A report published in 2015 in the Insurance Journal found that Florida insurer Citizens Property Insurance Corporation settled over 1,650 sinkhole-related claims with Florida homeowners during 2014. The company claims it took aggressive steps to reduce a 2,400-sinkhole claim backlog within a matter of months. These steps included:
- Agreeing to abide by a neutral evaluator’s decision where disagreement exists over the best method of repair;
- Agreeing to cover all recommended underground repair work and repairing any above-ground damage caused by the underground repairs; and
- Agreeing to pay law firms a set fee for their related expenses.
Although insurers often attempt to settle insurance claims disputes, policyholders might need legal advice about whether to settle or continue to fight. As a homeowner’s insurance claim law firm, we have helped many clients negotiate settlements with their insurance carrier following a covered loss and subsequent claim that the insurer initially refused to pay. Homeowners should be aware that there are benefits and drawbacks to settling a claim pre-litigation. A resolution that might constitute a favorable outcome in one case may not make sense in a different situation.
The Benefits and Drawbacks of Settling Homeowner Insurance Claims
One of the greatest benefits that settlement agreements provide – a benefit touted by Citizens in the Insurance Journal report – is that it provides homeowners with the funds necessary to make certain repairs more quickly than litigation. Even if the settlement amount provided does not fully cover all damage caused to the home, a settlement award of a sufficient amount can enable the homeowner to begin making repairs that can help prevent further damage from occurring to the house. The option of effecting quick repairs as opposed to waiting months or longer for a payment from the insurance company can make some homeowners feel more “in control” and happier with the outcome.
Additionally, settlement agreements tend to reduce costs for both the insured and the insurer. Homeowners who settle a case and who are paying an attorney an hourly fee will obviously save on costs as opposed to proceeding to trial; this holds true for insurance companies as well. (Of course, our clients generally do not pay lawyer fees unless we are able to recover compensation for their wrongfully-denied claims, so this may not be much of a concern for our homeowner clients.)
It is important to note, however, that settlements have certain drawbacks as well. Most notably, a settlement may not fully compensate the homeowner and may prevent the homeowner from seeking additional compensation if the actual costs of repair exceed the amount of the settlement. Thus, a homeowner who accepts a settlement for $10,000 may find that the actual costs of repair are $25,000; the additional $15,000 typically will be paid by the insured. A settlement agreement can also severely restrict your legal rights.
What a Homeowner Should Do If Offered a Settlement
Prior to accepting a settlement, a homeowner should at least have the proposed settlement reviewed by a Florida insurance claim attorney. The lawyer can point out unfavorable or unconscionable provisions that the homeowner may wish to renegotiate with the insurer.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].