Filing Number: 796086
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| Filing Accepted: 12/10/2024 |
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S & P HOLDINGS OF DAYTONA, LLC
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First Name |
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| Street Address
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835 N. BEACH ST. |
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DAYTONA BEACH,
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32114
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OCEANCLUBINC@AOL.COM |
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Insured |
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| Last/Business Name* |
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S & P HOLDINGS OF DAYTONA, LLC |
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First Name |
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| Policy # * |
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2018-803676-05 |
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Claim #* |
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CDA22038640 |
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Attorney is Applicable
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| Last Name* |
DANAHY
First Name *
MATTHEW
Initial
R
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901 W. SWANN AVE. |
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TAMPA
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FL
33606
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SERVICE@DANDDLAW.COM |
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| Insurer Type
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 Authorized Insurer
 Unauthorized Insurer
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| Insurer Name* |
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VELOCITY SPECIALTY INSURANCE COMPANY
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,
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NAIC Company Code 39640 |
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| Name of individual responsible for violation (if any):*
CLAIMS DEPARTMENT, SUPERVISORS, MANAGEMENT, AGENTS, AND ADJUSTERS, INCLUDING BUT NOT LIMITED TO THE FOLLOWING REPRESENTATIVE(S), ADJUSTER(S) AND VENDORS: SEDGWICK, LEADING EDGE CLAIMS, WILLIAM LOZADA, EVAN FOSTER, RAMONA GARCIA, SARAH JACKSON, SHELLI
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| Type of Insurance
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Commercial Property & Casualty
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| Reason for Notice
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Claim Delay
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Unsatisfactory Settlement Offer
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Unfair Trade Practice
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Other
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Violation of Code of Ethics
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Other
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Litigation Strategy and Behavior
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Statutory provision(s) which the insurer allegedly violated.
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| 624.155(1)(b)(1) |
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Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests.
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| 624.155(1)(b)(3) |
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Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
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| 626.9541(1)(i)(2) |
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A material misrepresentation made to an insured or any other person having an interest in the proceeds payable under such contract or policy, for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract or policy on less favorable terms than those provided in, and contemplated by, such contract or policy.
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| 626.9541(1)(i)(3)(a) |
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Failing to adopt and implement standards for the proper investigation of claims.
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| 626.9541(1)(i)(3)(b) |
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Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
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| 626.9541(1)(i)(3)(c) |
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Failing to acknowledge and act promptly upon communications with respect to claims.
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| 626.9541(1)(i)(3)(e) |
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Failing to affirm or deny full or partial coverage of claims, and, as to partial coverage, the dollar amount or extent of coverage, or failing to provide a written statement that the claim is being investigated, upon the written request of the insured within 30 days after proof-of-loss statements have been completed.
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Specific policy language that is relevant to the violation.
Enter all words or phrases (one at a time) that should be used to filter.
The Insured believes the language relevant to the violations includes the valuation and payment provisions, the declarations pages, and the following applicable provisions.
Coverage Limits of Liability
Coverage A: Building $2,304,140
Coverage C: Contents $1,000,000
Coverage D: Business Income $500,000
Specifically, the following coverage provisions and policy language relevant to the claim, and therefore relevant to the violation(s), are referenced in the policy and also in the letter to the insured dated February 15, 2023.
Please refer to your SMB 300 2106 CW ALL COMMERCIAL PROPERTY FORM, which states in part:
3. Coverage D - Business Income Coverages
This policy is extended to cover Business Income Coverages and Additional Business Income
Coverages for the Actual Loss Sustained by you up to the annual limits shown in the Declarations, during
the Period of Interruption directly resulting from a Covered Cause of Loss to Covered Property.
***
c. Business Income Monthly Limitation of Indemnity:
The most we will pay each month during the Period of Interruption for Business Income Coverage
Actual Loss Sustained by you resulting directly from a Covered Cause of Loss will be not greater
than 1/12 of the annual limit for Business Income Coverages shown on the Declarations. There
shall be no liability under this policy for more than the Business Income Monthly Limitation of
Indemnity shown on the Declarations for all Business Income Coverages, except for those that
have a sublimit on the Additional Coverages and Sublimits Endorsement. Business Income
Monthly Limitation of Indemnity is payable each period of thirty (30) consecutive days after the
beginning of the Period of Interruption.
***
B. Covered Causes of Loss:
The Covered Causes of Loss included in this policy means all loss and/or damage arising from the
following:
1. Windstorm or Hail which means direct action of wind or direct action of hail, accompanied by wind
or not, causes loss or damage.
a. Windstorm or Hail excludes:
1) Frost or cold weather, and/or
2) Accumulation of ice, snow, sleet, water, or any other form of precipitation.
***
D. Exclusions and Limitations
The stated exclusions (or failure to include other exclusions) shall in no way expand the coverage provided
by this policy or provide coverage for perils not named in this policy. Further, loss, damage, costs, and
expenses associated with the exclusions are similarly excluded from coverage under this policy, whether
or not a Covered Cause of Loss contributes concurrently or in any sequence to such loss, damage, costs
and expenses.
