Claims and the Legal Duties of Property Insurance Companies
Disputing insurance coverage with any type of insurance company often seems like an overwhelming and futile effort, and this is especially true when it concerns damage to one’s home. When someone makes the decision to invest hard-earned money in the purchase of a home, the person is also investing in the future and making a commitment of time, funds, and energy to keep it in good condition. Part of this commitment and investment involves obtaining homeowners insurance to cover repairs or rebuilding if the house is damaged by certain acts of nature or fire. Owners pay the premiums to fund this policy with the understanding that if a claim is filed, the insurance company will honor the contract and pay the necessary repair costs.
But, what happens if the company denies the claim, and asserts the damage is not covered? A Florida couple’s bid to combat a denial of coverage by their homeowners’ insurance company recently came to an unsuccessful end when the Florida Supreme Court declined to hear the case. The insurance company claimed the sulfurous odor and corrosion found in the home’s air conditioning system and other electrical components was due to defective Chinese drywall, which is considered a latent defect, and excluded under the terms of the policy. The couple argued the corrosion was also caused by humidity, but the lower courts disagreed. Florida law imposes certain duties on insurance companies when claims are made, and gives homeowners the right to elect an alternative resolution forum over a traditional lawsuit if a dispute arises. Understanding these two issues will help owners diligently pursue property loss claims, and both will be discussed below.
Duties of Insurance Companies When a Claim Is Filed
Florida law provides that insurers must review and acknowledge the submission of a claim within 14 days of receipt with either a written or verbal response by the insurance agent. The duty to investigate the legitimacy of the claim is triggered when the insurer receives a copy of insured’s proof of loss statement, which is a document that tells the insurance company details about the damage incurred, the value of items lost, and the amount of the claim. The law gives them 10 business days to open an investigation, and a total of 90 days to either pay the claim or deny coverage.
It is important to know that if the insured believes the insurance company acted in bad faith when it denied his/her claim, Florida offers consumers the ability to file a complaint with the Department of Financial Services. Acting in bad faith means the insurance company failed to settle the claim when the circumstances dictated otherwise if the company was acting honestly. Filing this complaint is the first step in the process of suing an insurance company for breach of contract, and if the insured is successful, he/she can recover damages, court costs, and lawyer’s fees from the insurance company.
Right to Request Mediation
If an insured wants to dispute the denial of a claim without the time and expense of an adversarial forum, he/she can choose to participate in mediation. This forum allows the policyholder and insurance company to meet and try to work out any disputes with the assistance of a neutral mediator. The insured is permitted to hire an lawyer to help negotiate a settlement. This procedure is voluntary and nonbinding, but if settlement is reached, the insured has three days to rescind the agreement before it is considered binding, and releases the insurer from further liability. Note that if this process is not productive, the insured is still free to pursue litigation.
Fighting an insurance company alone usually feels like an unwinnable battle in a situation where the stakes really matter. Hiring an lawyer to represent you will alleviate some this pressure, and give you a better chance of achieving your desired outcome. The Miami law firm of Pita Weber & Del Prado knows how to effectively attack contract language disputes, and will fight to get you the money you deserve. Contact us today for a free consultation.