Homeowners generally maintain a homeowner’s insurance policy. As with all policies, you only get what you bargain for, and it is important to read and understand the coverage rights and exclusions in any policy. Florida courts have recognized a cause of action against Insurers based on the Insurer’s “bad faith”. Generally bad faith can be defined as “An Insurer not attempting in good faith to settle claims, when, under all circumstances it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests.” §624.155, Florida Statutes. Florida Statutes provides for a review protocol for Insurance claims with certain statutory presumptions and remedies against Insurers. Can there be recovery for attorney fees and costs against an Insurer in the absence of the Insurer’s bad faith? In September 2016, the Florida Supreme Court decided that issue.
In Johnson v. Omega Insurance Co, a residence was severely damaged (over $200,000) due to a sinkhole. The homeowner had purchased a sinkhole rider to her homeowner’s policy but the Insurer’s initial investigative report concluded that the damage did not result from a sinkhole, contrary to the findings of the Insured’s expert report. The conclusions in the Insurer’s expert report were challenged as being deficient because the Insurer’s expert failed to perform a particle size analysis. The homeowner filed suit and after an extended period, the Insurer retained another expert to perform additional testing and evaluation, who arrived at the conclusion that there was sinkhole activity on the property. The Insurer then paid for the repairs as contemplated by the policy, but the issue of the attorney fees and costs incurred by the homeowner remained at issue.
The Florida Supreme Court held that the initial presumption of correctness does not extend to the litigation context and that an Insured recoved the fees and costs incurred as a result of an “incorrect denial” by the Insurer. Being that the Insurer paid the Insured for the costs of repair; the Supreme Court treated that action by the Insurer as a confession of judgment that warranted the award of fees and costs. Ms. Johnson recovered her fees and costs. The Supreme Court reiterated that Ch. 627, Florida Statutes is meant to” provide an adequate means to afford a level process to make already financially burdened insured whole again and to discourage insurance companies from withholding benefits on valid claims”.
Anthony (Tony) Zebouni