For each Covered Cause of Loss shown on the Declarations Coverage Information section, the respective
endorsement contains the policy details relating to the respective peril. If the coverage is selected “Yes”
in the Declarations, the peril as defined in the respective endorsement attached to this policy shall be a
Covered Cause of Loss and not be excluded. If the coverage is selected “No” in the Declarations, the peril
as defined in the respective endorsement attached to this policy shall be excluded from coverage under
this policy.
Any Covered Cause of Loss added by endorsement, shall only provide coverage as defined in the
respective endorsement. Any other exclusion contained in this policy shall be an exclusion if not
specifically defined in the policy forms or attached endorsements.
There is no coverage under this policy for loss or damage caused directly or indirectly by any of the
following exclusions. Such loss or damage is excluded regardless of any other cause or event contributing
concurrently or in any sequence to the loss or damage.
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4. Defect Exclusion
Loss or damage caused by faulty or defective workmanship, material, construction, installation, or design
from any cause; or faulty planning, zoning, development, surveying or siting is excluded unless the
resulting damage is the direct result of sudden and accidental direct physical loss or damage from a
Covered Cause of Loss. In that event, this policy will cover only the resulting damage.
In addition, loss or damage caused by fault, defect, error, deficiency or omission in design, plan or
specification is excluded, unless the resulting damage is the direct result of sudden and accidental direct
physical loss or damage from a Covered Cause of Loss. In this event, this policy will cover only such
resulting damage.
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6. Depletion Exclusion
Loss or damage caused by deterioration, depletion, rust, corrosion, erosion, wet or dry rot, decay,
evaporation, leakage, animal, insect or vermin damage, inherent vice or latent defect, shrinkage or change
in color, flavor, texture or finish, extremes or changes of temperature damage or changes in relative
humidity damage, whether atmospheric or not is excluded.
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34. Rain, Snow, Sleet, Sand or Dust Exclusion
Loss or damage caused by rain, snow, sleet, sand or dust to the interior of a building or property contained
in a building is excluded unless a covered peril first damages the building causing an opening in a roof or
outside wall, door or window and the rain, snow, sleet, sand or dust enters through this opening. We will
determine the value of Covered Property in the event of loss or damage as follows:
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45. Wear and Tear Exclusion
Loss or damage from wear and tear is excluded.
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H. Property Loss Conditions
The following Property Loss Conditions apply:
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5. Control of Damaged Merchandise
Exercising reasonable discretion, you shall be the sole judge as to whether the goods involved in any
loss under this policy are fit for normal intended use or consumption. No goods deemed by you to be
unfit for consumption shall be sold or otherwise disposed of except by you or with your consent, but
you shall allow us any salvage obtained by you on any sale or other disposition of such goods. You
shall have full right to the possession of and retain control of all goods involved in any loss under this
policy.
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11. Settlement of Claims
The amount of loss under this policy shall be payable within thirty (30) days after valid proof of loss is
received, accepted, and ascertainment of the amount of loss is made either by agreement with you or
an amount is determined by binding Arbitration in accordance with the provisions of this policy.
We shall have the option to take all or any part of the property at the agreed or arbitrated value, or to
repair, rebuild or replace the property physically lost or damaged with other of like kind and quality,
within a reasonable time, on giving notice of its intention to do so within sixty (60) days after receipt of
the proof of loss required.
See also the following language contained in the Policy:
Coverage A – Covered Property
1. Covered Property, as used in this Coverage Part, means the type of property described in this Covered Property Section and limited in the Property Not Covered Section, if a Limit of Insurance is Shown in the Declarations for that type of property.
a. Building, meaning the building or structure described in the Declarations including
1) Completed Additions;
2) Fixtures, including outdoor fixtures;
3) Permanently installed:
a) Machinery; and/or
b) Equipment
4) Hard Costs, meaning:
a) Foundations, fixtures, attachments and similar property that has become or intended to become a permanent part of the building (s) or structure(s); and/or
b) Materials, supplies, and similar property owned by others for which you are responsible for. This property must be used in the construction operations insured under this policy and be located at the premise(s) in described in the schedule of values.
5) Business Personal Property owned by you that is used to maintain or service the building or structure or its locations, including
a) Fire extinguishing equipment;
b) Floor coverings; and/or
c) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering.
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b. Coverage C – Your Business Personal Property consists of the following property located in or on the building(s) or structure(s) described in the Declarations, in the open, or in a vehicle within 1,000 feet of the covered building or structure or within 1,000 feet of the locations described in the Declarations, whichever distance is greater.
1) Furniture and fixtures;
2) Machinery and equipment;
3) Stock;
4) All other Business Personal Property owned by you and used in your business;
5) Labor, materials or services furnished or arranged by you on Business Personal Property of others;
6) Your use interest as tenant in improvements and betterments. Improvements and
betterments are fixtures, alterations, installations or additions:
d) Made a part of the building or structure you occupy but do not own; and I or
e) You acquired or made at your expense but cannot legally remove;
7) Leased Business Personal Property for which you have a contractual responsibility to insure, unless otherwise provided for under Business Personal Property of Others and / or
2. Animals, owned by others and boarded by you, or if owned by you, only as stock while inside of buildings.
***
3. Coverage D - Business Income Coverages
This policy is extended to cover Business Income Coverages and Additional Business Income Coverages for the Actual Loss Sustained by you up to the annual limits shown in the Declarations, during the Period of Interruption directly resulting from a Covered Cause of Loss to Covered Property.
