Exhibit 10.20

SEPARATION AGREEMENT

This Agreement, dated June 17, 2011, is by and between Homeowners Choice, Inc.
(the “Company”), a Florida corporation having its principal place of business at
5300 West Cypress Street, Suite 100, Tampa, Florida 33607, and Francis X.
McCahill III (the “Executive”).

BACKGROUND STATEMENT

The Executive serves as the Company’s chief executive officer. The Executive and
the Company have entered into several contracts in connection with the
Executive’s employment, including (1) Executive Agreement dated May 1, 2007,
attached as Exhibit A (the “Executive Agreement”); (2) Incentive Stock Option
Agreement dated June 1, 2007, as adjusted to reflect a 2.5 for 1 stock split,
attached as Exhibit B (the “Option Agreement”); and (3) Retention Bonus
Agreement, dated February 17, 2011, attached as Exhibit C (the “Bonus
Agreement”). The Executive has indicated his desire to sever his employment
relationship with the Company. This Agreement sets forth certain terms regarding
that severance and supplements and amends the Executive Agreement, the Option
Agreement and the Bonus Agreement.

NOW THEREFORE, in consideration of and reliance upon the statements contained in
the foregoing background statement and the representations and warranties
contained in this Agreement, the Executive and the Company agree to the
following terms and conditions:

TERMS AND CONDITIONS

1. Separation Date. The Executive’s final day of employment by the Company will
be June 30, 2011 (the “Separation Date”). The Executive hereby resigns effective
as of the Separation Date from each directorship, office and position held
within the Company and within any Company Affiliate. The Executive and the
Company agree the Executive is voluntarily electing to terminate the Executive’s
employment under the Executive Agreement and the parties have mutually agreed to
the Separation Date.

2. Compensation. The Company will pay and provide the Executive’s normal salary
and benefits up and to and including the Separation Date, less all deductions
legally required or otherwise authorized by the Executive. The Company hereby
waives its rights of reimbursement under the Bonus Agreement.

3. Restrictive Covenants. The Executive and the Company acknowledge and agree
that the Executive is leaving the Company on his own accord and consequently the
non-competition provisions of Section 5 of the Executive Agreement will have no
force and effect after the Separation Date. However, notwithstanding the
foregoing, the Executive agrees that during the period commencing on the date of
this Agreement and ending one year after the Separation Date the Executive will
not directly or indirectly solicit or induce any of the Company’s employees to
terminate employment by the Company. In addition, the Executive will not perform
any act or make any statement, public or private, legal or illegal, that would
tend to dishonor or embarrass the Company or its Affiliates, disparage,
discredit, reflect adversely upon or in any manner injure the reputation of
Company or its Affiliates or their products or services or subject the Company
or its Affiliates to potential liability or legal or administrative process.

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4. Stock and Stock Options.

4.1 Vesting. Vesting under the Option Agreement will cease on the Separation
Date. The Company and the Executive agree that under the Option Agreement the
Executive has a vested right to purchase 125,200 shares of the Company’s common
stock at an exercise price of $2.50 per share.

4.2. Exercise. The Executive does hereby exercise his right to purchase 125,200
shares under the Option Agreement (the “Shares”).

4.3. Sale of Shares. The Company hereby purchases from the Executive and the
Executive hereby sells to the Company 85,200 of the Shares at a price of $6.50
per Share.

4.4. Deliveries. Upon execution of this Agreement, the Company will deliver to
the Executive $240,800 by wire transfer representing $553,800 in full payment
for the purchase of 85,200 Shares minus the Executive’s aggregate exercise price
of $313,000 (125,200 times $2.50) and promptly direct its transfer agent to
issue to the Executive a certificate representing the remaining 40,000 Shares.

