was delivered to state CFO Tom Gallagher and his industry-dominated 'advisory' panel. Paige St. John of Florida Today has the account.

The plea to the charge of being really, really lousy at adjusting insurance claims? Guilty as charged.

Citizens reported --

it has closed 79 percent of all hurricane claims, though there were still 5,273 claims where the damaged property had yet to be inspected.

Citizens' closure rate doesn't include commercial property, such as condominiums. It also doesn't include closed claims that were reopened.

Office of Insurance records show that as of Dec. 30, Citizens had 28 percent of its hurricane claims open, the second-worst closure record among major insurers.

* * *
The system is still not working smoothly, task force members said.

Carol Everhart, representing the Professional Insurance Agents association, said she called the phone number publicized on Citizens' Web site. She waited on hold for 20 minutes only to be disconnected.

"It's an example of the frustration our clients are facing," Everhart said.

The sentence handed down by Mr. Gallagher? Two weeks probation:

Gallagher's Citizens review task force on Wednesday gave the company two weeks to draft a structure sufficient to handle the 1 million policies it manages. The plan is to include regional claims offices, an in-house system to track claims and a plan to work with the agents who sell Citizens policies.

Apparently, no one mentioned Citizens' other case-closing strategy of suing its policy holders and threatening the rest.

State Insurance Company Sues Disabled Hurricane Victim

One wonders if Jeb Bush, who's now winging it back to attend his brother's $40 million inauguration celebration, can find the time to do a little 'fact finding' about Florida storm victims of the state-controlled insurance company.

While Florida governor Jeb Bush was planning his whirlwind 3-day tour of South Asia to polish his political image and 'find facts' about tsunami damage anyone can see 24/7 on their television screen, back home the state-owned Citizens Property Insurance Co. -- over which you can be sure Governor Bush has ultimate authority -- was filing a lawsuit against a disabled policy holder who dared to make a claim for wind damage after his house was declared a total loss following Hurricane Ivan.

Citizens Property Insurance was created by the state of Florida, as its web site describes to "more efficiently and effectively [provide] insurance to, and [serve] the needs of, homeowners in high-risk areas and others who cannot find coverage in the open, private insurance market." Now, it says it will be sending hundreds of letters to other premium-paying customers who've made wind claims, telling them of the lawsuit and saying they'll hear from Citizens again if and when there is "a final determination from the courts regarding its obligations... ."

That reads, "Don't call us, we'll call you." As so many have said, dealing with Citizens Property Insurance Co. is 'worse than Hurricane Ivan.'

Amber Bolman of the Pensacola News Journal has the story:

The insurer of last resort for Florida home owners is suing an Escambia County couple, alleging the company should not be required to pay the full wind policy coverage on their destroyed Grande Lagoon home because most of the home's damage was caused by flooding.

In a case that could affect hundreds of local home owners, Citizens Property Insurance Corp. is asking the Circuit Court to nullify an earlier ruling that obligates insurance carriers to pay out full wind policy limits in cases where homes have been deemed total losses, even if only a portion of the damage was inflicted by wind.

Some attorneys are speculating the case could further delay insurance settlements for Panhandle families who have been waiting months for checks to begin rebuilding their homes.

"This thing could take two years to resolve," said plaintiff's attorney Bob Kerrigan. "And in the meantime, these people who have already had their homes destroyed are going to have to sit around and wait some more while the insurance companies try to get the laws changed to avoid paying."

Barbara and Ralph Perkins, whose home on Grande Lagoon Boulevard was devastated by Hurricane Ivan, were notified of the lawsuit last week after having demanded full payment on their $140,000 wind policy from Citizens.

To make matters worse, Bolman reports, in targeting the Perkins couple, Citizens is picking on a disabled Vietnam War veteran. Ralph Perkins not only needs a house, he needs it to be wheelchair-accessible.

What is going on here? In effect, Citizens simply doesn't like the rule of law followed in the Florida case of Mierzwa v. Florida Windstorm Underwriting Assn., 877 So.2d 774 (4th DCA 2004). . It's decided to challenge that existing rule of law by suing one of its customers in another court, sending intimidating letters to the others whose homes have been destroyed by a combination of wind and local ordinances that require the home to be torn down if it's more than 50% damaged, and then use the pending lawsuit as an excuse not to adjust windstorm claims for the next several years.

Ahhh! So that's what Citizens meant when it claimed last month that it would have all claims 'settled' by the end of 2004.

One wonders if Jeb Bush, who's now winging it back to attend his brother's $40 million inauguration celebration, can find the time to do a little 'fact finding' about Florida storm victims of the state-controlled insurance company. Given this latest move by Citizens, it's conceivable that all of South Asia will be rebuilt before hundreds of Florida families like the Perkins' have a home again.

Pensacola attorney Bob Kerrigan, the News Journal reports, is calling on the state's Department of Financial Services to require Citizens to make payments to affected home owners.

"The state-controlled insurance company is suing citizens of the state trying to overturn a law they don't like," Kerrigan said. "The law says home owners in this situation should have their full policy limits paid. It's very clear."

It's important to understand what's going on here. Florida's "value policy law" has been on the books for decades. It applies to all state-regulated property insurers, the state-owned Citizens Property Insurance Co. among them. All of those companies have been setting rates, and collecting premiums, and establishing a competitive market based on a variety of risk factors, the "value policy law" among them.