a. Actual loss sustained occurs in the event you are prevented from producing goods or from continuing business operations or services and are unable to:
1) Make up lost production within 365 continuous days after the Period of Interruption, or
2) Continue business operations or services:
a) through the use of any property or service owned or controlled by you; or
b) obtainable from other sources, whether the property or service is at an insured location; or
c) through working extra time or overtime at any other substitute locations, including any other locations acquired or for this purpose;
then subject to all other conditions of this policy, for the Actual Loss Sustained of the following during the Period of Interruption shall be Covered Property.
b. The Period of Interruption, not to exceed 365 continuous days, is
1) from the time of physical loss or damage insured against by this policy to the time when, with the exercise of due diligence and dispatch, to either:
a) Resume normal operations; or
b) Repair, replace, or prepare for operations, the physically damaged covered buildings and equipment, to the same or equivalent physical and operating conditions that existed prior to the loss or damage, whichever is less.
c) Such period of time shall not be cut short by the expiration or earlier termination date of the policy.
2) In addition, if applicable, such time as may be required with the exercise of due diligence and dispatch:
a) To restore stock in process to the same state of manufacture in which it stood at the time of the initial interruption of production or suspension of business operations or services; or
b) To replace physically damaged or destroyed mercantile stock necessary to resume
operations; or
c) To replace raw materials and supplies in order to continue operations.
However, the inability to procure destroyed mercantile stock or suitable raw materials and supplies to replace similar stock or materials and supplies physically damaged or destroyed shall not increase the Period of Interruption.
3) For Property Under Construction: The time period between the anticipated date of substantial completion had no covered loss occurred and the actual date of completion. In calculating the amount of loss, due consideration will be given to the actual experience of the business compiled after substantial completion and start-up.
The Period of Interruption does not include any additional time:
a) Required for re-staffing or re-training employees; or
b) Required due to your inability to resume operations for reasons other than those
enumerated in 2.a. through 2.b. above; or
c) Required for making change(s) to the covered buildings, structures, or equipment for any reason except as provided in the Ordinance or Law coverage.
Consideration will be given to the experience of the business prior to the occurrence of the Covered Cause of Loss and the probable experience had no loss occurred. Only normal charges and expenses that would have existed had no interruption of production or suspension of business operations or services occurred will be covered.
c. Business Income Monthly Limitation of Indemnity: The most we will pay each month during the Period of Interruption for Business Income Coverage Actual Loss Sustained by you resulting directly from a Covered Cause of Loss will be not greater than 1/12 of the annual limit for Business Income Coverages shown on the declarations. There shall be no liability under this policy for more than the Business Income Monthly Limitation of Indemnity shown on the Declarations for all Business Income Coverages, except for those that have a sublimit on the Additional Coverages and Sublimits Endorsement. Business Income Monthly Limitation of Indemnity is payable each period of thirty (30) consecutive days after the beginning of the Period of Interruption.
d. Business Income Coverages will be:
1) Gross Earnings, which in the event of a loss and for the purpose of this coverage are:
a) For manufacturing operations: The net sales value of production less the cost of all raw stock, materials and supplies utilized in such production; or
b) For mercantile or non-manufacturing operations: The total net sales less cost of
merchandise sold, materials and supplies consumed in the operations or services
rendered by you;
c) Plus, all other earnings derived from the operation of the business;
d) Less all charges and expenses which do not necessarily continue during the interruption
of production or suspension of business operations or services.
2) Net Sales, which in the event of loss at mercantile or non-manufacturing operations, and for
the purpose of this coverage, are determined as the amount for which merchandise could
have been sold to your regular customers if there was no loss or damage to merchandise.
3) Ordinary Payroll, which is the entire payroll expense for all your employees except officers,
executives, department managers, employees under contract, and other essential employees.
The specified number of days that Ordinary Payroll expense is covered is shown on the
Additional Coverages and Sublimits Endorsement. The number of days need not be
consecutive, but must fall within the Period of Interruption of production or suspension of
business operations or services, or fall within the extension of that period, if an extension is
provided.
4) Rental Value: In respect to Covered Property held for rental to others, this policy is extended
to cover the Actual Loss Sustained during the Period of Interruption but not exceeding the
reduction in rental value less charges and expenses which do not necessarily continue. Due
consideration will be given to the historic rental expenses prior to the loss and the probable
expenses.
e. Additional Business Income Coverages will be:
1) Contingent Business Income Costs will be covered up to the Sublimits shown on the
Additional Coverages and Sublimits Endorsement if sudden and accidental direct physical loss
or damage to the real or personal property of a direct supplier or direct customer of you is
damaged by a Covered Cause of Loss under this policy, and such damage:
a) wholly or partially prevents any of your direct suppliers from supplying their goods and/or
services to you; or
b) wholly or partially prevents any of your direct customers from accepting your goods and/or
services;
This policy is extended to cover the Actual Loss Sustained by you during the Period of
Interruption with respect to such real or personal property, if the property of the supplier or
customer which sustains loss or damage is of the type of property which would be Covered
Property under this policy.
