Why Delays Are a Common Tool in the Arsenal of Insurance Companies Fighting Claims

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

When you are forced to vacate your home because of damage caused by a fire, hurricane or flood, the financial pressure can mount quickly while you are waiting for your homeowner insurance carrier to process your claim.  If it feels like your insurance company is using every excuse in the book to delay settling your claim, your instincts might be accurate.  While some policyholders presume that insurance companies are motivated to close claims rather than continue investigating and processing claims indefinitely, there is enormous profitability in delay.  Below is an overview of the reasons insurance companies profit by delaying the settlement of claims.

Frustration of Legitimate Claims: When policyholders do not have legal representation, insurance companies recognize that eventually policyholders may get so frustrated that they simply give up.  While an insured should never abandon a legitimate claim, a substantial portion of insurance industry profits are based on unrepresented policyholders waving the white flag, so valid claims are never paid.

Interest and Investment Income: If insurance companies can drag out the process of paying claims, the funds that are being held can continue to earn income from interest and investment returns.  Because of the size of the sums, the return is enormous from maintaining these investments for additional months or years.

Running Out the Clock: An insured, generally, only has five years from the date of loss or breach of the insurance policy to file a lawsuit against his or her insurance company.  Many policyholders feel like their claim is being processed despite the delays.  The insured may falsely believe that the policyholder will eventually receive the value of his or her loss.  This belief can act as a disincentive to retaining an attorney and filing a lawsuit.  Further, there will typically be requirements that must be satisfied before a lawsuit can be filed, so policyholders should seek legal advice as soon as they become embroiled in a dispute with their insurance company.

Financial Pressure on Policyholders: Whether a policyholder is dealing with living expenses, lost profits from a business or other expenses incidental to a property loss, the financial pressure on policyholders does not abate while the claim is being negotiated.  If the policyholder is forced to tackle expenses without appropriate contributions from an insurance carrier, the insured will experience financial pressure to accept less than the amount needed to restore the property to pre-loss condition.

When an insured is faced with unjustified delays by an insurance company in paying a claim, the policyholder does have a number of statutory tools that can be employed to obtain satisfaction.  Florida Statutes §626.9541 specifies unfair trade practices that are prohibited by insurance companies.  Some of these specifically address timeliness of adjusting or deciding on a claim.  Further, policyholders damaged by a violation of this provision have a private right of action under Florida Statutes §626.155 for insurance bad faith.  However, the insured must provide a Civil Remedy Notice of Insurer Violation to the insurance company and State of Florida.  The insurer then has 60 days to cure the inappropriate conduct, which usually involves paying the claim.  If the insurance company fails to act, the insurance company can be exposed to extra-contractual damages.

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].

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