Michael Moline
A policyholder forced to file suit to get her insurer to repair sinkhole damage is entitled to recover her litigation costs from the company, the Florida Supreme Court has ruled.
The Omega Insurance Co. paid more than $200,000 for the repairs only after homeowner Kathy Johnson hired counsel to press a legal claim. The company finally conceded its initial inspection of damage missed evidence that a sinkhole was to blame, the court said.
“Once an insurer has incorrectly denied benefits and the policyholder files an action in dispute of that denial, the insurer cannot then abandon its position without repercussion,” the court said.
To allow the insurer to backtrack after the legal action has been filed without consequence would “essentially eliminate the insurer’s burden of investigating a claim,” Justice Fred Lewis wrote in Thursday’s majority opinion.
Joining him were Chief Justice Jorge Larbarga and justices Barbara Pariente, Peggy Quince, and James E.C. Perry. Justice Ricky Polston concurred without comment. Justice Charles Canady dissented.
The high court overturned a ruling in favor of Omega by the Fifth District Court of Appeal.
“The Legislature recognized that it was essential to ‘level the playing field’ between the economically advantaged and sophisticated insurance companies and the individual citizen,” Lewis wrote.
“The reality is that once the benefits have been denied and the plaintiff retains counsel to dispute that denial, additional costs that require relief have been incurred,” he continued.
State law “takes these additional costs into consideration and levels the scales of justice for policyholders by providing that the insurer pay the attorney’s fees resulting from incorrectly denied benefits. Without this approach, we would leave the insured to foot the bill not only for attorney’s fees, but also for experts to overcome the denial, which would render insurance payments insufficient to cover the loss.”