This coverage applies to your direct suppliers or direct customers located within the Coverage
Territory.
2) Extended Period of Indemnity covers extra expense incurred during the additional length of
time required to restore you to the same condition as existed had no loss occurred. This will
commence with the later of the following dates:
a. the date on which the coverage for loss or damage would otherwise terminate; or
b. the earliest date on which either normal operations resume, or repair, replacement, or
rebuilding of the property that has been damaged is actually completed; but in no event
for a period of time exceeding the number of days specified in the Additional Coverages
and Sublimits Endorsement. The Extended Period of Indemnity does not apply to any
Business Income Coverages.
***
B. Covered Causes of Loss
The Covered Causes of Loss included in this policy means all loss and/or damage arising from the following:
1. Windstorm or Hail which means direct action of wind or direct action of hail by wind or not, which causes loss or damage.
VIII. TO ENABLE THE INSURER TO INVESTIGATE AND RESOLVE YOUR CLAIM, DESCRIBE THE FACTS AND CIRCUMSTANCES GIVING RISE TO THE INSURER'S VIOLATION AS YOU UNDERSTAND THEM AT THIS TIME.
In addition of the above statutory provisions alleged to have been violated, see also the following statutes and rules:
624.155(1)(a)1 Any person may bring a civil action against an insurer when such person is damaged: (a) by violation of any of the following provisions by the insurer: (1) Section 626.9541(1)(i), (o), or (x)
69B-220.201(3)(b) An adjuster shall treat all claimants equally.
69B-220.201(3)(b)(1) An adjuster shall not provide favored treatment to any claimant.
69B-220.201(3)(b)(2) An adjuster shall adjust all claims strictly in accordance with the Insurance contract.
69B-220.201(3)(d) An adjuster shall make truthful and unbiased reports of the facts after making a complete investigation.
69B-220.201(3)(e) An adjuster shall handle every adjustment and settlement with honesty and integrity, and allow a fair adjustment or settlement to all parties without any compensation or remuneration to himself or herself except that to which he or she is legally entitled.
69B-220.201(3)(f) An adjuster, upon undertaking the handling of a claim, shall act with dispatch and due diligence in achieving a proper disposition of the claim.
69B-220.201(3)(k) An adjuster shall not undertake the adjustment of any claim concerning which the adjuster is not currently competent and knowledgeable as to the terms and conditions of the insurance coverage, or which otherwise exceeds the adjuster’s current expertise.
626.877 Every adjuster shall adjust or investigate every claim, damage, or loss made or occurring under an insurance contract, in accordance with the terms and conditions of the contract and of the applicable laws of this state.
626.878 An adjuster shall subscribe to the code of ethics specified in the rules of the department. The rules shall implement the provisions of this part and specify the terms and conditions of contracts, including a right to cancel, and require practices necessary to ensure fair dealing, prohibit conflicts of interest, and ensure preservation of the rights of the claimant to participate in the adjustment of claims.
627.7011(3)(b)(1) In the event of a loss for which a dwelling or personal property is insured on the basis of replacement costs, for personal property, the insurer must offer coverage under which the insurer is obligated to pay the replacement cost without reservation or holdback for any depreciation in value, whether or not the insured replaces the property.
627.70131(1)(a) Upon an insurer’s receiving a communication with respect to a claim, the insurer shall, within 14 calendar days, review and acknowledge receipt of such communication unless payment is made within that period of time or unless the failure to acknowledge is caused by factors beyond the control of the insurer which reasonably prevent such acknowledgment. If the acknowledgment is not in writing, a notification indicating acknowledgment shall be made in the insurer’s claim file and dated. A communication made to or by an agent of an insurer with respect to a claim shall constitute communication to or by the insurer.
627.70131(2) Such acknowledgment must be responsive to the communication. If the communication constitutes a notification of a claim, unless the acknowledgment reasonably advises the claimant that the claim appears not to be covered by the insurer, the acknowledgment must provide necessary claim forms, and instructions, including an appropriate telephone number.
627.70131(7)(a) Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment. The insurer shall provide a reasonable explanation in writing to the policyholder of the basis in the insurance policy, in relation to the facts or applicable law, for the payment, denial, or partial denial of a claim. If the insurer’s claim payment is less than specified in any insurer’s detailed estimate of the amount of the loss, the insurer must provide a reasonable explanation in writing of the difference to the policyholder. Any payment of an initial or supplemental claim or portion of such claim made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, whichever is later, bears interest at the rate set forth in s. 55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. If there is a right to prejudgment interest, the insured must select whether to receive prejudgment interest or interest under this subsection. Interest is payable when the claim or portion of the claim is paid. Failure to comply with this subsection constitutes a violation of this code. However, failure to comply with this subsection does not form the sole basis for a private cause of action.
624.155(5) No punitive damages shall be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are:
(a) Willful, wanton and malicious;
(b) In reckless disregard for the rights of any insured; or
(c) In reckless disregard for the rights of a beneficiary under a life insurance contract.
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Facts and circumstances giving rise to the violation.
Enter all words or phrases (one at a time) that should be used to filter.
