Judge Rules for Homeowners

It's far too early to celebrate. The losing defendant promises to drag things out another year or two by appealing to higher courts.

Still, in a closely-watched class action lawsuit against Citizens Property Insurance, a Leon County circuit court judge ruled yesterday that the state insurance company is bound by Florida's valued-policy law as it was when Hurricane Ivan struck Northwest Florida. Paige St. John has the report in today's News-Press . And, she puts the story in context: A "116-year old law".... that is "clear"... which was designed to free homeowners of the need to "haggle" with multiple insurance companies... is being flouted in "hundreds" of Panhandle cases... by the state-owned insurance company.

Here's the well-crafted opening:

Florida hurricane victims Thursday won the first round of their class action lawsuit, with a Leon County judge agreeing they can collect policy limits on windstorm insurance even if flood caused part of the damage.

Circuit Court Judge Kevin Davey's decision against Citizens Property Insurance sets the stage for round two before Florida's First District Court of Appeals and eventual resolution by the state Supreme Court.

It directly affects 350 Citizens policyholders with more than $58 million in denied claims, but could decide hundreds more of unsettled hurricane claims in the Panhandle and cost storm-battered insurance companies millions of dollars more.

"This is the reason you still see the blue tarps on all the roofs," said plaintiff's lawyer Scott Maddox, former state Democratic chairman and a candidate for the 2006 governor's race.

At issue is how broadly to apply the state's 116-year-old valued policy law, which requires insurers to pay policy limits for total losses rather than haggle over damages.

Agreeing with a South Florida appeals panel, Davey said the state law is clear and makes no exception when an uncovered peril, such as flood, contributes to the loss.

Predictably, a lawyer for Citizens immediately promised to appeal the ruling. By that very act alone, of course, Citizens undermines one of the key purposes behind the valued policy law and prolongs the recovery period for coastal communities hit by Hurricane Ivan, including Pensacola Beach.

Apparently, one of the arguments advanced by Citizens before Judge Davey was that the company "didn't consider the impact Florida's valued policy law would have on hurricane claims when they set premiums." It's an absurd argument, made worse by the fact, as other state courts have ruled, that if multiple perils contributed to the loss, after paying policy limits the wind insurer still has the right to seek "contribution" from any other companies that insured against perils contributing to the loss.

In other words, the real issue here is who has the burden of sorting out responsibility among multiple insurance carriers who want to duck their duty -- the companies themselves or the ruined home owner? Judge Davey, by enforcing the venerable valued policy law, in effect says the insurance company should pay the homeowner for the policy limits he bought. Then it can go "haggle" with the other insurers.

Insurance companies love to sue each other. They do it all the time. Heck, they're good at it.

To its shame, the 2005 Florida state legislature changed the valued policy law as it will apply to future claims. Next time a Big One hits, be sure to stuff a lawyer in your evacuation kit along with batteries, water bottles, and the family photos.