USAA Insurance, a company known for providing insurance coverage exclusively to military members and their families, is developing a bad reputation for denying legitimate claims. USAA has recently settled a number of class action suits alleging bad faith in denying personal injury protection (PIP) claims, for example:
- A case in Arizona was settled last summer for an undisclosed amount.
- An Illinois case settled in 2005 was estimated at $35 million.
Meanwhile, policyholders filed a similar lawsuit in Portland, Oregon last June.
Concern for Florida Homeowners with USAA Property Insurance
Florida state law requires homes to have sinkhole coverage, as they are prevalent in this part of the United States. Essentially, insurance must be available to remedy "structural damage" to a home caused by a sinkhole. Florida residents who've insured their property with USAA should be concerned about USAA's willingness to cover valid sinkhole claims.
It is not uncommon for Florida homeowners to contact their insurer (USAA) with a valid claim for sinkhole repairs, only to have the claim denied. USAA believes it can deny sinkhole claims when its own investigation indicates that sinkhole activity is only 'impacting' the structure and not causing 'structural damage.'
How Can USAA Continue Denying Valid Florida Sinkhole Coverage Claims?
Because Florida statutes do not specifically define what structural damage is, USAA has applied a very narrow definition in denying homeowner claims. So, according to USAA, the sinkhole claims do not fall within its definition structural damage in assessing what constitutes a sinkhole loss. While there is no specific language explaining this, USAA ostensibly requires sinkhole damage to affect a home's load bearing capacity.
Under this interpretation, a sinkhole would have to literally destroy a home. More troubling, USAA has decided to apply this standard to claims filed even before the recent statutory changes in May 2011.
USAA and Florida Bad Faith Insurance Laws
USAA's systematic denials of Florida sinkhole claims can be viewed as insurance bad faith. Bad faith occurs when an insurer unreasonably denies or delays payment of a claim or refuses to reimburse a claimant for costs covered under the insurance contract.
Simply put, insurers profit when they deny claims...even legitimate ones. Thousands of payable claims are rejected every day without contest. However, legal remedies are available to those unlawfully denied coverage. Insureds are entitled to benefits promised in their contracts in addition to losses and damages stemming from the wrongful denial. This can include damages for emotional distress and attorney's fees. Punitive damages are also available where an insurer has engaged in gross misconduct in denying claims.
An experienced Florida insurance claims attorney can answer your questions and help you understand your rights and options if you carry USAA property insurance and believe your valid claim for coverage was wrongfully denied.