The property located at 835 N. Beach St., Daytona Beach, FL 32114 (“the Insured Property”) was damaged by a Hurricane Ian loss on or about September 28, 2022. Prior to the loss, the Insured, S & P Holdings of Daytona, LLC; The Spot ("the Insured" or "The Spot") had obtained insurance coverage with Independent Specialty Insurance Company, Policy No. 2018-803676-05. In May 2023, Independent Specialty Insurance Company was acquired by Velocity Holdco and its name was subsequently changed to Velocity Specialty Insurance Company (“Velocity”), home address: 251 Little Falls, Wilmington, DE 19808, administrative address: 10 Burton Hills Blvd., Ste. 300b, Nashville TN 37215, and mailing address listed as “37215, Nashville TN 37215” on the Florida Office of Insurance Regulation (“FOIR”) website. However, despite this address appearing on the FOIR website, it appears to the insured that the mailing address listed is incomplete and/or not accurate because the zip code is listed twice and there is no street number or street name for the mailing address. The insured has Googled the mailing address, however, and has found the following address: 10 Burton Hills Blvd., Ste. 300b, Nashville TN 37215.
On or about September 28, 2022., the Insured suffered a covered hurricane loss at its Insured Property, which is a gift shop located in Daytona Beach, FL. The damage involved exterior and interior damage to the building, lost business income and damage to business personal property (BPP) which got wet or was otherwise damaged by the water which entered the building through openings created by wind. While Velocity did pay some damages for the loss, the carrier has undervalued and underpaid those claims.
In response to the claim, Velocity retained AmerAdjust, LLC to inspect the property and prepare an estimate. It also retained third-party administrator, Sedgwick.
Due to the extent of damage from the Hurricane, The Spot was forced to close following the loss. Unfortunately, Sedgwick and Velocity failed to timely inspect the claim taking an unreasonably long time to evaluate the loss and delaying the mitigation needed to bring the property back to its pre-loss condition and causing delay in the insureds ability replace the damaged business personal property so it could reopen. This resulted in a significant loss of business income.
On October 12, 2022, AmerAdjust adjuster, BJ Bennett first inspected the loss and damage to the insured property. During this inspection, the Insured’s owner, Pinny Mamane, asked if he should retain a mitigation company to dry out the property. Mr. Bennett instructed the Insured not to retain its own mitigation company, and stated the carrier would be sending its own mitigation company to the property. No mitigation company was ever retained by Velocity or Sedgwick and/or sent to the insured property as promised, and the Insured was required to perform mitigation efforts on its own.
On November 4, 2022, the Insured provided an email to adjuster, Dustin Rizzo, with a copy of The Spot’s most recent tax return for 2021, and requested an advance payment lost business income. The Insured also advised that in the month since the loss, he had not received any information from the carrier about the name of the adjuster who would be handling the damaged contents/ BPP claim. The Insured also advised that no mitigation company had been in contact to begin mitigation as promised.
When no response to the November 4th email was received, Mr. Mamane again followed up with Mr. Rizzo by email on November 8, 2022. Again, there was no timely response.
During the weeks which passed without further update from the carrier or Sedgwick, the Insured made additional written requests for updates on the claim on November 28, 2022, and December 6, 2022. On that date, two months after the loss and for the first time, Sedgwick Senior Account Manager, William Lozada, contacted the insured and advised two additional adjusters, Ramona Garcia and Evan Foster, had been assigned to the business interruption (BI) and business personal property (BPP) portions of the claim. Mr. Lozada instructed the Insured to coordinate an inspection of the BPP with Mr. Foster.
That same day, December 6, 2022, the Insured provided its inventory list for the BPP claim and coordinated the inspection of the BPP with Mr. Foster to occur on December 9, 2022, at 9:00 a.m. However, despite coordinating the inspection and the considerable delay in setting the inspection, Mr. Foster failed to show up for the inspection as scheduled, and without explanation, causing further delay.
On December 12, 2022, Mr. Mamane spoke with Mr. Lozada and again inquired about the status of his claim, and he reported Mr. Foster’s failure to attend the long delayed BPP inspection which had been set for December 9, 2022. Mr. Lozada directed the Insured to reset the BPP inspection Ms. Garcia (who had previously been assigned to handle the BI claim.
That same day Mr. Manane emailed Mr. Lozada a monthly revenue report for August 2021 – November 2022, and The Spot’s inventory and profit and loss statements as of September 30, 2022.
No one from Sedgwick contacted him to re-schedule the inspection of BPP items following this call, so on December 15, 2022 the Insured emailed Ms. Garcia requesting an update.
Ms. Garcia responded by transmitting a letter to the insured dated December 14, 2022, opening coverage for the wind damage to the building and indicating Velocity had determined the damage to the building totaled $248,650.13 for replacement cost value (“RCV”). After withholding “non-recoverable depreciation” in the amount of $76,581.53 and the Hurricane deductible of $114,124.20, Sedgwick issued what it claimed to be an actual cash value (“ACV”) payment for the building damage in the amount of $57,944.40. This ACV payment was incorrect, and was based on AmerAdjust’s November 16, 2022, estimate, which utilized low-unit pricing, reflected an incorrect scope (because it failed to include all the damage to the building), and otherwise undervalued the loss.
