When you purchase auto insurance, homeowner’s insurance, commercial insurance, or other coverage, the natural assumption is that the policy will protect against losses in the event of a natural disaster, fire, theft, or similar unanticipated event. There are a range of strategies that can be used to combat an insurer’s denial of a claim which include establishing broker negligence. When an insurer denies coverage or contends that the value of the claim does not fall within policy limits, the insurer can be accountable for the full amount of the coverage that the policyholder believed he purchased or should have been provided based on his or her needs.
The 4th DCA case of Medical Data Systems, Inc. v. Coastal Ins. Group, Inc. provides an example of how disputes with brokers that involve issues like the sufficiency of coverage and limits; delinquent notice, lack of clarity regarding policy terms, failure to procure coverage for additional insureds; and missing endorsements can be effected by deadlines. The 4th DCA observed that under Florida law, insurance brokers have an affirmative duty to employ reasonable care and diligence in obtaining coverage expressly sought by the insured or appropriate given the purchaser’s specific needs communicated to the broker. The court further noted that insurance brokers also are legally required to obtain coverage within a reasonable time or notify the insured that coverage cannot be procured. When a broker fails to comply with these duties, policyholders might have a right to hold the broker and carrier liable for the amount of coverage sought or obviously needed.
In the Medical Data Systems case, the broker liability claims raised statute of limitation issues that involve these types of negligence claims. The insured was a collection company that sought to have its insurer protect the business against liability based on purported violations of the Fair Debt Collection Practices Act. The insurance company denied coverage based on the grounds that the policy did not provide coverage against liability claims arising out of debt collection practices. The collection company pursued a claim for negligence against the broker for failing to provide coverage for the primary commercial activity performed by the insured – the collection of debts.
The wholesale insurance broker defended against the lawsuit based on the statute of limitations (SOL). According to the broker, the applicable four year statute of limitations had run. The broker’s SOL defense was rooted in the allegation that the time began to run as soon as the collection agency incurred costs to defend against the litigation.
While the trial court accepted this reasoning, the 4th DCA reversed. By contrast, the 4th DCA found that the action did not become “ripe” until the coverage action was completed. The rationale for this position is that the liability of the broker is based on a determination that the negligence of the broker resulted in the insured not being covered under the policy. The 4th DCA expressly ruled that the negligence action did not accrue until resolution of the underlying or related liability lawsuit, or the client’s right to sue in the underlying dispute expired in the event no judgment or settlement was reached.
This court case demonstrates the complicated timing legal deadline issues that can arise in claims disputes. While this particular dispute involved a negligence claim against a broker, timing requirements and litigation-related deadlines must be carefully observed in all insurance claims lawsuits. I invite you to contact me if you are having difficulties with your insurance company. I handle claims against insurance companies in Miami and throughout Florida. Please call for a free consultation and case evaluation. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.