This is Part II of a two-part blog that provides information that many policyholders do not know. To read Part I, click here. Insurance companies often exploit an insured’s lack of awareness of these types of issues and facts. The purpose of this blog is to assist policyholders in being more informed regarding their rights and the responsibilities of insurance companies. If you have specific questions about your situations, you are invited to contact the Law Offices of J.P. Gonzalez-Sirgo, P.A. after reviewing this blog post.
Insurance companies have an absolute duty to act in good faith when interpreting policy language, investigating a claim and/or paying benefits under the policy.
An insurance company is prohibited from putting its financial interest above that of an insured, engaging in tactics designed to create unreasonable delay or underpaying valid claims. When the insurance company use trickery, deception or misrepresentation during the claims process, the insurance company can be liable for extra-contractual damages for insurance bad faith.
The insurer must establish the applicability of an exclusion or limitation when it asserts that a claim is not covered.
A policy usually includes an “insuring clause” comprised of a few words along with dozens of paragraphs devoted to enumerating exceptions, exclusions and limitations to coverage. If you have a sizeable claim, the insurance company often will send a letter denying the claim and citing an exclusion or other relevant language in the policy to justify its coverage decision. Many insureds never get their legitimate claim paid because they simply accept the contention made by the insurance company that a particular exclusion applies to the claim. However, the insurer bears the burden of proving that an exception, exclusion or limitation applies and that it is both clear and conspicuous.
An insured may be entitled to more than the value of his claim if the insurance company violates its duty of good faith and fair dealing.
The ability of an insured to seek damages above and beyond the value of an insurance claim provides an incentive for insurance companies to handle a claim in good faith. If insurance companies did not face any risk of paying more than the full value of the claim, they could adopt a policy of denying every claim and making the process of obtaining compensation as drawn out and difficult as possible. Even if the insured took the insurer to court for breach of contract, the insurance company would have its liability constrained by the available contract damages. Because an insurance company may be hit with both an insured’s attorney fees and litigation costs, the insurance company faces financial risk if its approach to every claim is to deny coverage on frivolous grounds.
Our insurance bad faith law firm typically offers a free consultation, so we can evaluate your situation and provide initial legal advice.
Typically, our law firm represents clients in insurance bad faith cases on a contingency basis. This means that we do not collect attorney fees unless we obtain a recovery for our clients. When we take on a bad faith case on a contingency fee, we generally also advance the costs of litigation. This means that we have every incentive to carefully evaluate your case and to provide a candid assessment of your claim.
An insurance company may be engaging in an unlawful practice if it attempts to rescind (cancel) your policy for misrepresentation after you have submitted a claim.
When you complete an insurance application, you need to be very careful about completing the application accurately. Insurance companies frequently deny claims or rescind coverage based on non-disclosure or misrepresentations in an application. The reason for allowing an insurance company to deny coverage or cancel a policy on this basis is that the information may have had a material impact on the decision to provide coverage or amount of the premium.
On the other hand, an insurance company cannot forgo investigating the information on an application while collecting payments indefinitely only to rescind the policy as soon as a claim is made. Under a life insurance policy, for example, an insurance company in Florida typically must raise a misrepresentation issue within the two year contestability period to rescind coverage. Florida also just enacted regulations that limit the time for homeowners’ insurance companies to rescind coverage based on misrepresentation of credit information that is public information. The insurer must raise these issues within 90 days from the time of issuance of the policy. See Florida Statutes Section 627.409(3).
These are only a few of the key things insurance companies would prefer the average consumer not know when stonewalling an insured’s claim. If an insurance company delays, denies or lowballs your claim, you should consider speaking to an experienced Florida property damage attorney. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.