Some insurers add strings to settlement checks
Some Florida homeowners are discovering their insurance companies are employing an interesting strategy to avoid future claims costs.
Settlement checks sent by at least three companies include language stating that accepting the check releases the companies from further obligations connected to the claim.
Plaintiffs attorneys say they have major problems with this strategy: It tries to intimidate policyholders into not seeking payment for additional costs that come up during repairs and is likely unenforceable.
Trial attorney Joe Ligman pointed to a section of Florida insurance law stating an insurer, after paying “actual cash value” for an insured loss minus any applicable deductible, “shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred.”
But that’s not what notices from two of Florida’s largest insurers say.
On the back side of checks sent to homeowners, Universal Property & Casualty includes the statement that an endorsement by the payee “constitutes receipt and release in full settlement for the claim or item mentioned in the draft.”
Universal P&C is the state’s largest property insurer, with 612,227 policies statewide as of Sept. 30, according to state records.
Along with a check sent to at least one of its homeowners, People’s Trust Insurance sent a letter stating that “your endorsement of the indemnity check constitutes a full accord and satisfaction of a disputed loss.”
And a third company, Gulfstream Property and Casualty Insurance Co., enclosed with checks to at least two victims of Hurricane Irma a “release of property damage” that “does hereby … release, acquit and forever discharge” the company and its officials “from any and all claims, actions, causes of actions, demands, rights, damages, costs, loss of service, expenses and compensation whatsoever” stemming from the hurricane.
By contrast, state-run Citizens Property Insurance Corp. acknowledged in December that rising labor and materials costs triggered by Hurricane Irma would likely result in higher repair costs than initially estimated.
“As they go through the claims and repairs process, things will come up that may require us to readdress [and reopen] the claim,” Citizens spokesman Michael Peltier said Wednesday.
Locke Burt, chairman and president of Ormond Beach-based Security First Insurance, said his firm does not send release language with its claims checks “because we agree with the trial lawyer. It wouldn’t stand up in court.” Plus, he said, “We wouldn’t treat people that way.”
The state law requiring insurers to pay any remaining amounts for additional work does not apply to People’s Trust, which has 129,626 policies statewide and operates a unique business model known as “managed repair,” countered Amy Rosen, the company’s chief marketing officer.
Travis Miller, spokesman for Universal Property & Casualty, said other statements with the check will specify that the release pertains to a portion of coverage the check is for, such as additional living expenses, and “does not affect other payments such as replacement costs or other portions of the same claim [or any other claim.]”