Who's to BLAME - Florida Home Insurance Crisis

Who's to BLAME - Florida Home Insurance Crisis

February 03, 2023

Who’s to BLAME for the rising costs of Florida Homeowners Insurance?

I’m tired of answering this question on the phone everyday and out and about, so here is the answer and shockingly enough it isn’t 100% the Insurance Company at fault?

If you don’t want to read the whole Blog post and just want the answer…Our Florida Legislators caused the Florida Home Insurance Crisis 

 And here is the long technical answer…

The Florida legislature took several actions that contributed to the home insurance crisis in the state, including:

  1. Limiting the ability of insurance companies to raise rates: Florida law caps the amount by which insurance companies can increase rates each year, which has made it difficult for them to keep pace with rising costs, such as those associated with natural disasters.
  2. Underfunding the Florida Hurricane Catastrophe Fund: This fund is designed to help insurance companies pay claims in the event of a major hurricane, but it was underfunded, leaving insurance companies with a significant financial burden.
  3. Failing to address a litigious environment: Florida has a high number of lawsuits related to insurance claims, which can drive up the cost of insurance and discourage companies from operating in the state.

Expanding on the Litigious Environment in Florida, which if you talk to any Florida Insurance Underwriter, will say it is the #1 cause of high insurance rates not only on Home Insurance, but also Auto Insurance.

One-Way Attorney Fee Statute

The law regarding "One-Way Attorney Fees" in Florida changed in 2004 with the passage of the "One-Way Attorney Fee Statute". This law provides that, in cases where the policyholder prevails, the insurance company is responsible for paying the policyholder's reasonable attorney fees. The law was enacted to help level the playing field between policyholders and insurance companies, and to ensure that policyholders have access to legal representation when they need it.

The change in the law has been credited with helping to reduce the number of frivolous lawsuits and to prevent insurance companies from taking advantage of policyholders who may not have the resources to fight back. At the same time, however, it has also been criticized for creating an environment that is too favorable to plaintiffs and attorneys. Contributing to the high cost of insurance in Florida.

Here are a few examples of real-world cases in Florida where the plaintiff's attorney received a significant portion of the settlement or judgment:

Santiago vs Florida Peninsula Insurance
Santiago sued Florida Peninsula and the jury awarded Santiago $41,000 over a plumbing leak. The attorney fees to try the case was a staggering $600,835 and the judge awarded a 2.0 multiplier awarding the attorney $1,201,670…almost 30 times more than the $41,000 jury verdict.

Pedrero vs Citizens Insurance
Pedrero settled a claim against Citizens Insurance for $35,000. A Florida judge awarded a 2.01 multiplier and awarded the attorney $702,972.15…more than 20 time more than the settlement amount of $35,000

Bush vs Homeowners Choice Insurance
A small case where Bush received $18,911.72 for roof damage. The judge awarded the attorney a 2.5 multiplier bringing the attorney fees to a staggering $756,877.50…40 times more than the verdict amount of $18,911.72

Lawyers are got Richer - Attorney Fee Multiplier

The attorney fee multiplier is a concept in Florida law that allows a court to increase the amount of attorney fees that an insurance company is required to pay to a policyholder in certain circumstances. This multiplier is designed to provide an incentive for insurance companies to settle disputes with policyholders before they reach the stage of a full-blown lawsuit.

The multiplier is applied to the hourly rate that is used to calculate attorney fees, and can increase the amount of attorney fees by two or three times, or more, depending on the circumstances of the case. The use of the multiplier is discretionary and is up to the judge's discretion.

The attorney fee multiplier has been controversial, with some arguing that it is necessary to ensure that policyholders receive fair compensation for the costs of litigation, while others argue that it contributes to the high cost of insurance in Florida and creates an environment that is too favorable to plaintiffs. Despite this, the multiplier remains a part of Florida law and continues to be used in some cases to increase the amount of attorney fees that insurance companies are required to pay to policyholders.