Claims Handling Practices - Florida

Claims Adjusting Standards

Florida lists unfair claims settlement practices in its “Unfair Insurance Trade Practices Act.” Fla. Stat. § 626.9541(i). Additional prohibited claims practices are described in Fla. Stat. § 624.155(1)(b), which also creates a private cause of action by an insured for violation of these statutes, as discussed within.

Florida statutes prohibit the following unfair claims settlement practices (Fla. Stat. § 626.9541(1)(i); Fla. Stat. § 624.155(1)):

1. Attempting to settle claims on the basis of an application, when serving as a binder or intended to become a part of the policy, or any other material document which was altered without notice to, or knowledge or consent of, the insured.


2. 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.


3. Committing or performing with such frequency as to indicate a general business practice any of the following:
   
   
   1. Failing to adopt and implement standards for the proper investigation of claims.
   2. Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue.
   3. Failing to acknowledge and act promptly upon communications with respect to claims.
   4. Denying claims without conducting reasonable investigations based upon available information.
   5. Failing to affirm or deny full or partial coverage of claims, and, as to partial coverage, the dollar amount or extent of coverage, or failing to provide a written statement that the claim is being investigated, upon the written request of the insured within 30 days after proof-of-loss statements have been completed.
   6. Failing to promptly provide a reasonable explanation in writing to the insured of the basis in the insurance policy, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement.
   7. Failing to promptly notify the insured of any additional information necessary for the processing of a claim.
   8. Failing to clearly explain the nature of the requested information and the reasons why such information is necessary.
   9. Failing to pay personal injury protection insurance claims within the time periods required by s. 627.736(4)(b). The office may order the insurer to pay restitution to a policyholder, medical provider, or other claimant, including interest at a rate consistent with the amount set forth in s. 55.03(1), for the time period within which an insurer fails to pay claims as required by law. Restitution is in addition to any other penalties allowed by law, including, but not limited to, the suspension of the insurer’s certificate of authority.
      
      
4. Failing to pay undisputed amounts of partial or full benefits owed under first-party property insurance policies within 90 days after an insurer receives notice of a residential property insurance claim, determines the amounts of partial or full benefits, and agrees to coverage, unless payment of the undisputed benefits is prevented by an act of God, prevented by the impossibility of performance, or due to actions by the insured or claimant that constitute fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which benefits are owed.

Private Cause of Action for Single Instance of Prohibited Act

A private cause of action may be brought on the basis of an allegation of a single prohibited act listed above, even for those acts which are stated to require “with such frequency as to indicate a general business practice.” Fla. Stat. § 624.155(1); Dadeland Depot, Inc. v. St. Paul Fire and Marine Ins. Co., 945 So.2d 1216, 1232-1233 (Fla. 2006); Hogan v. Provident Life & Accident Ins. Co., 665 F.Supp.2d 1273, 1283 (M.D. Fla. 2009).

An insured must file with the insurer and the Florida Department of Financial Services a notice of alleged violation of claims practices at least 60 days prior to filing suit. The purpose is to provide the insurer with opportunity to cure the alleged violation. Fla. Stat. § 624.155(3)(a).

The existence of contractual liability and the determination of the extent of contractual damages are necessary elements of an action for bad faith under Fla. Stat. § 624.155(1)(b)(1). Fridman v. Safeco Ins. Co., 185 So. 3d 1214, 1215 (Fla. 2016). Thus, an insurer cannot be liable for first-party bad faith under § 624.155(1)(b)(1) where no coverage exists.

Independent Adjusters

Independent insurance adjusters in Florida are also governed by a regulatory Code of Ethics. 69B-220.201, F.A.C. Additional requirements apply to public adjusters. Fla. Stat. § 626.854; 69B-220.051 & 69B-220(4), F.A.C. Insureds have argued that an independent adjuster’s failure to comply is attributable to the insurer.

Communication, Investigation and Payment Deadlines

Insurers handling certain types of claims (primarily residential property, including commercial residential up to 10,000 square feet, as well as certain contents claims) are subject to a statutory mandate to communicate, investigate, and pay or deny claims within time deadlines. Check Fla. Stat. §627.70131 (5)(c) to confirm if your claim is included in these requirements. 

Communications must be responded to within 14 days, unless factors beyond the control of the insurer prevent it.

An acknowledgement of a notice of claim must include claim forms, unless the acknowledgement reasonably advises the claim appears not to be covered, or unless factors beyond the control of the insurer prevent it.

Investigation must begin within 10 days after submission of proofs of loss, unless factors beyond the control of the insurer prevent it. 

Payment or denial of claims must be made within 90 days, unless factors beyond the control of the insurer prevent it, in which case the claim must be paid or denied within 15 days after those factors cease. Failure to timely pay entitles the insured to interest, and is a breach of proper claims handling requirements – but the statute provides that slow pay, standing alone, shall not be a basis for a legal action against an insurer. 

In a separate regulation that overlaps the statute above, Florida also provides that “every” property and casualty insurer must adopt standards for the acknowledgment of communications and investigation of claims that includes responding to communications within 14 days and beginning an investigation in 10 working days after receipt of proof of loss unless “factors beyond the control of the insurer” prevent it. 

Limited Mediation Program for Residential (including commercial residential) Claims

In claims for damage to residential property, both commercial and homeowner insureds and their insurers can request a mediated claims settlement conference before commencing the appraisal process or litigation, or during litigation. The policyholder determines whether legal counsel may be involved. 

The insurer must include in its response to any eligible claim notice of the insured’s right to this procedure and related information mandated by the Department of Insurance, which will administer the property insurance mediation program. Fla. Stat. § 627.7015. 

This program does not apply to disputes over coverage, where the insurer suspects fraud or denies due to a misrepresentation, to claims for less than $500, and to a windstorm or hurricane claim that does not comply with Fla. Stat. § 627.70132, which requires submission of such claims within 3 years after the hurricane first made landfall or the windstorm caused the covered damage. 

The regulations detailing this program are found at 69J-166.002, F.A.C., Mediation of Commercial Residential Property Insurance Claims, and 69J-166.031, F.A.C., Mediation of Residential Property Insurance Claims.

Windstorm Deductibles

Florida courts will enforce plainly written deductibles for “windstorm” or other perils.  See, e.g., El-Ad Enclave at Miramar Condo. Ass’n v. Mt. Hawley Ins. Co., 752 F.Supp.2d 1282 (S.D. Fla. 2010) (per building deductible for windstorm applied).

Hurricane Claims Standards

The Florida Office of Insurance Regulation has not issued directives or bulletins concerning claims handling or the application of deductibles specific to Hurricane Dorian.

The Office publishes links for hurricane-specific information, including disaster preparedness, on its website: https://www.floir.com/Office/HurricaneSeason/hurricaneresourcepage.aspx