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PROPERTY & CASUALTY INSURANCE & HOW IT AFFECTS CONSUMERS:
A POLICYHOLDER’S PERSPECTIVE
In 1973, Florida’s Deceptive and Unfair Trade Practices Act (FDUTPA) (F.S. §501.201
et seq.) was enacted to give consumers stronger legal protection against commercial wrongdoing.
It is patterned after the Federal Trade Commission Act (FTC act) (15 U.S.C. §§45 et seq.), which
provides a right of action only to the FTC. 1 While statutes regulating the insurance industry have
specific provisions defining unfair or deceptive acts or practices, including a list of unfair claim
settlement practices,2 FDUTPA specifically exempts any persons or activity regulated under laws
that are administered by the Department of Insurance. 3 As such, in Florida, the Department of
Financial Services (DFS) maintains the division of consumer services for resident policyholders
of property insurance throughout the State. While on one hand the website promotes consumer
awareness and provides helpful insight in guiding consumers for common issues, it is interesting
to note that the DFS is the registered agent for all insurers in the State of Florida. The DFS
handles serving consumer complaints filed by and through retained attorneys, on behalf of the
policyholder. Like the FDUTPA and FTC, the DFS enables consumers to recover actual
damages, permits recovery of reasonable attorneys’ fees and costs by the prevailing party, and
also provides for declaratory judgments and injunctive relief.4
Insurance contracts are designed to meet specific needs and thus, have many features not
found in other types of contracts. Since insurance policies are standard forms, it features
boilerplate language, which is similar across a wide variety of different types of insurance
1 For a general discussion ofthe background of FDUTPA as initially enacted, and its legislative history, see R.
Tennyson,The Deceptive and Unfair Trade Practices Act: A New Approach to Trade Regulation in Florida,2 Fla.
St. U. L. Rev. 223 (spring 1974). For a discussion of the various states’adoption of little FTC acts beginning in the
1960s, see Marshall v. Miller, 276 S.E.2d 397, 400 (N.C. 1981).
2 Fla. Stat. §626.9541(1)(i); see also Fla. Stat. §§636.059, 641.3903.
3 Fla. Stat. §501.212(4).
4 Fla. Stat. §627.428.

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policies. This boilerplate language leads to boilerplate results, leaving thousands, if not millions,
of consumers wrongfully denied or underpaid in the State of Florida. Unfairness in the property
and casualty insurance community has been an available, yet neglected and misunderstood, basis
for state, individual, and commercial litigation. Perhaps this is due to all the strict and confusing
legislative reform that changes year-to-year, but likely this is because policyholders simply feel
helpless against this billion-dollar industry. This article discusses the broad scope of the
amorphous “unfair acts and practices”5 within the property insurance community, including
appraisals, non-renewals, cancellations, preferred contractor endorsements, and the ever-
increasing insurance premiums that seem to ever-decrease the amount of coverage for these law
abiding policyholders.
The appraisal process has been misconstrued to be an “Alternative Dispute Resolution” in
the negotiations and settlements of property loss. While many policies contain "appraisal
clauses," most contain puzzling language and sometimes hidden "non-waiver" or "reservation of
rights" qualifiers that effectively give the insurance company the unilateral ability to disavow the
appraisal.6 What is the purpose of a policyholder engaging in a process, of which the holder is
led to believe, can avoid the hassles of litigation, when the end results in having to go to ligation?
The appraisal process puts the policyholder in binding positions to owe additional third parties
for their umpire services, and no guarantee of coverage after the process. “Policyholder’s should
not object to the general proposition that appraisal clauses are enforceable, and may, when
deployed fairly, reduce litigation. However, when appraisal provisions contain open-ended,
amorphous ''escape hatches" effectively giving the insurer the sole option to deny or reduce the
appraisal by proceeding to litigation, the promise to resolve the dispute by arbitration becomes
5 David J. Federbush, The Unexplored Territory of Unfairness in Florida's Deceptive and Unfair Trade Practices
Act, May, 1999 Volume LXXIII, No. 5, The Florida Bar Journal
6 State Farm Fire & Casualty Insurance Company v. Licea, 685 So.2d 1285 (1996)

