What Exactly Is a First-Party Insurance Claim?
A first-party insurance claim is a lawsuit brought by an owner of a residential or commercial property against the insurance carrier. The most common is a water claim, typically from a leaking roof, or pipe that burst in a kitchen or a bathroom. Other types include fire, hail, wind storm, and sink hole claims. Any type of property damage, including damage to furniture or contents such as clothing and food, can potentially be covered under a first party claim. If there’s a power outage, and food spoils in a deep freezer, that’s potentially covered. If you have to stay in a hotel, or your kitchen is damaged and you have to order out every night until it is fixed, these are all potentially covered losses.
Do You Handle Both Residential and Commercial First-Party Claims?
We handle residential and commercial property claims, which both fall under the umbrella of first-party property.
How Common Is It for Insurance Companies to Deny Claims? Why Do They Deny, Underpay, or Delay?
It is all too common for insurance companies to deny or underpay claims because they know that there is a percentage of insureds who don’t know what their rights are, or who are averse to filing a lawsuit. In Florida, there’s a one-way fee-shifting statute, which allows insureds to recover attorney’s fees if they get a judgment against an insurance carrier. This means if an insurance company denies a claim, or underpays a claim by any amount, even a dollar, they have to pay for all of your attorney’s fees if you get a judgment against them. That can be a jury verdict, or a summary judgment. By the time you get a judgment, the attorney’s fees can be exponential. Thus, carriers almost always settle cases before trial.
Insurance probably deny claims because they know that for every ten claims that they deny, a certain number of them won’t hire attorneys, and they won’t have to pay.
If Someone Was Not Denied but Believes the Insurance Company Underpaid or Is Delaying Paying Out on a Claim, Is That Grounds to File a Lawsuit?
Absolutely. It’s common for a carrier to attempt to close a claim out for a low number initially. It’s also common for an attorney, like myself, to get involved and resolve the matter for an acceptable amount with just a couple of emails.
For all residential claims and commercial claims for buildings under 10,000 square feet, the carrier has a statutory duty under Florida law to make a coverage determination within 90 days unless there are extenuating circumstances (such as the insured not responding, not allowing inspections, or not being able to let the carrier into their home, perhaps because they’re out of town). I often see claims where the carrier took longer than their statutory 90 days to make a determination of coverage. Taking longer than 90 days is not grounds to file for breach of contract alone, but it is potentially grounds for a bad faith claim.
What Is a Bad Faith Insurance Practice?
Bad faith claims are extra-contractual claims, meaning that it is separate from the breach of the insurance policy. Bad faith claims are additional claims that are for violations of Florida statutes.
Bad faith claims are a way to seek punitive damages (punitive means to punish). Punitive damages are a way to gain leverage in litigation against the insurance carrier. If you do file a Civil Remedies Notice, the carrier has 60 days to remedy whatever violations are alleged in your notice.
Civil remedies notices are a niche area. There have only been a handful of successful bad faith claims in property insurance in Florida in the past ten years. In my experience, these claims are used for leverage in the underlying breach of contract claim, rather than as a standalone way to recover punitive damages. One of the reasons for that is Florida Statute 627428, the one-way fee-shifting statute, is already in place to act as a punitive damages remedy. Many judges might see a bad faith claim as double-dipping because there already is the fee-shifting statute for the underlying breach. Nevertheless, there have been successful bad faith claims in the area of property damage. It’s still more common, and more necessary to file bad faith claims in personal injury lawsuits, because it allows a plaintiff seek an excess verdict. That being said, Payne Law often files a civil remedies notices on property damage claims.
For more information on First-Party Insurance in Florida, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (407) 915-0503 today.
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