Yet another adjuster, Sarah Jackson, then contacted the insured and set an inspection to finally evaluate the BPP. On December 20, 2022, Ms. Jackson met with Mr. Mamane at the property and inspected the damaged BPP.
In a December 21, 2022, email following the inspection, Ms. Jackson advised the insured that the carrier would be “totaling out” the BPP. She also requested “wholesale invoices or purchase receipts” for the inventory.
In separate emails exchanged with adjuster, Ramona Garcia, and a phone call on January 10, 2023, Mr. Mamane advised that (based on the contents inventory provided over a month prior), the insureds BPP claim well exceeded the $1,000,000 policy limit for that coverage, and he requested an advance so the insured could begin replacing inventory and it could begin building repairs and reopen the business. Mr. Mamane also provided Ms. Garcia with the insured’s revised contents/ BPP inventory confirming the Insured’s loss totaled $1,275,169.05 not including decals damaged by the storm. As outlined in the revised inventory (and above), the Insured’s BPP claim including damage to inventory, non-inventory BPP, and cleaning of damaged items which could be cleaned, well exceeded Policy limits for this coverage.
With respect to the requested advance for BPP, the carrier requested the Insured first accept and sign a Salvage Agreement in order to issue the advance. It stated it would only issue an advance payment in exchange for the salvage of the BPP. However, in making this proposal to the insured upon which it conditioned an advance, Velocity failed and/or refused to confirm it would issue the full payment requested for the BPP before the Insured was required to surrender those items as salvage. As Velocity would not confirm its agreement to pay the full BBP claimed (up to policy limits), the Insured did not sign the Salvage Agreement.
On January 11, 2023, Mr. Mamane emailed Ms. Jackson seven (7) invoices from Ocean Club Sportswear, Inc., the company from which the insured purchased the inventory in compliance with her request for “wholesale invoices or purchase receipts” for the damaged inventory.
Ms. Jackson responded and incorrectly claimed that the invoices were not sufficient to comply with her request because Ocean Club was a “related entity” to The Spot (both businesses are owned by Mr. Mamane). But this fact is completely irrelevant, and any implication of impropriety is not well taken. Ocean Club and The Spot are separate corporations. The fact is that the BPP was purchased through Ocean Club but was owned by the insured on the date of loss and it was damaged by the Hurricane. The insured fully complied with Ms. Jacksons request for the purchase receipts so that the BPP could be “totaled out”, yet no payments were issued.
On January 13, 2023, Mr. Mamane responded and clarified that Ocean Club is a distributor to multiple stores and sells inventory to the Insured and other shops in the Daytona Beach area. What Ocean Club paid for the BPP which was sold to the insured and was damaged by the Hurricane is not relevant to what was paid to Ocean Club by the insured, or to the value of the damaged BPP. There was no basis for the failure to pay the BPP claim, and the withholding of the payments owed was and is wrongful.
With respect to the BI claim, on December 20, 2022, Insured provided Sedgwick/Velocity with its payroll documentation for September, October, and November 2022. Over fourteen (14) days later, on January 6, 2023, Mr. Lozada finally acknowledged receipt of the payroll information and requested “supplemental information in order to put something together for the adjuster and account manager to consider for the business income loss.” The new information requested from the insured was the following: 1) Monthly sales tax returns for the period January 2021 through December 2022, 2) Monthly profit and loss statements for the period January through December 2022, 3) Payroll register reports prepared by payroll service provider by pay period from July 2022 to date and 4) Rental lease agreement for the loss location.
On January 9, 2023, the insured promptly responded to Mr. Lozada by providing all documentation responsive to items No. 1 – 4 above, except for monthly sales reports for December 2022 as those were not available at that time. On behalf if the insured, Mr. Mamane also advised Mr. Lozada that Monthly Profit and Loss statements were only available January 2022 – September 2022 (due to the loss shutting down the insureds business on September 28, 2022).
On January 11, 2023, Mr. Lozada requested further information and documents regarding the BI claim, including the monthly sales tax returns for January – December 2021 (which had not previously been requested), and Monthly profit and loss statements for October – December 2022.
On January 12, 2023, the Insured promptly complied with this request providing the documents up to September 28, 2022 (when the storm damage occurred).
Between January 13 and January 25, 2023, the insured received no contact from Sedgwick or Velocity on his claim until he was advised on January 25, 2023, that yet another new adjuster, Sharlene Simmons, had taken over the BPP claim.
On February 1, 2023, Ms. Simmons advised she was still waiting on the contents report from the prior adjuster, Ms. Jackson, to complete her BPP evaluation. This was another unreasonable claim delay given the fact that the inspection of the BPP was conducted well over a month prior, and the requested invoices had been provided to Ms. Jackson three weeks prior.
By letter dated February 15, 2023, nearly five (5) months after the loss, Velocity finally issued some payments on the BPP and BI claims, and it issued an additional payment on the Building damage clam. The payments were as follows: Coverage A (Building) - $30,065.68 (supplemental payment); Coverage C (BPP - Retail) - $450,255.62 ($443,814.80 for ACV of non-salvageable items, $6,440.82 for contents cleaning); Coverage C (BPP - Non-retail) - $17,530.00; Coverage D (BI) - $160,632.44.