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illusory, and the entire matter should be litigated. This is especially true for property damage
claims made under homeowner's policies, where ‘coverage’ and ‘policy’ defenses are bound up
in the determination of the amount of the loss.”7 Thus, reservation of coverage deprives the
appraisal award any binding effect (whether signed by two parties or not), subjecting the case to
litigation regardless.
The question then is why do the insurers have an appraisal provision to begin with? Is
this not just another delay tactic implemented to frustrate the insured? How can this be deemed a
good faith and timely negotiation of the claim when it seems to precisely fall subject to the
provisions set forth under Fla. Stat. 626.9541(i) ‘Unfair Claim Settlement Practices’? 8 Arguably,
these appraisal clauses, coupled with the other provisions of the policy, create an unfair and
deceptive act and practice within itself. This is just one example of a policy provision that affects
the outcome for a policyholder in a negative way. Insurers either acknowledge coverage (paying
pennies to the dollar of an estimate), or flat out deny it with the hopes that the policyholder
believes they are subject to the exclusion of the policy (requiring them to pay out of pocket).
These policyholders argue the aforementioned perfectly: “No public policy is served by
permitting - even encouraging - an insurer like State Farm to ‘hide’ its rights and sit on them,
while the homeowner has been lured into the appraisal process with the assurance that it will
settle the amount of loss. The public policies that discourage multiplicity of proceedings and
encourage efficient, alternative dispute resolution mechanisms are ill-served by having
appraisers set the amount of a loss, and then allowing the insurer the sole option to re-visit the
issue in a judicial proceeding. These public policies, and the law of mutuality of obligation,
7 State Farm Fire & Casualty Insurance Company v. Licea, 685 So.2d 1285 (1996)
8 Fla. Stat. 626. 4251(1)(i)(2) “A material misrepresentation made to an insured or any other person having an
interest in the proceeds payable under such contract or policy, for the purpose and with the intent of effecting
settlement of such claims, loss, or damage undersuch contract or policy on less favorable terms than those provided
in, and contemplated by, such contract or policy;”

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necessitate that all issues be resolved at one time in one place.”9 A policyholder would expect
this to be a winning argument to sway a reasonable and premium-paying Judge in their favor.
However, much to the policyholders’ detriment, the Third District Court of Appeal’s decision in
Licea was quashed, and insurers like State Farm have continued to be able to use the absence of
limiting language to their discretion. The result? A continuing unfair business practice to delay,
dispute or deny coverage for all property related claims.
Luckily, Fla. Statute 627.428 offers a prevailing policyholder statutory fees and costs for
pursuing a claim such as this.10 It is funny to reason that the sole purpose of having insurance is
to gain a sense of security in the event of an accident or catastrophe, and yet insurers make their
loyal policyholders fly through hoops in order to redeem indemnity. As such, policyholders
unaware of their rights (as consumers) are failing to retain proper counsel and failing to defend
themselves against the thriving insurance industry. Policyholders and their counsel need to be
more aggressive when defending against such insurers, make or change precedent law, and
represent a bigger voice to legislature when insurer lobbyists are trying to pass bills that provide
for less insurance coverage at higher premiums. This leads to the next issue of this article
relating to non-renewals and cancellations enforced by insurers.
Policyholders dealing with non-renewals, cancellations, and higher premiums are the
epitome of dealing with a “Catch 22,” or rather a requirement that cannot be met until a
prerequisite requirement is met. However, the prerequisite cannot be obtained until the original
9 State Farm Fire & Casualty Insurance Company v. Licea, 685 So.2d 1285 (1996).
10 627.428 Attorney’s fee. (1) Upon the rendition of a judgment or decree by any of the courts of this state against
an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract
executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the
appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum
as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had;
(2) As to suits based on claims arising under life insurance policies or annuity contracts, no such attorney’s fee shall
be allowed if such suit was commenced prior to expiration of 60 days after proof of the claim was duly filed with the
insurer; (3) When so awarded, compensation or fees of the attorney shall be included in the judgment or decree
rendered in the case.

