Insurance Coverage

FL Fights for Internal State Farm Docs

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A battle between Florida regulators and the state’s biggest property insurer is capturing the attention of lawyers there and elsewhere, because of what’s really at issue.

Property insurance rate-setting is the official topic. But attorneys on both sides are waiting to see whether State Farm, a Bloomington, Ill.-based insurer, has to turn over internal documents concerning its coverage decisions, as Florida’s governor and insurance commissioner have demanded, reports the St. Petersburg Times. Who wins the document battle may be known at a scheduled regulatory hearing next month.

Insurance rates in the hurricane-prone state have skyrocketed in recent years. Meanwhile, Hurricane Katrina litigation in Mississippi has focused public attention on how flood exclusions in property policies can be applied to windstorm claims in which water damage is at issue.

As discussed in previous posts, lawsuits and news reports have accused State Farm and other insurers of systematically lowballing claims on the Mississippi Gulf Coast and elsewhere, too. Now a similar dispute may be brewing in Florida. If so, State Farm—which denies the Mississippi allegations and says it is going to stop writing policies there—could pull out of Florida, too. And that could prompt other insurers to reconsider their coverage.

“To the extent we’ve seen what happens in other places, [the hearing] could open the door to those things happening here,” Adam Shores, an Allstate spokesman, tells the newspaper. “What affects one company could affect everyone in the industry.”

But homeowners need to know what’s really going on concerning their coverage, says William “Chip” Merlin, a Tampa lawyer who represents hundreds of homeowners in Mississippi and Florida. “Until you require people to turn over internal documents, e-mails and memorandum, you won’t know the truth.”

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