Filing Number: 807748
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| Filing Accepted: 2/20/2025 |
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THE SCHOOL BOARD OF VOLUSIA COUNTY
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First Name |
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| Street Address
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100 WOLF PACK RUN |
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DELTONA,
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32725
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ARRYAN@VOLUSIA.K12.FL.US |
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Insured |
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| Last/Business Name* |
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THE SCHOOL BOARD OF VOLUSIA COUNTY |
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First Name |
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| Policy # * |
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0312-8587-1A |
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Claim #* |
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2021022623 |
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Attorney is Applicable
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| Last Name* |
DUNNAVANT
First Name *
ERIN
Initial
E
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| Street Address* |
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901 W. SWANN AVENUE |
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TAMPA
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FL
33606
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| Email Address * |
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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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| Insurer Name* |
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ALLIED WORLD ASSURANCE COMPANY (US), INC.
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,
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NAIC Company Code 19489 |
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| Name of individual responsible for violation (if any):*
CLAIMS DEPARTMENT, SUPERVISORS, MANAGEMENT, AGENTS, AND ADJUSTERS, INCLUDING THE FOLLOWING REPRESENTATIVE & ADJUSTER(S), CONSULTANTS AND VENDORS SPECIFICALLY: TRACY MEDNICK AND ANDREW W. JOHNSON, P.E.
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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 Denial
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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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| 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)(d) |
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Denying claims without conducting reasonable investigations based upon available information.
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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 following language from its Commercial Policy with the Insurers may be applicable:
SECTION II – COVERED CAUSES OF LOSS
A. PERILS INSURED: This Policy insures against all risks of direct physical loss or damage to Insured Property, except as excluded.
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SECTION III – INSURED PROPERTY
A. INSURED PROPERTY: Unless otherwise excluded, this Policy covers the following property while on the described Locations and within 1,000 feet thereof:
1. Real property, including new buildings and additions under construction at an Insured Location, and personal property in which the Insured has an insurable interest;
2. Improvements and betterments to buildings or structures in which the Insured has an insurable interest.
Such improvements and betterments shall be considered real property;
3. Personal property, other than motor vehicles, of officers and employees of the Insured;
4. Personal property of others in the care, custody and control of the Insured, which the Insured is under obligation to keep insured for physical loss or damage of the type insured against under this Policy;
5. Contractor’s and vendor’s interests in property covered to the extent of the Insured's liability imposed by law or assumed by written contract prior to the date of direct physical loss or damage. However, such interests will not extend to any time element coverage provided by this Policy.
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SECTION IV – VALUATION
Unless otherwise endorsed hereon, the property, as described below, will be valued as follows:
A. For all property other than property specifically described in Subparagraph B. through M., inclusive, below:
Adjustment of loss or damage shall be valued at the cost to repair or replace (whichever is less) at the time and place of the loss with materials of like kind and quality, without deduction for depreciation and/or obsolescence. The Insured may elect to rebuild on another site, provided that, such rebuilding does not increase the amount of loss or damage that would otherwise be payable to rebuild at the same site. Property that is not repaired or replaced within two (2) years after the date of loss (unless such requirement is waived by the Company in writing) will be valued at Actual Cash Value at the time and place of the loss.
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SECTION VI – ADDITIONAL COVERAGES
The following additional coverages are subject to the terms and conditions of this Policy, including, the deductibles and sublimits of liability corresponding to each such additional coverage shown in Section I. These sublimits are part of, and not in addition to sublimits and limits of liability of this Policy, including, but not limited to, the Earth Movement, Flood, or Named Storm Sublimits of Liability provided herein, if applicable.
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B. DEBRIS REMOVAL: This Policy covers the necessary and reasonable expense of removal from the Insured Locations of debris of Insured Property remaining as a result of direct physical loss or damage insured against under this Policy when the Insured gives written notice of such direct physical loss or damage to the Company, no later than 180 days after the loss. There is no liability for the expense of removing contaminated or polluted uninsured property, nor the Pollutant or Contaminant therein or thereon, whether or not the contamination results from an insured event.