These payments are incorrect, do not reflect the insured’s full damages, and this was known to Velocity at the time it issued the payments. Regarding the BPP in particular, despite Ms. Jacksons statement that the carrier would “total out:” the BPP claim, only a portion of the BPP coverage was paid with the February 15, 2023, letter. The payment was not an advance but was paid as the “full amount” of the BPP damages.
By email to Ms. Simmons dated February 27, 2023, the Insured disputed the payments and estimates upon which they were based. Again, the estimates were based on low unit pricing, failed to include all damaged items and reflected an incorrect scope, applied excessive depreciation, and otherwise continued to undervalue the claim resulting in incorrect claim payments.
In March 2023, yet another new adjuster, Shelli Hula, was assigned to the insureds claim. This caused additional delay. Between March 2, 2023, and May 26, 2023, the Insured issued several requests for status and additional payments on his claim. This included a detailed email send to Ms. Hula on March 23, 2023, which addressed the specific areas of dispute for each coverage. There was no response to the March 23, 2023 email.
During a phone call with Ms. Hula during the week of April 14, 2023, Ms. Hula said she would provide an email addressing the Insured’s concerns as contained in the March 23, 2023 email. She did not follow up, and no responsive email was ever provided by Ms. Hula.
Thereafter Sedgwick reassigned the contents claim to yet another new adjuster, Mary Seychel. This caused further delay. But instead of reviewing and evaluating the Insured’s concerns regarding the BPP claim, on May 26, 2023, Ms. Seychel simply resent the previously provided worksheets outlining the carrier’s position on the BPP claim and upon which payments had previously been made.
On June 26, 2023, Sedgwick provided a “30 day” letter in which it maintained its prior coverage and payment positions and advised it was closing the claim if it did not receive any additional communication or information from the Insured. For each disputed area of coverage (building damage, BPP and BI) it requested the Insured notify Sedgwick/Velocity “in writing” of the discrepancies and provide supporting documentation. However, this was previously done on numerous occasions, including Mr. Mamane’s March 23, 2023, email to Ms. Hula.
Before sending its “30 day” letter Sedgwick had been repeatedly advised of the disputes regarding its prior adjustment and payments, and it did nothing to address those disputes. Instead, Sedgwick and Velocity simply ignored the information provided.
On June 29, 2023, the insured responded to the “30 day” letter and again outlined the discrepancies in the building damage, BPP and BI claims and re-sent the supporting documentation for each. The June 29, 2023, email (and subsequent follow up emails) went without response or acknowledgment by Sedgwick until over one month later.
On August 2, 2023, Ms. Hula emailed the Insured stating “I will look at the information you sent me and get back with you before the end of the week.” But once again Ms. Hula did not keep her word, and she did not respond.
This type of conduct – making claims that a timely response would be provided to the insured and then failing to provide the promised response – appears to be a general business practice and likely results from improper calendaring procedures and/or improper training.
When the promised response was not provided, Mr. Mamane again followed up. However, instead of working to adjust the claim further, Ms. Hula sent an email dated August 11, 2023, again providing the June 26, 2023 “30 day” letter, and stating: “I need you to respond to me in writing telling me what you are not in agreement with regarding the claim.” Ms. Hula’s August 11th email ignored and disregarded the Insureds’ numerous prior communications outlining the areas in dispute in detail and providing supporting documentation for same, including his March 23, 2023, email and his June 29, 2023 email. This was done to continue to stonewall the insured and delay the claim.
On August 22, 2023, the insured sent yet another email to Ms. Hula which again outlined the claim, the disputes, and the amounts still owed in detail in response to her August 11, 2023 email. (even though this information had been provided several times before).
On September 8, 2023, Ms. Hula sent an email which advised that she was providing the Insured’s information regarding the disputed claims to the building and contents adjuster to review.
When no response was provided for 20 days, Mr. Mamane followed up on September 28, 2023. Ms. Hula replied that same day stating: ”I have received the adjuster’s report for the Building and will be sending the information to you today. I actually have been working on your claim this morning. Just wrapping up my notes.”
Once again, Ms. Hula did not send the promised information that day (or in the following weeks).
Thirteen (13) days later, having received no information or response from Ms. Hula, on October 11, 2023, Mr. Mamane again wrote to Ms. Hula requesting a status update. Again, there was no response from Ms. Hula.
Eleven (11) days later, on October 20, 2023, Mr. Mamane again emailed Ms. Hula requesting the status of the claim. Again, there was no response.
On October 23, 2023, Mr. Mamane called Ms. Hula and left a message asking for the documentation she advised she would be sending to the Insured in her September 28th email. Again, there was no response.
After more than a month had passed since Ms. Hula’s September 28 email promising information that day, Mr. Mamane sent an email to Ms. Hula dated October 31, 2023, which outlined his efforts to obtain a response regarding the disputed claims. He also requested arbitration to resolve the dispute, as arbitration is provided as a dispute resolution method under the Policy.
Mr. Mamane made additional requests for a response in November 2023, and he requested Ms. Hula provide the contact information for her manager.
No response was received until November 22, 2023, when Ms. Hula finally responded that a building payment was being provided in the amount of $ 17,586.31, and that no further payments for BPP would be issued. Ms. Hula ignored the information from the insured which supported the correct payments for the BPP claim and the BI claim, she ignored the request for arbitration, and she ignored the request for the contact information for her manager.
