The difference between the insurance check and the contractor bill got you in a stew? Tom Gallagher says: Forget court.
By ALISA ULFERTS
Published October 12, 2004
TALLAHASSEE - For many Floridians whose homes have been damaged in the recent spate of storms, it comes as a bad case of sticker shock: The quote cited by the contractor far exceeds the check written by the insurance company.
To help those homeowners and others with similar experiences, Chief Financial Officer Tom Gallagher on Monday unveiled a mediation program intended to help embattled hurricane victims resolve disputes with their insurance companies.
Rather than spend years and money in court, policyholders who disagree with their insurance companies can settle on a solution with the help of state lawyers and four mediation centers.
It's an experiment that worked well after Hurricane Andrew in 1992 and one intended to get homeowners back under their roof, Gallagher said.
"The main reason is for homeowners to get their money as soon as possible," Gallagher sad.
Florida's four hurricanes and one tropical storm this year have left behind 2.2-million insurance claims that could total more than $20-billion by the time adjusters finish tallying.
With all those claims, there are bound to be disagreements over cost that would become even costlier if handled in court. To avoid unnecessary legal entanglements, the state will in the next few weeks open four mediation centers in hard-hit areas around the state: Charlotte, Escambia, Orange and St. Lucie counties.
The centers, which will be run by the LeRoy Collins Center for Public Policy at Florida State University, won't cost taxpayers nor policyholders a dime. Insurance companies will pay $350 per mediation claim, a figure the industry says is far cheaper than going to court.
The state has fronted the Collins center $200,000 to get the program off the ground.
"If we can resolve disputes and keep them out of court, everyone wins," said Sam Miller of the Florida Insurance Council.
"There may be some companies that don't like the cost, but it's still cheaper than going to court," he said.
Under the program, an insurance company and a policyholder have 21 days to come up with a settlement once one of them announces a decision to go to mediation. Gallagher said he believes most cases will be settled during this phase. Those that aren't will go to mediation. Based on the number of people who used mediation after Andrew, Gallagher said, he thinks 30,000 people will apply for the service this year.
"We don't know how many people will apply because of these storms, but we are prepared to handle them," he said.
The disparity between the money offered by insurance companies and the amount cited by contractors is likely to be one of the most oft complained about issues, Gallagher said.
While most policies provide some form of inflation guard, the problem for homeowners is construction costs have outpaced inflation. Add to that the labor shortage in the construction industry and the price increases for materials. The result is a shock for Floridians who thought their insurance would cover rebuilding.
"For many storm victims, they have felt that they haven't been treated fairly by their insurance company," Gallagher said.
The difference between insured cost and construction cost isn't policyholders' only beef.
Homeowners who were in the path of Charley and Frances were upset to find they might have to pay double deductibles, with damage from each storm viewed as a separate incident.
With Jeanne, some inland residents might have the onus of paying an unprecedented third deductible. But most likely, some insurers said, another deductible payment will not apply if damage to a house from a storm left it susceptible to more damage.
Gallagher said there might be some, though not much, the state can do for people hit with double or triple deductibles.
"It is an issue that's a problem, but it's a problem because it's allowed in law," Gallagher said. He plans to push for a change in the law when lawmakers meet in December for a special session to discuss hurricane-related matters.
WHERE TO CALL
A mediation program will assist hurricane victims in resolving disputes with insurance companies. The toll-free hotline for the mediation program is 1-800-227-8676 (1-800-22-STORM).