In addition, Sedgwick, the third-party administrator retained by the insurer, cited the following policy language as being pertinent in its September 28, 2023, denial of coverage letter:
MANUSCRIPT DOMESTIC PROPERTY POLICY
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SECTION III – INSURED PROPERTY
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B. PROPERTY EXCLUDED: This Policy does not insure against loss or damage to:
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2. Land, land values, any substance in or on Land, or any alteration to the natural condition of the Land;
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5. Drainage systems, pavements or roadways;
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MANUSCRIPT DOMESTIC PROPERTY POLICY
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SECTION II – COVERED CAUSES OF LOSS
A. PERILS INSURED: This Policy insures against all risks of direct physical loss or damage to Insured Property, except as excluded.
B. PERILS EXCLUDED:
1. The Company does not insure for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss or damage. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area:
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h. Deterioration, depletion, rust, corrosion, erosion, wet or dry rot, decay, evaporation, leakage, wear and tear, 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, all whether atmospheric or not; all unless physical damage not otherwise excluded by this Policy ensues, in which event, this Policy shall cover only such ensuing damage.
i. Settling, cracking, shrinking, bulging, or expansion of pavements, foundations, walls, floors, or ceilings; all unless physical damage not otherwise excluded by this Policy ensues, in which event, this Policy will cover only such ensuing 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 to the above statutory provisions alleged to have been violated, see also the following statutes and rules which were violated by the Insurers, the application of which are further explained below:
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)(2) An adjuster shall adjust all claims strictly in accordance with the Insurance contract.
69B-220.201(3)(c) An adjuster shall not approach investigations, adjustments, and settlements in a manner prejudicial to the insured.
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)(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.
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 100 Wolf Pack Run, Deltona, FL 32725 (the “Insured Property”) sustained damage resulting from a sinkhole(s) on or about September 10, 2021. Prior to the loss, the Insured had obtained a commercial policy from Axis Surplus Insurance Company (Policy No. EAF637823-01/2021), Everest Indemnity Insurance Company (Policy No. CA3P006695-211), Allied World Assurance Company (Policy No. 0312-8587-1A), and StarStone Specialty Insurance Company (Policy No. E80402210CSP) (the “Insurers”).
The instant CRN is directed towards Allied World Assurance Company (US), Inc. A separate CRN will be filed in regard to the other insurers. Allied World Assurance Company (US), Inc.’s administrative and mailing address is 199 Water Street, New York, NY 10038, and its home address is 251 Little Falls Dr., Wilmington, DE 19808.
The Insured timely filed a claim with the Insurers on or about September 10, 2021. The Insured reported that one of its teachers noticed a crack in her classroom (i.e., Building 10 of the Insured Property). This triggered the reporting of the claim.
The Insurers thereafter retained third-party administrative company, Sedgwick, to adjust and service the claim on their behalf. Sedgwick assigned adjuster, Tracy Mednick, to the claim(s).
The Insured retained the services of third-party engineering firm, Universal Engineering Sciences (“Universal”), to inspect the Insured Property and prepare a report opining as to its findings and conclusions concerning the origin and cause of loss. On October 27, 2022 (revised December 15, 2023), Universal provided the Insured with its report of findings and conclusions.
As part of its findings, Universal determined that the Insured Property suffered from sinkhole activity. In particular, Buildings 2, 10, and 12 sustained visible losses. Universal recommended, in summary, the following in its report:
To remediate sinkhole activity encountered during this exploration, we recommend that the soils beneath the perimeter and interior of Buildings 2, 10 and 12 be treated by low slump grout injection. Due to the distress to the building Universal also recommends preventative underpinning prior to grouting operations. We recommend that the remaining buildings be periodically monitored for any further distress.
As discussed, we were provided with updated underpinning plans by BRPH. The updated plans include the interior load bearing walls. The underpinning plans and grout injection plans for each building are provided in Appendix C. It should be noted that these plans are preliminary and are subject to change based on access constraints and underground utilities.
The Insurers, through Sedgwick and Tracy Mednick, sent out their own engineering company, Engineering Systems, Inc. (“ESi”) to separately inspect the Insured Property on their behalf. In its report dated April 28, 2023, ESi, through Andrew W. Johnson, P.E., S.E., concluded that:
1. Structural Damage, as defined by §627.706(2)(k) Florida Statutes, has not been identified at the Deltona High School Building 2, Building 10, and Building 12.
2. The observed damage to Building 2, Building 10, and Building 12 is due to age-related deterioration of building materials, shrinkage of cementitious materials, the expansion and contraction of building materials, and differential settlement over time.
