Last month, the Florida Senate Appropriations Committee unanimously passed Senate Bill 708. If the bill becomes law, portion of the language would curb Universal House Insurance coverage Company, and all insurance businesses in the state, from alleging specified application misrepresentations.
At present, Florida residential home insurance firms have 90 days to perform underwriting on an insurance risk – the particular dwelling and insured it is giving insurance coverage for – but what happens during the 90 day time period looks to fluctuate tremendously dependent on the insurance coverage firm.
As a way of background, the 90 day underwriting period is a time for the insurance company to genuinely appear at the house and evaluate regardless of whether insuring that residence is a gamble it wants to consider. Normally an underwriter operating for an insurance coverage company will use specialized application to calculate risk, analyze and fee insurance coverage applications, advise approval or denial, and set the premium accordingly. Insurance underwriters set the criteria to screen applicants, and then either approve or refute the ultimate choices. Automated computer software techniques are often employed.
The present language in this bill relating to application problems begins on line 134:
For residential residence insurance coverage, if a policy or contract has been in impact for far more than 90 days, a claim filed by the insured can not be denied based on credit information available in public record.
Universal House Insurance coverage Company’s application contains the following background queries:
As you can see from this sample redacted application, the X’s marked in the boxes are not handwritten but are laptop generated. The candidates do not fill this policy out online, so it is both Universal or the insurance coverage agent that fills in the X’s, or they are pre-filled on the form. Since of the way applications are filled out and the locations of the signatures on these varieties, I am a firm believer that the applicants/Florida home owners are not usually asked these concerns just before insurance coverage is quoted and bound.
As you can see from the application, Universal desires to know about bankruptcies, liens, judgments, repossessions, felony convictions, suspended drivers licenses, prior lawsuits against an car insurance coverage or a property owners insurance coverage organization, DUI arrests, assault, battery, disorderly carry out arrests, and what sorts of canines possible insureds have on the house.
I will allow you in on a tiny insider information…Universal is asking these questions due to the fact it does not want to insure you if you response “yes” to any of these background inquiries (besides the question about dogs then the response is: it depends).
Because Universal apparently bases its acceptance of your house for insurance on how you response these background inquiries, the agent must invest additional time going over these important queries, Floridians must tell the reality, and Universal ought to do an underwriting workup on these questions within the very first 90 days. But if Universal did this…it wouldn’t make as much funds in premium dollars.
These days we can Google online court information and use Facebook or other social media to receive a lot of info about each home and people with just a couple of important strokes. Not prolonged ago this study could have necessary a lot of time and even travel to get, but it is now obtainable on your intelligent cellphone. Think about this in the context of the 2nd biggest residential house insurer in Florida, with all sorts of access to records, databases, apps, and connections with other insurance coverage organizations at the touch of a button. However, for some reason, it seems Universal does not search into the background of its candidates turned insureds or check out to verify information until finally a claim is known as in and funds may really have to be paid out alternatively of collected.
As soon as a house owner can make a claim, the very first point that the adjusters appear to be skilled to do is inquire the panic stricken home owners these specific background inquiries for the duration of a recorded statement. Universal frequently finds some kind of discrepancy and then alleges an application misrepresentation. Universal has been popped for this post-claim underwriting, the practice of hunting for a reason not to insure the home after the claim. In many of the files we have reviewed, Universal does its assessment of the applicants from numerous public sources or easily attainable insurance coverage records after the reduction and then uses this data as a basis to deny the claim. The approach of reviewing an application submitted by a policyholder is underwriting, but this must be carried out inside of 90 days of binding the policy.
Numerous policyholders that have shared their applications and denial letters with Merlin Law Group show this trend. Universal sends a denial letter to the insureds and includes some document that it has found showing the homeowner did have 1 of the situations listed in the background inquiries at the time of the reduction (e.g., a bankruptcy or lien, and so on.). Universal utilizes this as the explanation not to spend the otherwise covered claim, and alleges that the insured lied on the application. Often the denial letter consists of the supposed lie, but other letters do not. Universal claims that if the insured had not produced this alleged misrepresentation, it would have never issued insurance coverage, and then the policy premium is refunded back to the insured. The documents that are frequently presented with the denial letters are very easily available information, court filings, or other documents that have been accessible on the web for any individual to see at the time the insurance coverage was bought. Universal’s representatives discovered this information correct away right after the claim was denied, so it is not as if this was tough info to uncover. Or perhaps, Universal had this info all along and was just holding it in its file for future use.
Some of our market readers may possibly feel it is a problem that a homeowner failed to disclose one thing as essential as a lien or a judgment. The flip-side argument is if a lien or a judgment is so critical, the carrier must check out the data and make certain ahead of the 90 days is more than. The filing of a lien or a judgment does not constantly indicate a policyholder had satisfactory discover, understood what the document was legally classified as, or may possibly be unaware of anything filed by a co-applicant.
But it Will get Worse
What may be most troubling is, in spite of what 1 could think is crucial to an insurance coverage firm, (open debts) Universal has voided policies when the candidates have been found to have pleased liens and judgments in their background. The way the queries are written is really troubling due to the fact its not clear that Universal will count a content liens towards you. Think about this scenario: if I spend a contractor for work on my home and the contractor fails to pay out a subcontractor, the subcontractor might file a lien towards me, the house owner. The scenario gets worked out and ultimately the subcontractor will get paid and withdraws the lien. I never ever failed to reside up to my contractual obligations, I really don’;t pay for the operate twice, and I am in very good financial standing.
Many years later on, when trying to locate a organization in addition to Citizens to insure my property, I look at the question on the insurance application that asks,
Has any potential insured been topic to any lien in the previous 60 months?
I reply “No” – I was not subject to a lien and it is withdrawn or satisfied now.
But Universal doesn’t agree and has denied claims for happy liens. And don’;t forget, this is all public record Universal could have looked at and mentioned with its applicant if it had an problem with the lien. A proper insurance business would have sorted this out in the course of the 1st 90 days.
In May possibly 2013, Universal Home & Casualty was fined one.26 million dollars right after an extended marketplace review identified new and repeated statutory insurance coverage violations of this nature. Despite the fact that Universal initially challenged the fine, a consent buy was signed last week and Universal paid this slap on the wrist.
In prior posts I have spotlighted Universal Property and Casualty for this practice:
Universal is not the only insurance firm that has raised public data or insurance coverage sector data as a basis for not having to pay a declare. Thankfully, the Senate has recognized this negative act but the bill wants to be passed in buy for this chapter of “illusion of insurance coverage coverage till you truly require it” to shut. If you have received a denial of your declare for an application issue, please speak to skilled coverage counsel.