We are finishing up our discussion of the Florida Supreme Court's decision that consumer advocates say could be a game-changer. The case involved a hurricane insurance policy that did not conform to state requirements. In particular, the high deductible warning was in a smaller font and used the word "windstorm" instead of "hurricane."
The insured is a homeowner association in Boca Raton. In 2005, when Hurricane Wilma hit, the association's property sustained significant damage. The association filed a claim; this lawsuit followed. The association claimed breach of contract, breach of the implied warranty of good faith and fair dealing and violation of the state statute that requires the separate deductible warning and lays out the specific language and point size.
After a jury trial, the verdict came back in the association's favor. The insurer objected to the decision and took the case to the federal circuit court of appeals. That court asked the Florida Supreme Court to decide the state-specific matters, including the deductible warning.
Essentially, the court's response to the plaintiff is, "So what?" The font was 16.2 points instead of the required 18 points. Windstorm and hurricane are similar enough, especially in places like Florida where, typically, flood insurance covers flooding and hurricane insurance covers wind damage. No harm, no foul.
However, according to the insurance company's attorney, the ruling is not as broad as some may think. All the court has said, the attorney explained, is that there is no private right of action if the font is smaller than 18 points and there are minor language changes. The policy still included the warning; the court has not said that a consumer cannot seek redress if the language is omitted altogether.
Still, consumer advocates see the opinion as the thin end of the wedge. Other cases will be affected by this ruling, and in the current pro-insurer climate, there is a real risk that these warnings and consumer protections could be abandoned.
Source: The Republic, "Fla. justices rule no penalty for insurance companies that violate deduction notification law," Bill Kaczor, May 31, 2012