Challenging an Insurance Company’s Denial of Coverage
People buy insurance policies in anticipation of the day when serious damage or injury happens to property or person, in order to cover these large and unexpected expenses, most commonly for car accidents or property damage to a home. Without this type of backup plan, many people would be left destitute under the weight of debt that would accumulate. Paying insurance companies monthly or annual premiums is the tradeoff for this security, and policyholders expect in return that insurance companies will honor the terms of their policies and pay submitted claims. In a perfect world, this process would be easy and fast, but insurance companies often dispute whether an accident or event is covered under the policy contract, leaving policyholders the unsavory task of fighting the company for the performance of what all these premium payments were made to cover. Florida law recognizes this kind of fight is almost always unfair in favor the insurance company and offers a legal mechanism to challenge insurance companies who deny coverage for bad faith reasons. In addition, a recent decision by the Florida Supreme Court should make it easier for policyholders to challenge insurance companies for incidents of bad faith denial of coverage.
Contesting a Denial of Coverage
Florida law grants individuals insured by insurance providers licensed in the state to file complaints with the Florida Department of Financial Services (FDFS). FDFS offers forms to initiate the process and requires the following information to investigate a complaint:
- the specific law the insurance company violated;
- the facts surrounding the violation;
- the name of individuals involved in the violation;
- the specific policy language relevant to the violation; and
- a statement that the completion of the form constitutes notice of filer’s intent to pursue this remedy.
The statutory provision that an insured individual is most likely to claim was violated is one that requires an insurance company to settle claims in good faith when circumstances indicate it should do so. In other words, if the facts show the other party was completely at fault, and the accident was clearly within events covered by the policy, the insurance must pay out the claim.
Once notice is given, the insurance company has 20 days to respond to the FDFS and 60 days to pay the claim or remedy the issues that caused the violation. If the insurance company does not reply within this time frame, the insured can file a lawsuit, and if successful, is entitled to reimbursement for court costs and lawyer’s fees, in addition to any damages awarded.
Effects of Florida Supreme Court Decision
The Florida Supreme Court recently decided a case involving the denial of an underinsured/uninsured motorist insurance claim stemming from a car accident that left the plaintiff with $12,000 in property damage to his car and $24,000 in medical expenses, with additional medical treatment needed. Liability for the accident was decided in an earlier trial, and the other driver was found to be entirely at fault. The insurance company appealed the jury award because it exceeded the policy limits and argued determinations of damage beyond the policy limit should only be allowed in a later bad faith lawsuit. The Supreme Court disagreed, and in an effort to streamline these types of claims, stated the full extent of damages can be set during the first trial for liability, that they are binding for later lawsuits filed, and that the original court can retain jurisdiction. The court’s decision should reduce the number of lawsuits necessary to hold an insurance company accountable and lower litigation costs, which is good for policyholders.
Dealing with an insurance company who denies a claim is often a daunting task due to the size and financial power they have over policyholders. Turning to an lawyer in this situation could give you an advantage and prompt the company to be more willing to settle. The Miami law firm of Pita Weber & Del Prado regularly represents clients in insurance coverage disputes, and they can assist you with your case. Contact us to schedule a free consultation.