Many policyholders who file insurance claims are unsure how to proceed when an insurance carrier initially denies the claim or extends a lowball settlement offer.  If you submit an insurance claim, it is important to be aware that insurance companies have little incentive to make an initial settlement proposal that approaches the full value of your loss.  Although the first amount offered by the insurance company typically will be woefully inadequate, insurance companies may negotiate the value of your insurance claim. 

When insurance companies enter into negotiations over a property damage claim under a commercial policy, homeowner’s policy, or other type of insurance contract, the carrier will have the benefit of a team of adjusters, experts, and attorneys along with enormous litigation resources.  An experienced Florida insurance claims professional can be an indispensable asset in balancing the scales of justice.  There are many insurance company traps that can be set to derail a legitimate claim when policyholders proceed without legal representation. 

The recent case of Aaron v. Georgia Farm Bureau is not controlling precedent in Florida because it is from another jurisdiction.  However, the case highlights a tactic often used by insurers that can result in businesses and individuals with meritorious property damage claims walking away with nothing.  In Aaron, the parties agreed on the total value of damage to the policyholder’s home after a motor vehicle crashed into the residence.  However, the policyholder objected to the settlement because it did not provide a breakdown of the amount of money allocated to pay for specific repairs. 

The insurer’s subsequent itemization of the proposed settlement did not allocate any funds to repair the home’s septic tank or drain lines.  The insured requested the settlement offer be increased to provide allocation of an appropriate amount for repair of the septic tank and drain lines.  The insurer balked at paying for septic system damage because this loss was allegedly caused by repair efforts rather than the crash.

While the statute of limitations for pursuing a claim for breach of contract under the policy was six years under the law of the jurisdiction, a provision in the insurance agreement shortened this period to only a year.  Three days prior to expiration of the one year period, the insurer sent a letter to the insured indicating that the insurer wished to discuss a settlement.  The homeowner reasonably assumed that the insurer was prepared to pay some amount for the septic system damage.

During the next several days, the parties were not able to reach a settlement of the property damage claims dispute.  The insured failed to file a complaint commencing a civil lawsuit, which might have been based on a lack of awareness of the one year policy limitation or the belief that the negotiations tolled (suspended) the expiration of the limitations period.

After the modified limitation period had run (expired), the insured filed a lawsuit and indicated his desire to pursue the appraisal process.  The court dismissed the lawsuit pursuant to a summary judgment motion by the insurance company because the lawsuit was not filed in a timely manner.  Further, the court also ruled that the insurer did not have to participate in the appraisal process because the claim was not instituted within the time limit imposed by the "Suit Against Us" clause of the policy.  Since the appraisal process provides a method to determine the amount of a loss related to a claim, the bar against pursuing a lawsuit to enforce such an award made the appraisal process unnecessary.

This strategy is used by insurance companies in many settlement discussions when an insured does not have the benefit of legal advice.  The approach is two-pronged: (1) sneak a provision into the insurance agreement (in states that allow such provisions) that creates a very short period to formally commence a lawsuit; and (2) quietly drag out settlement negotiations until the time to pursue legal remedies has expired.  Since there is no “hardship exception” to the statute of limitations, failure to comply with this legal deadline or a contractual provision shortening this period generally will constitute an absolute bar to recovery.  Because legal deadlines are strictly enforced and have devastating consequences on a policyholder’s legal rights, an insured should seek prompt advice from an experienced insurance claims lawyer.  

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].

J.P. Gonzalez-Sirgo
J.P. Gonzalez-Sirgo, P.A.
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