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requirement is met; point made. There is a big difference between cancellation and non-renewal,
as broken down by Fla. Statute 627.4133, or is there? On one hand, insurance companies cannot
cancel a policy that has been in force for more than sixty, (60) days except: if you fail to pay the
premium; if you have committed fraud; and if you have made serious misrepresentations on your
application.11 Nonrenewal on the other hand, either a policyholder or the insurer can decide to
not renew when the policy expires. However, an insurer can also file for nonrenewal if they
allege fraud or misrepresentation. Difference much? The focus here will be when the insurer
notifies the policyholder they will not be renewing their policy for the next term, many times
right after the insured has obtained counsel for a disputed claim. Keep in mind that the insurer
has never rejected timely premium payments from the policyholder as they burden them with
these obstacles.
The best example of a nonrenewal letter is claiming the policyholder has failed to
maintain the roof, and if they do not replace it within thirty, (30) days of the notice, they will be
dropped. Likely guaranteed that the policyholders receiving these letters are the same ones who
filed a claim against their insurer, but got denied coverage. The average consumer does not have
readily available the amount of money necessary to replace a roof when it has suffered a sudden
and accidental loss, thus the reason homeowners pay insurance to begin with. So, if they file a
claim for a roof leak, not only will the insurer likely not acknowledge coverage by applying the
rubberstamped “wear and tear” exclusion, but also they put the policyholder at risk of being
dropped; and the reason they are getting dropped is because the insurer denied coverage to fix
the covered peril to begin with, hence, the Catch-22. To add insult to injury, if one’s insurance
company does not renew a policy, one is likely to be charged a higher premium at another
insurance company. This is fair? The problem is the vague language of the Statute, which lets the
11 Fla. Stat. 627.4133(e)(1).

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insurer get away with “justifying” the non-renewal. Thus, policyholders are hesitant to notify
their carriers of any claims, regardless of whether they are covered or not. They bear the risk of
being dropped because the only way to know if they are covered or not is to file a claim to begin
with. Subsequently, this is another notable “unfair” business tactic, to ensure that the insurance
industry holds on tight to the policyholders’ premiums each year, without having to dish out
indemnity costs back to the homeowner before they start a new year of coverage.
Take a look at Fla. Stat. 627.4133(2)(6): “A single claim on a property insurance policy
which is the result of water damage may not be used as the sole cause for cancellation or
nonrenewal unless the insurer can demonstrate that the insured has failed to take action
reasonably requested by the insurer to prevent a future similar occurrence of damage to the
insured property”.12 Conveniently, the statute allows the insurer to make a subjective decision on
whether reasonable action took place or not, for a single claim! Policyholders, on the other hand,
are likely stuck in this Catch-22 scenario that they cannot afford to make repairs, and cannot get
the insurer to claim liability for the damage. The best is when the insurer uses the statutory
excuse of the reported claims not being an “Act of God,” 13 and as such, subject to the
nonrenewal terms. Arguably, every pipe burst, water leak, fallen object, is an “Act of God,” and
at the least, every non-atheist policyholder could argue that nonrenewal for this reason is
inappropriate. It seems silly, but policyholders are faced with these issues everyday.
Policyholders pay insurance for protection, yet a helpless-panic is inevitable when their carrier
randomly notifies them they will no longer providing coverage to their home, right before
hurricane season.
12 Fla. Stat. 627.4133(2)(6), [emphasis added].
13 Fla. Stat 627.4133(e)(6): “Claims on property insurance policies that are the result of an act of God may not be
used as a cause for cancellation or nonrenewal, unless the insurer can demonstrate, by claims frequency or
otherwise, that the insured has failed to take action reasonably necessary as requested by the insurer to prevent
recurrence of damage to the insured property”.

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Plaintiffs’ attorneys need to take action and take the time to sit with their clients so that
when they are truly faced with mishandled claims and non-renewals, they can effectively prevail
in providing consumer protection for their clients. Let the jury, not the insurers, decide whether
the policyholder failed to take action and whether the insurer’s requests were reasonable.
The latest trend in insurance policies is enticing policyholders to add to their policy a
“preferred contractor” endorsement, usually for a discount on the premium. Music to the
policyholders’ ears, or is it? The carriers have a “list” of preferred vendors that they send out on
behalf of the insured to perform mitigation services. One, out of the laundry list of post loss
obligations for a policyholder is “to mitigate the damage after a loss.” By sending out a
restoration company it may seem “cost effective” to lower overhead, as compared to having to
pay adequately trained in-house claim adjusters or licensed independent adjusters to go out and
render aid and assistance to the policyholder. But, who are these “preferred contractors” that the
insurer is sending out to perform these services? Turns out, the insurers’ “preferred contractors”
are actually owned by the carrier themselves, but created under another identity, and its no
secret. Cost effective indeed, but what about quality?
Unfortunately, this is a novel issue that has not yet been aggressively addressed or
challenged. Various policyholders have been faced with this nightmare; restoration companies
sent out by the insurer, ruining their carpets, recommending repairing cabinets rather than
replacing them, and leaving furniture outside in the rain, allowing for vandalism. Are the
“preferred contractors” even licensed for this service at all? Or are they a guise of the insurance
company posed as a different corporate entity attempting to adjust the loss in favor of the carrier?
“Now there is nothing wrong with the insurance industry bringing out restoration firms who are
experienced and qualified at fire, water, restoration, etc. However, they should not be relied on to