4.5. Right of First Refusal. If any time after the execution of this Agreement,
the Executive proposes to sell or transfer any of the Shares, then the Executive
will deliver written notice to the Company (the “Offer to Sell”) (i) stating the
number of shares of the proposed to be sold or transferred, the name and address
the proposed purchaser or transferee, the nature of the proposed transfer (e.g.
sale, gift, or encumbrance) and terms of the proposed sale or transfer,
including the price or amount of encumbrance, payment terms and the closing date
and (ii) offering to sell those shares to the Company upon the terms provided by
this Agreement. The Offer to Sell shall be accompanied by a copy of the written
offer, proposal or contract, if any, associated with the proposed sale or
transfer. The Company will have the first right, but not the obligation, to
purchase all or any number of the Shares offered pursuant to the Offer to Sell
at a price equal to 95% of the closing price on the NASDAQ Global Select Market
(or other applicable public market upon the which shares of the Company’s common
stock trade) on the day previous to the date the Offer to Sell is received by
the Company To exercise this purchase right, the Company must deliver written
notice of acceptance to the Executive—stating the number of shares to be
purchased—within three business days of receiving the Offer to Sell. The closing
on the sale will take place within five days of the Company’s acceptance of the
Offer to Sell.

 

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5. Cooperation. The Executive agrees to cooperate and participate reasonably
with the Company in any legal or regulatory proceedings for which the Company
reasonably requests his participation.

6. Release and Waiver. Acting for himself, his heirs, personal representatives,
administrators and anyone claiming by or through him, the Executive
unconditionally and irrevocably releases, acquits and discharges the Company and
its past and present Affiliates, from any and all Claims, whether known or
unknown, that the Executive may have against the Company or its Affiliates as of
the date of this Agreement, or that any person or entity claiming through the
Executive may have or claim to have against the Company or its Affiliates.

The Executive expressly waives and relinquishes all waivable rights and benefits
afforded to him by Title VII of the Civil Rights Act of 1964 (“Title VII”), as
amended; the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended;
the Americans with Disabilities Act of 1990 (“ADA”), 42 U.S.C. §12101, et seq.;
the Family and Medical Leave Act (“FMLA”), 42 U.S.C. §12101, et seq.; the Fair
Labor Standards Act (“FLSA”); the Florida Civil Rights Act of 1992 (“FCRA”)
(Fla. Stat. 760 et seq.); Fla. Stat. §448.101 - 448.105; the Florida Human
Rights Act of 1977 (“FHRA”) (Fla. Stat. 760 et. seq.); the Older Workers’
Benefit Protection Act (“OWBPA”); or any other local, state or federal acts
dealing with discrimination associated with employment or workplace policies,
“whistle-blower” claims, all employment related causes of action, as well as
claims for breach of contract, wrongful termination, retaliation, intentional
infliction of emotional distress, negligent hiring, invasion of privacy,
defamation, slander, or any other tort arising out of the employment
relationship. Title VII prohibits discrimination and retaliation based on sex,
race, color, national origin and religion. ADEA prohibits discrimination on the
basis of age. ADA prohibits discrimination against qualified individuals with a
disability. FMLA provides for leaves of absence in certain circumstances. FLSA
provides for minimum and overtime wages. FCRA and FHRA prohibit discrimination
and retaliation in all aspects of employment on the basis of race, sex,
religion, national origin, age, handicap or marital status. OWBPA prohibits
discrimination against older workers in connection with employee benefits except
when age-based reductions in employee benefit plans are justified by significant
cost considerations.

The Executive has been given at least seven days following the execution of this
Agreement to revoke this Agreement and the releases and waivers it contains, and
understands that this the releases and waivers contained in this Agreement do
not become effective until after the revocation period expires.

The Executive has been given at least 21 days to consider this Agreement and the
releases and waivers it contains, but is not prevented from considering and
signing this Agreement in less time.

 

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7. Notices. Any notices or deliveries permitted or required by this Agreement
will be deemed given (i) when delivered in person or by messenger, if a receipt
is obtained for delivery, (ii) when delivered by Federal Express, United Parcel
Service, Airborne Express, U.S. Express Mail or similar nationally recognized
overnight delivery service, if a confirmation of delivery is obtained, or
(iii) five days after mailing, if mailed via certified or registered U.S. mail,
return receipt requested, provided the notice is delivered or mailed to the
party’s address as set forth below:

If to the Company:

Homeowners Choice, Inc.

