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Can You Get Consequential Damages in a Property Insurance Damage Lawsuit?


In a property insurance contract, damages for the homeowner when the insurance company breaks the insurance contract by not paying, or by not paying the proper amount, is generally whatever it would cost to fix the property (in addition to attorneys fees and costs).

In other words, if your house is flooded, and the cause is insured, the insurance company pays you what it costs to fix the damage. If it does not, you sue and you receive the amount that should have been paid in the first place to fix the property.

Consequential Damages

But what about damages that go beyond just repairing the property? These are called consequential damages. As the name implies, these are damages that are a consequence of, or which result because of, the insurance company’s breach.

For example, let’s assume that your home floods, and the insurance company must be sued to force it to pay what it owes under the insurance contract. They do eventually pay. However, you work as a realtor. Because of the delay in fixing the flood, you were unable to attend a closing, and lost your commission on a sale. Your lost income (lost commission) is a consequence of the insurance company’s failure to pay the claim. This would be a consequential damage of the insurance company’s breach of the contract.

As a general rule, courts have refused to allow homeowners to get these kinds of consequential damages when insurers do not pay claims. But the Florida Supreme Court is set to decide on the issue.

Supreme Court to Hear Consequential Damages Case

The Florida Supreme Court is hearing a case decided on by a lower court, where the Court allowed an apartment complex owner to sue Citizens Insurance for lost income in the form of lost rentals. The complex alleges that it lost rental income due to Citizens’ delay in making hurricane-damage related repairs.

The lower court noted that in any breach of contract case, parties are entitled to be put in the place they would be, had the contract been complied with, so long as the damages are or could have been contemplated by the parties when the contract was made. That would seem to include consequential damages, such as lost rental income.

What makes the case even more important is that if consequential damages are allowed, the homeowner’s (insured’s) damages may be allowed to exceed the limits of the insurance policy. Citizens argues that the only way an insured can get more than the policy limits is through what is known as a bad faith claim. According to Citizens, allowing consequential damages to exceed the policy limits allows an insured to get more than the policy limit, without demonstrating bad faith.

Citizens is Florida’s insurer of “last resort,” a state-backed insurance company for those unable to get insured by private insurers. Still, whatever the Florida Supreme Court decides, will affect all insurance companies.

Do you have a property insurance claim that is being denied or underpaid by a property or homeowner’s insurance company? Contact the Miami property damage insurance attorneys at Velasquez & Associates P.A. today for help.




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