Most policies contain a “Loss Payment” condition that reads along these lines:
We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment. Loss will be payable 60 days after we receive your proof of loss and: (1) Reach an agreement with you; (2) There is an entry of a final judgment; or (3) There is a filing of an appraisal award with us.
But some carriers beef the “Loss Payment” condition up a bit:
We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment. Loss will be payable upon the earlier of the following: a. 20 days after: (1) We receive your proof of loss and reach written agreement with you; or (2) Written executed mediation settlement with you according to the terms of the written mediation statement; or b. 60 days after we receive your proof of loss and: (1) There is an entry of a final judgment or, in the case of an appeal from such judgment, within 60 days from and after the affirmance of the same by the appellate court; or (2) There is a filing of an appraisal award or, in the case of an appeal from such award, within 60 days from and after the affirmance of the same by the appellate court; or c. If payment is not denied, within 90 days after we receive notice of claim. However, this provision does not apply if factors beyond our control reasonably prevent such payment.
And Section 627.70131(5)(a) of the Florida Statutes speaks to loss payment, providing, in part:
Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment. … The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. …. Failure to comply with this subsection constitutes a violation of this code. However, failure to comply with this subsection does not form the sole basis for a private cause of action.
As I read the above beefed up contract and statute, the game is over -, payment is owed – if the claim has not been denied within ninety days of claim notice and there were no factors beyond the insurer’s control that reasonably stymied the insurer’s claim adjustment. Seems right, right?
Well, not so fast … notwithstanding the clear language of subsection “c” of the above beefed up “Loss Payment” condition and Section 627.70131(5)(a) of the Florida Statutes, it is not uncommon for an insurer to send a letter to the insured on day ninety (or close to it) nakedly asserting the claim is still under investigation and bombarding the insured with requests not previously made (e.g., EUOs, document production, whatever). Acceptable? Not if there were no factors beyond the insurer’s control that reasonably prevented it from making such requests weeks or months earlier. If there were no factors beyond the insurer’s control that reasonably prevented it from making such requests weeks or months earlier, then, in my opinion:
- neither the above-cited beefed up contract nor Section 627.70131(5)(a) enable the insurer to unilaterally continue the claim investigation beyond ninety days via such requests,
- the insurer’s unilateral continuation of the claim investigation beyond ninety days via such requests constitutes a breach of contract,
- the insured is excused from obliging such requests,1 and
- payment is owed.
All of this said, however, deciding on whether to demand payment without complying with an insurer’s eleventh-hour requests requires a careful case-by-case analysis by a qualified professional.
To read previous posts in my series on insurance policy conditions, click here.
1 See, e.g., 17A Am. Jur. 2d Contracts § 685 (West, Nov. 2012).