Suite 100

5300 West Cypress

Tampa, FL 33607

ATT: General Counsel

If to the Executive:

Executive’s most recent address on file with the Company.

The parties may change addresses to which notices are to be delivered by giving
notice of the change of address in the manner set forth above; except, however,
that notwithstanding the foregoing provision, notice of a change of address will
be deemed made upon actual receipt of the notice by the other party. Notices
deemed given or delivered as set forth above on a Saturday, Sunday, or legal
holiday will instead be deemed given or delivered on the next succeeding day
which is not a Saturday, Sunday or legal holiday.

8. Entire Agreement. With respect to its subject matter, this Agreement contains
all the understandings and agreements of the parties and supersedes all previous
and all contemporaneous agreements, understandings, discussions and negotiations
between the parties, whether written or oral. The parties agree that no previous
drafts of this Agreement will be admissible as evidence (whether in any
arbitration or court of law) in any proceeding which involves the interpretation
of any provisions of this Agreement.

9. Amendments. Except as otherwise provided herein as to terms that are
unreasonable, arbitrary or against public policy, this Agreement will not be
modified or amended except by an instrument in writing signed by the parties.

10. Governing Law. This Agreement will be governed by and construed in
accordance with the internal laws of the State of Florida without reference to
conflicts of law principles.

11. Further Assurances. Each party hereto will cooperate and will take such
further action and will execute and deliver such further documents as may be
reasonably requested by the other party in order to carry out the provisions and
purposes of this Agreement.

 

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12. Construction. This Agreement was negotiated at arms’-length, with each party
having the assistance of independent legal counsel. No court, arbitrator or
finder of fact should be construe this Agreement more strongly against either
party on the basis of which party was responsible for the Agreement’s
preparation. Wherever from the context it appears appropriate, each term stated
in either the singular or the plural will include the singular and the plural,
and pronouns stated in the masculine, feminine or neuter gender will include the
other genders. The words “Agreement,” “hereof,” “herein” and “hereunder” and
words of similar import referring to this Agreement refer to this Agreement as a
whole, including Exhibits, and not to any particular provision of this
Agreement. Whenever the word “include,” “includes” or “including” is used in
this Agreement, it will be deemed to be followed by the words “without
limitation.” The various headings contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit or extend the scope or
intent of any of the provisions of this Agreement.

13. Counterparts. This Agreement may be executed in one or more counterparts,
all of which taken together will be deemed one original.

14. Affiliate. For the purposes of this Agreement, the capitalized term
“Affiliate” means any corporation, limited liability company, partnership or
other association or entity controlled by the Company and any office or director
of any of the foregoing.

15. Claims. For the purposes of this Agreement, the capitalized term “Claims”
means and includes any lawsuits, causes of action, obligations, promises,
agreements, controversies, damages, debts, demands, liabilities, and losses of
every kind (including third-party claims for indemnity or contribution against
the Company or any of its Affiliates), which are known and unknown to Employee
at the time this Agreement is executed.

16. Exhibits. All exhibits, schedules and other attachments to this Agreement
are hereby incorporated by this reference as integral parts of this Agreement.

17. Saturday, Sunday or Legal Holiday. When the last day of a period during
which an act may be performed under this Agreement falls on a Saturday, Sunday,
or legal holiday that period will be deemed to end on the next succeeding day
which is not a Saturday, Sunday or legal holiday.

18. Electronic Signatures. Signed versions of this Agreement, addenda,
attachments and exhibits delivered by telephonically or electronically will
legally bind the parties to the same extent as original documents.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first set forth above.

 

  EXECUTIVE       Francis X. McCahill III   Homeowners Choice, Inc.     By:  

Paresh Patel

Chairman of the Board

 

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