3. The observed current conditions, management of roof and walkway cover run off, and management of surface water flows around the buildings, is allowing for localized soil erosion and percolation of rainwater in the soils at or near the building foundation contributing to differential settlement of the structure.
Based upon the findings and conclusions of ESi, the Insurers, through Sedgwick and Tracy Mednick, wrongfully denied coverage for the Insured’s claim in a letter dated September 28, 2023. In that same letter, Sedgwick advised that, “If you disagree with this assessment and believe there are facts bearing on the question of coverage that have yet to be made known to the Insurers, please forward that information to us.”
The ESi report was forwarded to Universal for review and consideration. On or about June 27, 2024, Universal prepared a “rebuttal to property damage assessment” in response to the ESi report and its determinations.
In addition to the disagreement the Insured has as it relates to the inapplicability of the Insurers’ assessment that the policy’s exclusionary clauses apply to this loss (and not sinkhole activity, which is a form of “earth movement”), the Insured also disagrees with the Insurers’ position that the structural damage threshold must be met here in order to afford the Insured coverage.
Again, a review of the policy shows that the Insured purchased a policy that provides broader coverage than just “sinkhole loss,” but rather “earth movement,” which sinkhole activity is a form of. There is no “structural damage” requirement pursuant to Florida Statute §627.706(2)(k) as the Insurers purport. Nonetheless, even if such a threshold must be met per the policy (as the Insurers presume), Universal does believe that prong §627.706(2)(k)(4) as it relates to imminent collapse has been met at the Insured property. Thus, even under the Insurers’ theory of this claim, the Insured should be afforded coverage.
Due to the Insurers complete failure to properly resolve and adjust this loss, the Insured felt compelled to contract for, and begin remediation, building stabilization and repairs through contracting firm, A.M. Weigel Construction, Inc., so as to protect the welfare of the Children who attend school there, and the welfare of the school’s teachers, administration and staff. The Insured has incurred losses exceeding $2.2 million to properly remediate, stabilize, and restore the Insured Property.
The Insured Property was damaged by a covered loss. The Insured timely reported the damage to the Insurers. The Insurers (and their representatives) conducted a deficient investigation and improperly denied the loss, particularly in light of the evidence submitted by the Insured.
The Insurers have 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 handlings its claims resulting in statutory violations as set forth above. The Insurers have 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 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. The Insurers have failed to comply with their duty to timely adjust and fully indemnify its Insured.
Further, the Insurers have breached the policy of insurance with their Insured through their actions and/or inactions.
The Insurers have 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 Insured is wrong.
The actions taken by the Insurers in the handling and adjustment of the Insured’s claim was willful, wanton, and in complete disregard for the rights of the Insured 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, the Insurers have engaged in wrongful conduct. That wrongful conduct includes, but is not limited to, the following:
1. Improper claim delay.
2. Improper claim denial.
3. Looking for ways to deny recovery to the Insured.
4. Looking for ways to delay recovery to the Insured.
5. Not adjusting the claim and not evaluating the loss properly, promptly, and fairly so as to provide full and prompt indemnity to the Insured.
6. Failing to implement proper standards for the adjustment and investigation of insurance claims.
7. Making misrepresentations to the Insured about coverage.
8. Making misrepresentations to the Insured about facts.
9. 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.
10. Establishing severity control initiatives and otherwise establishing a culture of not fully and promptly paying claims following losses.
11. Ignoring submitted claim documentation and information from the Insured.
12. Using ESi to evaluate and estimate damages, which is a well-known outcome-oriented expert and vendor who makes significant income from insurance companies, including the Insurers, subsidiary companies, and the insurance industry in general.
13. Forcing the insured to adjust its own loss.
Therefore, to cure the defects outlined in this Civil Remedy Notice, the Insurers must:
Tender all insurance monies owed to the Insured for the Sinkhole loss to the Insured Property.
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:
Axis Surplus Insurance Company, via Certified Mail R.R.R.
Everest Indemnity Insurance Company, via Certified Mail R.R.R.
Allied World Assurance Company, via Certified Mail R.R.R.
StarStone Specialty Insurance Company, via Certified Mail R.R.R.
Sedgwick, via Certified Mail R.R.R.
Ms. Tracy Mednick, Sedgwick, via Certified Mail R.R.R.
Amber Ryan (o/b/o the Insured), 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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