The supplemental building payment of $17,586.31 was provided with a letter dated December 12, 2023, in which Sedgwick/Velocity affirmed its prior coverage and payment positions and advised the insured it was closing its file.
Despite being provided all requested information and other information to substantiate the correct payments to the insured on numerous occasions, Velocity did not resolve the dispute over the Building damages, continued to ignore the dispute over the BPP which had been underpaid (retail and non-retail), continued to ignore the dispute over the BI still owed, continued to ignore the insureds’ demand for arbitration, continued to ignore the request for Ms. Hula’s managers contact information,
The following is a summary of the Insureds’ damages which remain due and owing from Velocity under each relevant coverage provision related to the Hurricane Ian claim:
Coverage A/Building: $239,975.61
Coverage C/Business Personal Property
(retail, non-retail, cleaning): $532,214.38
Coverage D/Business Interruption: $104,039.63
Total amounts in dispute: $876,229.62
The Insured Property was damaged by a covered Hurricane loss. The Insured timely reported the damage to Velocity. Velocity conducted a deficient investigation, would not consider information provided by the insured which reflected a dispute over the damages to the Building, the BPP and the BI, refused to work to resolve the disputes, under scoped and undervalued the damages, made incorrect claim payments, and unreasonably delayed the claim.
Velocity has failed to create and implement adequate guidelines for proper claims investigation, claims evaluation, claims handling, and for training and supervision of employees and independent contractors handling its claims resulting in statutory violations as set forth above. Velocity has failed and/or refused to thoroughly, accurately, and completely investigate and evaluate the Insured’s claim for damages.
The concept of insurance is that it is the insurer's granting of timely and prompt indemnity or security against a contingent loss. Fla. Stat. § 624.02 defines insurance as a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies. Inherent is the fact that payment is made timely and promptly so that insureds may mitigate their damages and be put back into the position they were in prior to the loss as quickly as possible. Velocity has failed to comply with its duty to properly investigate and adjust the loss and promptly and fully indemnify its Insured.
Velocity has refused and/or failed to pay the full insurance proceeds owed to the Insured as required by the policy and law. Refusal and/or failure to settle the Insured’s claim when under all the circumstances it could have and should have done so had it acted fairly and honestly towards the Insureds is wrong.
The actions taken by Velocity in the handling and adjustment of its Insured’s claim was willful, wanton, and in complete disregard for the rights of its Insureds and occurs with such a frequency as to indicate a general business practice, and further, is in violation of Florida Statutes § 624.155 and § 626.9541.
Based on the foregoing actions and omissions, Velocity has engaged in multiple instances of wrongful claims handling conduct. That wrongful conduct includes, but is not limited to, the following:
1. Improper claim delay.
2. Improper claim denial.
3. Not conducting a full and fair investigation of its Insureds’ claim.
4. Looking for ways to deny recovery to its Insured.
5. Looking for ways to delay recovery to its Insured.
6. Ignoring and failing to respond to communications from the Insured within fourteen (14) days.
7. Not adjusting the claim and not evaluating the loss properly, promptly, and fairly so as to provide full and prompt indemnity to its Insured.
8. Failing to implement proper standards for the adjustment and investigation of insurance claims.
9. Making misrepresentations to the Insured about facts.
10. Making misrepresentations to the insured about coverage.
11. Making misrepresentations about payments owed.
12. Not training, supervising, or managing adjusters and independent contractors properly so that prompt and full payments are made, but rather placing the company’s interests before the policyholders’ interests by attempting to deny or minimize payments owed.
13. Establishing severity control initiatives and otherwise establishing a culture of not fully and promptly paying claims following losses.
14. Ignoring submitted claim documentation from the Insured.
15. Ignoring communications from the insured.
16. Ignoring the insureds’ requests for information.
17. Refusing to re-evaluate its claim decision (and/or to further adjust the claim) upon receipt of new information and documentation from the Insureds.
18. Repeatedly switching and assigning new adjusters which caused confusion and delay.
19. Failing to issue an advance payment for BPP unless the insured first signed a salvage agreement.
20. Knowingly underpaying the insureds claim.
Therefore, to cure the defects outlined in this Civil Remedy Notice, Velocity Specialty Insurance Company must:
(1) Tender all remaining insurance monies owed to the Insured for the Hurricane Ian loss and damage to the Building, for loss and damage to Contents/BPP and for BI.
A copy of this form has been submitted to the FDFS and has been printed out and mailed to the following parties providing them notice of the filing of the Civil Remedy Notice:
Velocity Specialty Insurance Company, via Certified Mail R.R.R.
Claims Department, Velocity Insurance via U.S. Mail.
Sedgwick, via U.S. Mail.
Pinchas Mamane, via email.
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The submitter hereby states that this notice is given in order to perfect the rights of the
person(s) damaged to pursue civil remedies authorized by Section 624.155, Florida Statutes.
Before submitting a Notice using this system, please verify that all text has been entered
correctly and completely. Once the Notice has been submitted, the text cannot be changed
or deleted.
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DFS-10-363
Rev. 10/14/2008
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