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 claims practices (Fla. Stat. § 626.9541; Fla. Stat. § 624.155(1)(b)):

  1. 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.

  2. 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.

  3. Committing or performing with such frequency as to indicate a general business practice any of the following:

    1. Failing to adopt and implement procedures for the prompt investigation and settlement 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.

  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.

  5. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests.

  6. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made.

  7. Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

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. FL 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 and Public Adjusters

Independent 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 Claims (including commercial residential)

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 insured 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 Irma Claims Standards

The Florida Office of Insurance Regulation issued Emergency Order 214271-17-EO on September 13, 2017 under authority granted by Florida Statutes Section § 624.307. The Emergency Order contains, among other things, the following directives:

  1. No insurer or other entity regulated under the Florida Insurance Code shall cancel or nonrenew a personal residential or commercial residential property insurance policy covering a dwelling or residential property located in this state, subject to this Emergency Order, which has been damaged as a result of Hurricane Irma. Such policy or contract of insurance may be cancelled or nonrenewed 90 days after the dwelling or residential property has been repaired.

  2. The time period in which any application, filing, or document, required to be filed with the Office of Insurance Regulation, pursuant to the Florida Insurance Code or Chapter 120, Florida Statutes, which by statute would be deemed approved if not approved or denied within a specific time period, shall be tolled for a period commencing on September 4, 2017, the date the Governor declared the State of Emergency, and ending 90 days thereafter.  Further, any time period within the Florida Insurance Code or Chapter 120, Florida Statutes, in which the Office is required to take action is also tolled for a period commencing on September 4, 2017, the date the Governor declared the State of Emergency, and ending 90 days thereafter.

The Emergency Order also activated the provisions of Fla. Admin. Code R. § 69O-142.015(2). Specific dates and amendments made to the rule include, but are not limited to:

  • Rule 690-142.015(2)(d) As to any policy provision, notice, correspondence, or law which imposes a time limit upon an insured to perform any act or transmit information [...]with respect to a contract of insurance, which act was to have been performed on or after September 4, 2017, the time limit shall be extended to December 3, 2017. This extension of time shall not relieve a policyholder who has a claim resulting from Hurricane Irma from compliance with their obligations to provide information and to cooperate in the claim adjustment process relative to the property damage claim. This extension of time shall also not apply to new policies issued on or after September 10, 2017. No interest, penalties, or other charges, shall accrue or be assessed, as the result of the extensions required herein. Interest that is owed pursuant to premium financing plans with premium finance companies or insurers or their affiliates may be assessed. Intentionally omitted. This extension does not apply to premium due in the normal course of   business.

  • Rule 690-142.015(2)(e) Between September 4, 2017 and October 15, 2017, no insurer or other entity regulated under the insurance code shall cancel or nonrenew a policy or contract of insurance  or issue a notice of cancellation  or nonrenewal,  covering  a person, property or risk in Florida, except at the written request or written concurrence  of the policyholder. This provision may be extended should the Commissioner determine  it is in the interests of the policyholders and issues an amended emergency order on or before October  12, 2017.

  • Rule 690-142.015(2)(f) All notices of cancellation issued or mailed on or after August 25, 2017 through and including September  3, 2017, covering a person, property  or risk in Florida, shall be withdrawn and reissued to insureds on or after October 15, 2017.

  • Rule 690-142.015(2)(g) A cancellation or nonrenewal may occur prior to October 15, 2017, at the written request or written concurrence of the policyholder.

  • Rule 690-142.015(2)(h) Except as provided in  paragraphs  (e)  and  (f)  with  respect to a notice of cancellation or nonrenewal which, but for this rule, would have taken effect between September 4, 2017 and October 15, 2017, such notice is not made invalid by this rule; however, (1) the insurer shall extend the coverage to and including October 15, 2017, or a later date specified by the insurer; and (2) the premium for the extended term of coverage shall be the appropriate pro-rate portion of the premium for the entire term of the policy.

  • Rule 690-142.015(2)(n) This rule shall not apply to new policies effective on or after September 4, 2017.

  • Rule 690-142.015(2)(o) If the contract of insurance was financed by a premium finance company for risks located in Florida, the following provisions apply:

1. Premium finance companies may issue advisory 10-day notices of intent to cancel and cancellation notices in accordance with the terms of the premium finance agreement signed by the insured. In addition, each such advisory notice shall prominently contain the following statement:

If you have been displaced through the loss of your home or damage to your home which has caused you to reside elsewhere on a temporary basis, or if you have temporarily become unemployed due to the destruction caused by Hurricane Irma, please contact this office at once.

Victims of Hurricane Irma will receive an automatic extension of time to and including October 15, 2017, to bring their accounts up to date and no late charges will be applied to any late payments received which were due on their accounts between September 4, 2017 and October 15,  2017.

Therefore, if you are a victim of Hurricane Irma, please contact us at once at the number provided at the bottom of this notice so that we may advise you of the status of your account.

If you decide that you no longer need or desire to keep the coverage provided by the insurance policy financed by your contract with us, please contact us at once so that we may instruct you on how to effect cancellation with your insurer."

2. If a premium finance loan is in default at the end of the grace period, a premium finance company shall give proper notice by:

a. Issuing a 10 day notice of intent to cancel to the insured by the means provided under Section 627.848(1)(a)1., F.S., and applicable regulations,   and

b. If the insured does not bring their loan current within the time provided in the notice of intent, a premium finance company may mail the insurer a request for cancellation as provided in Section 627.848(1)(a)2., F.S.

3. Upon receipt of a request for cancellation from a premium finance company after October 15, 2017, the insurer will process the cancellation in accordance with paragraph Rule 690-142.015(2)(i), F.A.C.

4. Any insurer who is unable to cancel because it has received a claim under a policy for which it receives a notice of cancellation  from a premium finance company will offset the balance owed the premium finance company, as disclosed in the notice of cancellation, from the first claim payments made under the   policy.

5. No late charges shall be assessed for any insured who qualifies for protection under this order.

  • Given the strength and size of Hurricane Irma, its catastrophic effect on Florida, stretching from coast to coast, and its potential impact on hundreds of thousands of policyholders, the Office expects all insurers and regulated entities to implement processes and procedures to facilitate the efficient payment of claims. This includes critically analyzing current procedures and streamlining claim payment processes as well as using the latest technological advances to provide prompt and efficient claims service to policyholders.

  • Section 627.4035(3(b), Florida Statutes, permits insurers to pay claims by debit card or any other form of electronic transfer upon written authorization of the recipient or the recipient's representative. Due to the severe and catastrophic impacts from Hurricane Irma, many insureds will be unable to receive or send mail. For the duration of this State of Emergency, the requirement of written authorization is waived provided the insurer verifies the identity of the insured or the insured's recipient and does not charge a fee for the transaction. If the funds are misdirected, the insurer remains liable for the payment of the claim.

  • The Commissioner of the Office of Insurance Regulation may, by written Order, amend the scope of this order, based upon a determination that   it is necessary.

  • The provisions of this Emergency Order shall be liberally construed to effectuate the intent and purposes expressed therein and to afford maximum consumer protection.

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