An alternative to Florida insurance claim litigation

One Florida insurance provider is offering a voluntary endorsement, whereby the homeowner will receive a discount on their premium if they waive their right to litigation on a disputed claim. The endorsement provides that the policy holder agrees that disputes would be handled by what is known as alternative dispute resolution (ADR), meaning mediation and/or binding arbitration. If the homeowner does not opt for the endorsement and discount, they will pay the full going rate for their insurance and they retain their full rights to sue the carrier if there is a dispute arising from a claim.

As a risk manager for a large corporation, I handled over 1,000 claims per year. A few of those resulted in litigation and still fewer were handled using ADR. Plaintiff attorneys know that the hammer they hold is the excessive cost of investigation, discovery and attorney fees. This hammer is a very real threat for most homeowner's claims, which will cost much less than the cost of litigation. I once spent over $70,000 in legal fees to obtain a $0 verdict from the jury on claim I could probably settled for $50,000.

The new endorsement, which has been approved by Insurance Commissioner David Altmaier, is a great first step in addressing the homeowner's insurance crisis we have in Florida. The Florida Legislature should codify this approach into the state's insurance code. Every homeowner's insurance company should be required to offer a "Voluntary ADR Endorsement" and should make the discount sufficient to encourage their customers to opt in.

Some contractors and virtually all plaintiff attorneys will oppose this new concept – but consider their motivation.

Jim Green

Hernando