The "value policy law" simply says that if a structure is effectively totalled and a covered peril (for example, wind) contributed to the damage, the policy owner who has been paying premiums is entitled to the policy limits on which those premiums were based.

The Mierzwa case did not particularly break new ground when the court held that in determining whether a structure has been "totaled" the insurance company must take into account, as well, the impact of local and state building codes. An analogy might be drawn to auto collision policies: if the frame of your car is damaged irreparably, you rightly would expect to collect on the lost value of the total vehicle even if, in theory, the car could be reconstructed on top of the damaged frame. You collect the full "policy value" because you wouldn't be allowed by local law to register or drive the rebuilt vehicle in its unsafe condition.

In Mierzwa, as in the case of hundreds of Northwest Florida hurricane victims, existing local law specifies that if the structure is located in a flood plain and it suffers cumulative damage of more than 50%, then it must be torn down and re-built on pilings.

If Citizens doesn't like the "value policy law" it's free to attempt to convince the legislature to amend or repeal it. But as things stood when Citizens was collecting premiums from policy holders, that was the law. As things stood when Hurricane Ivan destroyed thousands of structures in flood zones around the state, that was the law. As things stand now with tens of thousands of hurricane claims still pending with Citizens, that is the law.

Instead of following the law, Citizens has chosen to sue some customers and send threatening letters to the rest, hoping the courts eventually will retroactively overturn the Mierzwa holding. Beyond the individual hardships this will cause, the tactic virtually guarantees that it will be many, many years before coastal communities throughout Northwest Florida can recover from Hurricane Ivan. Everything from the school property tax base to tourist sales tax revenues will be adversely affected.

The state's property insurer betrays its core mission and the very reasons it was created when it targets its own customers with lawsuits and intimidating settlement practices. Governor Bush and state CFO Tom Gallagher should put a stop to these abusive practices -- right now.

Discontinuance of Beach Checkpoints

While passing through the Pensacola Beach eastbound residential area checkpoint this past Friday, I commented to the attending deputy that we sure would be sorry to see them go after this weekend, when the checkpoints are to be discontinued. He fervently replied, "And we'll be sorry to go, so please contact the commissioners! Call them! Leave messages!"

I figured it was the least I could do. Even though I'm sure you join me in realizing it's highly unlikely to do much good, I sent the following e-mail to the Escambia County Commissioners today, and copied the Sheriff's Department. Please send one yourself, or call them, if you agree with me. I only hope we never have to say we told them so.

Here's the letter:

"Tonight's discontinuance of Sheriff's checkpoints at the entrances to the residential areas on Pensacola Beach is a very big mistake.

This is a huge, widely devastated area that cannot possibly be properly patrolled and controlled by deputies - not when the vast majority of the structures are unoccupied and thus remain an open invitation to vandalism and looting, and not while many of those structures have been officially deemed unsafe to enter without risk. The amount of time and personnel required to carefully patrol each block 24-7 when the area is opened to all comers will simply be prohibitive.

While it may be true that most residents' belongings have been removed, there are still plenty of owners and renters who for logistical or monetary reasons can't afford to do so, or who've been unable to find rental storage facilities in the area. (I don't have to tell you that storage capacity here is severely overtaxed.)

Some of the other factors inviting trouble:

There are thousands of out-of-town workers in the area, who may not feel a connection to and/or sympathy with Ivan victims, and the temptation to "salvage" personal property, fittings and fixtures from unguarded, especially damaged, houses will be high. Not everyone from everywhere is as upstanding as most of our local area citizens.

Further, since the beach has always been a playground for the young, there'll be the added danger of those kids with nothing better to do, and maybe with a few beers under their belts, deciding it's OK to wreak more havoc on structures already trashed by Ivan. It may prove virtually impossible to protect these young people from themselves. The dangers are many, and the potential liabilities huge.

Certainly not least is the difficulty of protecting homes under re-construction, many of which contain equipment and new materials stored on site or already installed. While this is a potential problem in any new housing project, here we have what amounts to an entire darkened, unguarded and somewhat remote town full of temptation for those who would as soon steal plywood as gold. Fledgling re-construction efforts on Pensacola Beach, as difficult as they presently are for all kinds of reasons, should be applauded, encouraged and protected, not left open to the frightening prospect of new harm.

Leaving a checkpoint deputy at each end of the beach 24-7 and reducing the number of patrolling deputies the beach normally enjoys would seem to be a much wiser move than closing the checkpoints and increasing patrols. In fact, isn't this a no-brainer, or am I missing something?

(I think what I'm missing is the political aspect: pressure from your county constituents spouting that baloney about our severely wounded island under protection of its owner now somehow resembling a private gated community. Look, that's just the usual old sordid sour grapes, and there's no call for it. Please don't be stupid enough to fall for such childishness.)

The very last thing Pensacola Beach needs now, while we're trying to rebuild the island and its tourism, is a lot of negative publicity about incidents of thievery, vandalism, and possibly even personal injury. Will you wait until that's already happened, or will you work with the Sheriff to find a way to maintain the security the non-core area still needs and deserves?"