Property Insurance Claims
An insurance policy is a contract between the insurer and insured under which the insurer promises to pay up to the limits of coverage those claims that meet the terms and conditions set forth in the policy. An insurance policy is a special kind of contract in that the insurer typically writes the policy and sets the rates paid for the coverage without any direct input from the insured. Such agreements are referred to as “contracts of adhesion.”
Because of this imbalance in bargaining position, ambiguities in the policy are strictly construed against the insurer and exclusions are normally narrowly interpreted in favor of the insured. Further, detailed statutory schemes govern insurers’ conduct. Under the typical policy, the terms and conditions establish duties and obligations both for the insurer and the insured. Disputes between insureds and insurers as to the legal meaning of the terms and conditions in a policy must generally be resolved by a court. Disagreements as to the amount of damage suffered by an insured under a policy providing coverage for property damage can be resolved either in a civil lawsuit, or by the informal (out of court) appraisal process that is provided for in most policies. If an insured has furnished an insurer with adequate proof of property damages sustained, and the insurer has declined to pay, the insured is confronted with the decision of whether to invoke appraisal or file a lawsuit.
Before an insured can initiate a lawsuit, it must have done all the things required of it under the policy or have been excused from doing so by the conduct of the insurer. The prerequisites to filing suit are generally referred to as “conditions precedent”. For example, if the insurer requests an examination under oath of the insured, the examination would ordinarily have to be completed before a court would entertain a lawsuit. Generally speaking, if an insurer requests appraisal, that process would have to be concluded before suit on any issues beyond those addressed by the appraisal process. If an insured has satisfied all conditions precedent under the policy or has been excused from their performance, the question of whether to seek resolution of a property damage claim through appraisal or a lawsuit is a matter of judgment dependent upon the particulars of the situation. The filing of a lawsuit does not preclude a subsequent determination, while the lawsuit is pending, of the amount of damages by appraisal.
Insurer Conduct and Remedies.
By statute, Florida law addresses instances where an insurer has not attempted in good faith to settle a claim when, under all circumstances, it could and should have done so, had it acted fairly and honestly toward its insured with due regard for his or her interests. Florida Statutes Section 624.155 creates a cause of action in favor of an insured under circumstances where an insurer violates any of the acts enumerated under the statute. However, as a condition precedent to bring in an action under the statute, the insurer must be given 60 days written notice of violation, referred to as a Civil Remedy Notice, after which no action will lie if the damages are paid or the circumstances giving rise to the violation or corrected by the insurer.
Thus, under Florida law there are two potential types of damages that can potentially be sought by an insured in a suit against an insurer. The damages that correspond to the amounts due under the coverages in the policy are referred to as “contractual damages.” If the insured is able to prove a violation of Section 624.155 that has not been paid or cured within the 60 day period set forth by the statute,” then the insured may be able to recover “extra-contractual” damages as well. Such damages would include expenses incurred that were caused by the insurer’s conduct, but not otherwise covered by the policy.
Under Florida law, any dispute of contractual damages must first be resolved by way of a breach of contract lawsuit or appraisal before the question of extra-contractual damages can be litigated. There is, however, no prohibition against the filing of a Civil Remedy Notice before resolution of the contract damages at issue, and such a notice should be filed promptly upon the occurrence of a violation when circumstances warrant it. As in many areas of the law, there are various statutes and case law that govern and influence the flow of a claim for property damages. Given the complexity of the law and the individual predilections of the various insurers, policyholders and others involved, including independent and public adjusters and attorneys, each case must be analyzed individually to determine the best avenue for its resolution.
Florida Statues Section 627.428 provides for attorney fees in the event a policyholder prevails in a lawsuit against their insurance company. It states as follows: “(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.”