Wind Insurance Claim, Hurricane Ivan, Home Destroyed: Insurance Coverage Issues.

   In 2004, Hurricane Ivan destroyed Mr. and Mrs. Hamilton's mobile home in Milton, Florida.  The Hamiltons made a Flood Insurance Claim on their Flood Insurance Policy, which was paid on the basis of a covered "flood loss".  Mr. Hamilton returned a sworn Proof of Loss to the Hamiltons' Flood Insurance Company that "he was claiming under the policy for the full value of the home and its contents, based on the 'flood loss' of September 2004."  Citizens Property Insurance Corp. v. Hamilton, Download Citizens Property Insurance Corp. v. Hamilton (Fla. 1st DCA Case No. 1D09.4128, Opinion Filed July 7, 2010) also published as 2010 WL 2671808 *1 (Fla. 1st DCA July 7, 2010)(Westlaw subscription required to access Westlaw; STATED NOT RELEASED FOR PUBLICATION IN PERMANENT LAW REPORTS AND SUBJECT TO REVISION OR WITHDRAWAL).  The Flood Insurance Claim was paid for the mobile home.  (The Hamiltons sustained losses to other structures which are not the subject of this post, although they were involved in other parts of the decision than those commented on here.)

   The Hamiltons thereafter filed a Wind Insurance Claim.  A flood of Insurance Coverage Issues ensued.  Among them, the Florida Appellate Court first dealt with Citizens' argument that it should have been allowed to put on evidence of the amount of the Flood Insurance payment.  (The Trial Court permitted Citizens to put on evidence that there was Flood Coverage, that there was Flood Damage, and that the Hamiltons made a Flood Loss Claim on their Flood Insurance Policy, "except as to dollar amount."  Hamilton, 2010 WL 2671808 at *3.)   Citizens was thus arguing that it should have been allowed to put on evidence of the amount of the Flood Insurance Claim despite the Collateral Source Rule.

   "As applied, the common law collateral source rule militates against evidence of the dollar amount of flood insurance payments, disbursed by an entity wholly independent of appellant, under a plainly distinct contractual obligation, and paid for entirely by premiums remitted by the Hamiltons, Accordingly, we find no abuse of discretion in the ruling on this matter."  Id. at *4.  [Emphasis added.]  The Appellate Court pointed out that with respect to this 2004 loss, "under the statute in effect at the time of the loss, the common law collateral source rule had not been legislatively altered.  See § 627.702(1), Fla. Stat. (2004)."  Id.  Section 627.702(1) has since been legislatively altered:  See Fla. Stat. § 627.702(1) (2009).

  Another Insurance Coverage Issue of interest in this case involves determining an "actual total loss" vs. a "constructive total loss".  "A building is considered an actual total loss, under the identity test, if it 'has lost its identity and specific character as a building, and becomes so far disintegrated, it cannot be possibly designated as a building, although some part of it may remain standing.  [Citation omitted.]  '[A] building is considered a constructive total loss when the building, although still standing, is damaged to the extent that ordinances or regulations in effect prohibit the building's repair, such that the building has to be demolished.'"  Id. at *5.  [Emphasis added.]  In this particular case, the Appellate Court held that the Trial Court's ruling on "the constructive total loss instruction" was not error and, even if it was error, Citizens was not prejudiced by it here.

   A third and final Insurance Coverage Issue of interest involves the Appellate Court's rejection at common law of a doctrine legislatively enacted, at least in part, into the relevant Statute:  the total loss recovery rule.  "The total loss recovery rule is a theory of damages based on indemnity principles, limiting an insured's recovery as between two or more insurers to the pre-loss value of the subject structure."  Id. at *7.  The Florida Appellate Court pointed out in its Hamilton decision that Florida Courts had rejected this rule before, and it rejected it at common law again, in this case.  In an echo of its ruling on the Collateral Source Rule, the First District held in this case:  "Accordingly, where the covered peril causes a total loss, the insurer has no equitable plea to reap a windfall from, in effect, a total set-off for unrelated insurance payments."  Id. at *8.

   The Florida Legislature's subsequent limited enactment of "the total loss recovery rule" did not affect the outcome in the Hamilton case:  "That the Legislature in 2005 amended the VPL [Florida's Valued Policy Law] to incorporate the spirit of the total loss recovery rule further supports our conclusion that this doctrine was not previously part of our canon of common law.  See § 627.702(1)(b),  Fla. Stat. (2005)....  In light of these decisions and the subsequent amendment to the VPL, we find no error in the court's refusal to apply the total loss recovery rule."  Id.   Here is a link to the current version of the Statute cited by the Hamilton Court.

   In many respects, losses incurred from Hurricanes in 2004 -- which included Hurricanes Charley, Frances and Jeanne, in addition to Ivan -- swept legislation into place in 2005 which had not previously existed in Florida.  The outcomes of decided cases may be different since then if the statutory changes apply to the given loss.

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Comments

[Building Site Injury]

According to statistics released by the Health and Safety Authority for 2009, more than 10% of all workplace related accidents happen on a building site. That may not seem a particularly astonishing figure, considering it was closer to 20% at the height of the construction boom a few years ago. it would appear that little progress has been made in preventing construction workers from suffering a building site injury.

[Tamper Proof Tape]

Interesting - I was not aware of the difference between constructive and actual total losses. This is what my friend must have been caught up on, it sounds like he attemtped to claim for the wrong damages. Surely this information is quite widely available so I now don't have as much sympathy with the guy!