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Note to Citizens: If you deny our claims, we will sue p2

Tue Apr 8th, 2014 on     Insurance Claims,    

We are still talking about litigation costs at Citizens Property Insurance Corp. The state-run insurance company is paying more than $2 million every month to defend itself in policyholder lawsuits, according to research conducted by a state legislator. The lawsuits are over claim denials, and critics are wondering why Citizens is choosing to litigate when paying the claims could cost less.

Citizens, however, defends its strategy. In fact, the insurer has a plan to ramp up its efforts to prevail in claims disputes.

First, the company is formally adopting a “get-tough” strategy to deny claims and to delay claim payments long enough that policyholders are forced to settle. Citizens has retained a new law firm to “coordinate” the effort, which will cost about $6.5 million over the next five years.

The push to settle also extends to policyholder lawsuits. And, Citizens hopes to avoid lawsuits over sinkhole claims by vetting contractors to do the stabilization work on the home. The insurer would then send a list of “approved” contractors to the policyholder who would be free to choose one. Should the policyholder fail to decide within 30 days, Citizens will choose for him.

Critics are concerned that Citizens will only approve contractors that agree to use the “grout in the ground” repair method that the insurer favors. The method is an alternative to installing steel beams to underpin the home, according to the Miami Herald. The bill states that “Citizens shall select the contractor based on quality, cost-effectiveness, and other criteria,” language that some say gives the insurance company too much control over the policyholder’s home.

Citizens was lobbying for a provision in another bill that would have given the insurer more control over emergency mitigation work. A committee amendment struck this section, but it’s interesting to note that the company was hoping to curtail policyholder’s assignment of rights to contractors.

We will explain assignment and a couple of other developments with Citizens in our next post.

Source: Miami Herald, “Citizens legal costs continue to climb,” Mary Ellen Klas, March 17, 2014

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