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Insurance company sues policyholders over contract violations

A number of Florida residents are very unhappy with their insurance company after filing claims for damage from Hurricane Irma several months ago.

Not only are their homes going without repairs, the homeowners are being sued by their own insurance company for contract violations.

How does something like this happen?

It certainly isn't the normal course of business for most insurance issues. However, the People's Trust insurance company has filed over 240 lawsuits against its own Florida policyholders.

The company claims that their contract requires the insured customers to use contractors approved by the insurance company for repairs. Instead, the policyholders sought estimates from independent contractors and used public adjusters to try to get more money from the insurer. They claim the lawsuits are only designed to force the homeowners to give them access and say that the clients' attorneys are to blame for the issues.

The defendants, for their part, say that the insurance company was trying to force them to seek less compensation for their losses than they were due and allow subpar repairs to their property. They say their agreement to use company contractors was essentially a trick. In exchange for agreeing to use them, the homeowners were given a premium discount of less than $200.

People's Trust has been plagued by legal problems over its business strategy. Founded by someone without insurance experience, the company was able to offer surprisingly low premiums simply because it controlled its contractors. Homeowners are usually able to pick their own, within reason.

However, prior customers have complained that the company purposefully limits the amount of work that gets done. If a homeowner objects, the insurance company asks for an appraiser to review the issue -- which forces the homeowner to share thousands of dollars in costs for the process.

Nearly 700 previous customers have filed lawsuits against the company in the past -- and current policyholders say they're being targeted as the company tries to intimidate them through its legal actions.

Contract disputes can involve anyone. Most consumers don't realize how many contracts they actually sign on a regular basis -- until something like this happens. When the stakes are high, however, it pays to review a contract's terms very carefully and to seek legal help when you need it.

Source: Sun Sentinel, "Why does People's Trust Insurance keep suing its own policyholders?," Ron Hurtibise, April 29, 2018

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