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run the claim and attempt to settle the matter for an insurance company. They should be looked
on as a tool to help the insurer and the insured understand the scope and potential cost of a loss
and render emergency mitigation services. Of course these issues can be very subjective and
subject to negotiations and discussions for final settlement.”14 Policyholders again have been
misled to believe they are getting additional coverage through these endorsements but in the end,
the opposite prevails. So is there a breach of contract? On its face, no, the policyholder agreed to
the endorsement in consideration for something else. Is there liability of the insurer for the lack
of quality in the work performed on the property? Probably not, one of the basic exclusions
under a property & casualty policy is that they are not liable for faulty contracting by a third
party. Naturally then, the insurers are not willing to cover the additional losses resulting from the
poor work performed by their own “preferred contractors.” Just like the claim-hindering
appraisal process, sending out these remediation services does not guarantee the claim is covered
under the subject policy provisions. The policyholder is left owing these third party beneficiaries,
at the risk of getting a lien placed on the property. The insurer is invoking their “preferred
contractor” endorsement at the expense of the policyholder and it does not even guarantee
coverage. So how do the “preferred contractors” get paid? There is no reason to think that these
“preferred vendors” are doing the work for free. If they were, they would never continue to
perform these services for every claim assigned by the insurer. The fact of the matter is, they are
not getting their invoices satisfied out of the policyholders’ indemnity amount; if they do, the
invoices are minimal in proportion to the amount of coverage afforded under the policy, and the
quality of work will leave the policyholder in need of choosing their own contractor to fix the
mess they left behind.
14 See Charles R. Tutwiler, Insurance Companies Using Preferred Contractors To Settle Claims Not In
Policyholders Best Interest, December 13, 2014.

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In another article relating to insurance companies using the preferred contractors to settle
claims against the policyholder’s best interest, the author mentions the owner of insurance carrier
“Peoples Trust” business model is “not to pay out building-structure claims, instead, he wants
policyholders to be required to use his repair company to ‘fix’ the problem. Funny thing is, in the
mailers many of you have received from People’s Trust, the large, bright, and shiny paragraphs
never mention or even allude to the Preferred Contractor Endorsement Form, E023… you can
only see this if you read the fine print.” 15 Is this not a direct violation of Fla. Stat.
626.9541(1)(a) by misrepresenting the benefits and advantages of a policy? 16 It seems that way,
however, Plaintiff attorneys are too busy with the reoccurrence of wrongfully denied and
underpaid claims that insurer violations of these consumer statutory regulations are being
overlooked everyday.
The good news is there are still passionate attorneys representing policyholders, who take
the time to get the desired result for their client by aggressively challenging these unfair business
practices. In a 4th District Appeals Decision, People’s Trust Insurance Company v. Roddy,17 a
jury awarded $766,258.06 to Florida policyholder Raymond N. Roddy, who lost his home in a
house fire. Mr. Roddy prevailed again thereafter, when the Court found no error, ending People’s
Trust Insurance Company's appeal. The Court found harmless error at the trial level and People’s
Trust’s last delay tactic ended for one policyholder.
I, #832, attest this paper is solely and exclusively my work done solely and exclusively for this course.
15 Venison, Nicole, AnotherOutrageous Insurance Claim Denial by People’s Trust Part I, (2014).
16 Fla. Stat. 626. 9541(1)(a)(1) “Misrepresents the benefits, advantages, conditions, or terms of any insurance
policy”; See also Fla. Stat. 626.9541 (1)(b) False information and advertising generally. Knowingly making,
publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made,
published, disseminated, circulated, or placed before the public: 1) In a newspaper, magazine, or other publication;
2) In the form of a notice, circular, pamphlet, letter, or poster; 3) Over any radio or television station; or 4) In any
other way.
17 Peoples Trust Insurance Company v. Raymond N. Roddy, Fla. 4TH DCA (2013).