Ruling Limits Wind-Policy Liability

TALLAHASSEE - Insurance companies can be required to pay only for actual damage and just that resulting from covered perils such as wind storms or fires - not other causes - the Florida Supreme Court said Thursday in two rulings affecting homeowner policies.

The opinions rejected prior appellate court decisions that let hurricane victims whose homes were a total loss collect up to their windstorm policy limits even though flooding was at least partly to blame.

One ruling could affect an undetermined number of people who lost homes to hurricanes in 2004. Nearly all are victims of Hurricane Ivan and did not have federal flood insurance or their damage exceeded flood policy limits.

Most are customers of the state-created Citizens Property Insurance Corp., which stands to save nearly $150 million as a result of the ruling, said Citizens spokesman Rocky Scott. Citizens general counsel Perry Cone said the decision affects about 200 lawsuits pending against the company including class actions with multiple plaintiffs.

The Legislature in 2005, though, changed state law to clarify that wind policies provide coverage only for wind damage - not flooding.

"The Legislature only fixed something the courts should have gotten right in the first place," said William Stander, a spokesman for the Property Casualty Association of America.

The Supreme Court's unanimous decision in the case of Eugene and Debra Cox, a Pensacola area couple who lost their home to Ivan, adopts limitations that are in the new law for damage that occurred before it was passed.

The high court's second decision applies the same criteria to supplemental coverage for replacement or repair costs that go beyond policy limits to meet requirements in new building codes or other laws.

That ruling came in the case of Juan and Jacqueline Ceballo, whose Maimi-Dade County home was destroyed by fire in 2004. They sought full policy limits for supplemental coverage from Citizens regardless of how much expense they actually had.

The decision in the Coxes' case doesn't mean an end to litigation for them and other hurricane victims who say insurance companies are trying to avoid paying legitimate claims by attributing too much damage to flooding and not enough to wind.

The Coxes' lawyer, Louis K. Rosenbloum, said they now will challenge an offer from Florida Farm Bureau Casualty Insurance Co. to pay only $11,583 in wind damage under a $65,000 policy.

"That's just Farm Bureau's opinion of the wind damages," Rosenbloum said.

Similar wind-water insurance disputes have come up in other states, but Rosenbloum said no comparisons can be made because laws differ from one state to another.

A trial judge awarded the Coxes the policy limit based on a 2004 appellate interpretation of Florida's 1899 Valued Policy Law. The 4th District Court of Appeal ruled in favor of Zennon Mierzwa, who lost his Fort Lauderdale home in 1999 to Hurricane Irene.

The appellate judges ordered the Florida Windstorm Underwriting Association, predecessor of Citizens, to pay full wind policy limits regardless of cause because the home was a total loss.

The Supreme Court reversed a decision by the 1st District Court of Appeal, which had cited the Mierzwa ruling in the Coxes case. The justices disapproved the Mierzwa decision and upheld a conflicting 3rd District Court of Appeal ruling in the Ceballos' case.

Lawyers for the Ceballos did not immediately return telephone messages seeking comment.