Many policyholders in Florida attempt to accurately complete their application for insurance coverage but inadvertently provide inaccurate or incomplete answers to questions requesting background information.  Sometimes insurance companies engage in a practice referred to as “post-claims underwriting” and use such information to deny claims.  For example, Universal Property and Casualty Insurance Co., Florida’s largest private insurer at the time, agreed to pay $1.3 million dollars in fines primarily for this type of practice in 2014.  The Insurance Journal reports that the investigation and fine assessed by the State of Florida will result in reconsideration of approximately 300 claims that were previously denied.

news article provides an example of the way this type of practice was used by Universal to collect premiums for years with no assurance that the carrier would pay out on any type of claim by the policyholder.  Policyholders from Delray Beach to Gainesville reportedly indicated that they had paid premiums for years, but their claims for devastating water and fire loss were denied according to the article.  Further, many of the policyholders indicated that the insurance company’s tactics endanger their families’ life savings.  Based on the report, the insurance company denied the claims based on information that was inaccurate or left out of the application when the policyholders applied for the policy.

The news source provided a number of examples of post-claim underwriting performed by Universal.  Normally, the underwriting process occurs when you submit an application for insurance coverage or shortly thereafter.  The application will ask for information that will be used to assess the level of risk, amount of your premiums and extent of your coverage.  When the Ward’s submitted a claim after their home was destroyed in a fire, Universal refused to pay the claim because Ronald had neglected to disclose that he was a co-signer on a delinquent account used by his elderly parent.  The Ward’s indicated that they were not aware the account was past due when they executed the insurance application and that they resolved the delinquency in any event.  Another example of “post claim underwriting” cited in the article involved the denial of a claim for non-disclosure of a property tax lien in another state that was released long before the policy application was submitted to the insurance carrier.

The practice of ‘post-claim underwriting’ is an extremely unfair ‘gotcha’ tactic. The insurance company receives premiums on a policy even though information it should have discovered before issuing the policy in the underwriting process will eventually be used to deny any claim despite the merits.

Insurance companies often ask background information about past due accounts, bankruptcies, criminal convictions. Frequently, policyholders forget specific information elicited by these types of background questions.  The risk of omitting or misstating this type of background information is even higher if the matter has been resolved long before submitting an insurance application.  The information that can be used to confirm such information is often a matter of public record. Thus, the responses to these questions should be part of the risk assessment process that occurs prior to the insurance company accepting premium payments and/or a policyholder making a claim.  If the insurance company genuinely determines that this information means that there is a greater risk, this risk can be reflected in an adjustment in the premium amount.

As part of the consent order reached between Universal and state insurance regulators, the insurance carrier agreed to complete a full underwriting process within 90 days after the effective date of issuance of a new policy according to the news report.

If you have had your insurance policy cancelled or a claim denied by Universal or another insurance company in Florida, you may have a right to pursue a claim for insurance bad faith.

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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