Fla. CFO Seeks to Clarify Reported Confusion with Storm Claims, Outlines Options to Help Consumers

Florida’s Chief Financial Officer Tom Gallagher on Wednesday raised concerns with confusing policy language and recommended solutions for helping consumers navigate through their homeowners insurance policies and storm claims.

Gallagher also said he is turning over consumer complaints he has received on confusing policy language to the Office of Insurance Regulation for further review.

“Storm victims are dealing with a number of pressures – financial, family, work and more. My goal is to alleviate some of the pressure by helping storm victims recover the insurance money due them to pay for losses,” said Gallagher. “And to make sure there is no pattern of miscommunication to storm victims, I am turning over our consumer complaints to the Office of Insurance Regulation for further review.”

One such reported confusing situation deals with depreciation holdbacks.

Gallagher said that Florida homeowners insurance policies contain a provision that entitles the policyholder to the full replacement cost for their home and contents without any depreciation for materials used. But insurers can impose a holdback provision and initially pay a fractional or actual cash value amount, but they must explain the procedure for recovering the remainder of the costs of the loss.

Homeowners who have replacement cost coverage will get the amount of money it costs to complete their repairs or to replace destroyed contents – minus what is referred to as recoverable depreciation. If a homeowner did not refuse this coverage – in writing – when the policy was purchased, then the replacement cost coverage is automatically included.

Last week, Gallagher met with Milton and Denise Phillips at their home in Lakeland, which was devastated by two hurricanes. “I was able to explain the process the Phillips would have to go through to rebuild their home, because even after all these months they were still having trouble getting their claim finalized and their home rebuilt,” said Gallagher.

Gallagher said he is exploring solutions to discourage insurance companies from holding back too much money or for too long by requiring the insurer to pay interest on the holdback. Gallagher said he would also like to see insurers, every six months, re-contact policyholders entitled to recoverable depreciation but who have not applied for it.

Gallagher also pointed to a provision in Florida homeowners policies that requires policyholders to notify their insurers that all repairs and replacement of property be submitted and finalized within 180 days to qualify for payment. Unfortunately, some Floridians have reportedly received correspondence from their insurers that refers to this deadline and believe they must make all repairs and purchase new contents within this timeframe.

To make his point, Gallagher displayed correspondence from Robert Hoke, of Perdido Key, which showed a message from an adjuster saying Hoke had 180 days to purchase his lost contents if he wanted to receive recoverable depreciation. However, Hoke’s condominium probably won’t be rebuilt for two to three years.

“Because of the incredible widespread damage caused by last year’s storms and the amount of time it has taken to settle all claims we do not expect this deadline to be enforced,” said Gallagher. “But if someone is threatened with such a deadline, I want to hear about it.”

Gallagher reminded policyholders that they need to keep all receipts for any work done and for contents purchased to provide to their insurer for reimbursement. Also, he recommended consumers get more than one estimate for repairs and pick the lesser of the estimates to prevent conflicts over price gouging.

Policyholders may also have any estimate approved by the insurer in advance, which could be helpful if short-term financial assistance is needed to complete repairs or to replace contents.