Florida Court Defines Wind Loss Mitigation Discount Dispute Process

Sep 27, 2010


Recently, a Florida appellate court held that an insured who does not receive a statutorily-mandated premium discount for wind loss mitigation must first pursue administrative remedies with the Florida Office of Insurance Regulation (“OIR”) before seeking court action against the insurer.  Serchay v. State Farm Ins. Co., 25 So. 3d 652, 652 (Fla. 4th DCA 2010).

In this case, the insured had filed an action in circuit court and sought class action certification against State Farm, alleging that the insurance company did not notify him of the right to receive the discount, nor did it provide him with the discount.  State Farm moved to dismiss the action based upon the insured’s failure to exhaust his administrative remedies before filing the lawsuit.  The trial court granted the insurer’s motion and the insured appealed.  Subsequently, the appellate court affirmed the trial court’s determination and held that the insured should have exhausted the statutory administrative procedure before filing a judicial action against State Farm.

Section 627.711, Fla. Stat. (2010) mandates that, at the time of the issuance of the policy and at each renewal, all insurers issuing residential property insurance must clearly notify the applicant or policyholder of the availability of discounts for properties on which fixtures or construction techniques that reduce the amount of loss during a windstorm can be, or have been, installed or implemented to reduce the amount of loss during a windstorm.

Further, Section 627.371, Fla. Stat. provides that any person aggrieved by any rate charged by any insurer must make a written request to the insurer to review the matter.  If the request is not granted within 30 days, the insured may regard the request as rejected.  At that point, the insured may file a written complaint with the OIR. 

Thereafter, the OIR will give written notice to the insurer and request that the noncompliance is corrected within 10 days of the date of the notice.  If the insurer does not make the changes requested, the OIR is required to administratively determine the merits of the complaint.  If the insured is not satisfied with the OIR’s determination, the insured then may seek judicial review of the OIR’s final action. 

On appeal of the Serchay v. State Farm Ins. Co. case, the insured argued that he was not aggrieved by a rate charged, but by the insurer’s failure to provide the premium discount.  As a result, the insured asserted that he should not have to first exhaust his administrative remedies.  The appellate court’s determination focused upon the strong relationship between premium discounts and rates charged and found that a premium discount requires a reduction of the insurance rate.  Thus, the two terms were determined to be inextricably linked. 


Colodny Fass handles insurance defense and commercial disputes for insurance companies and related entities.  Call our award-winning Litigation Division based in Sunrise, Florida at (954) 492-4010.