Court Ruling Requires Citizens Wind Policies to Pay for Flooding

May 26, 2005

Circuit Court Judge Kevin Davey has ruled in a class-action lawsuit in Tallahassee, Fla. that Citizens Property Insurance Corp., Florida's insurer of last resort, must pay the full amount of damage homes were insured for, even if they were primarily damaged by flooding and not wind.

The decision supported contentions by homeowners that state law requires insurers to pay the full amount of a policy even if an uncovered catastrophe causes a portion of the damage.

"We will continue to assert that Citizens should not be paying for losses caused by flood," Justin Glover, a Citizens spokesman told the Lakeland Ledger. He said Citizens will appeal the decision.

Hundreds of residents of the Florida Panhandle, whose homes were destroyed by 20-foot waves during Hurricane Ivan, could receive payments if the decision is upheld.

Citizens maintains it is legally prohibited from paying flood claims and believes the judge's ruling essentially means it could have to pay for the full value of a house even if 99 percent of the damage is caused by flooding, Glover said.

"These people paid their premiums month after month, they deserve to get their policies paid so they can rebuild their homes and go on with their lives," said Scott Maddox, one of the lawyers suing Citizens. Maddox is also a Democratic candidate for governor.

About 350 homeowners have demanded Citizens make full payment on their policies. Others who may not have contested Citizens' decision not to pay flood damage may do so now, Glover said.

The Legislature earlier this month passed a bill that would protect insurance companies from having to pay flood damage when policies only cover wind. The bill, however, isn't retroactive, so it won't affect this case.

"In March, I asked Citizens Property Insurance Corporation to drop individual lawsuits they had with their policyholders and to seek an expedited resolution of claims involving Florida's valued policy law," Tom Gallagher, Florida's CFO commented on the case. "Thousands of storm victims, especially in the Panhandle, have suffered for far too long without resolution of their claims.

"Today's ruling reinforces what I have said all along--the people in Pensacola, whose homes were destroyed more than eight months ago, must be made whole. I applaud Judge Davey's ruling and urge Citizens and all insurers to immediately comply with the ruling."