Citizens Property Ins. Corp. v. Manor House LLC, et al.
The Supreme Court of Florida ruled recently that consequential damages in insurance disputes are not recoverable absent a separate action for bad faith. The dispute before the court involved the Manor House apartment buildings that attempted to recover rental income lost due to Citizens Insurance Corp.’s alleged breach of policy obligations to properly adjust and pay for a claim arising out of a 2004 hurricane. Citizens, a state-backed insurance company that insures over 600,000 property owners in Florida, argued that the only damages owed to their insured were included in the express terms and conditions of the policy. The court sided with Citizens, stating that the rental income Manor House sought to recover constituted extra-contractual damages, which could not be recovered without a separate action for bad faith. Since Citizens is statutorily immune from bad faith under Florida law, these damages are therefore not recoverable. However, the broad language the court unemployed reaches past just the state backed insurance outfit, and therefore the recovery of consequential damages seems to be barred in any first-party property insurance action involving any insurer.