Section 627.70131(5)(a) of the Florida Statutes reads:
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. Any payment of an initial or supplemental claim or portion of such claim made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, whichever is later, bears interest at the rate set forth in s. 55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. If there is a right to prejudgment interest, the insured shall select whether to receive prejudgment interest or interest under this subsection. Interest is payable when the claim or portion of the claim is paid. 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.
Does this statute bear on an insured’s compliance with policy conditions? There is a dearth of published decisions regarding the application of Section 627.70131(5)(a), but that will not keep me from offering my thoughts.
As it relates to this blog series, it is my opinion that Section 627.70131(5)(a) precludes an insurer from demanding compliance with policy conditions after the statutorily prescribed claim adjustment deadline has elapsed. The legislature does not enact law for the heck of it, and the clear purpose of Section 627.70131(5)(a) is to foster prompt claim resolution. If an insurer were permitted to drag its claim investigation past ninety days by belatedly exercising policy conditions (e.g., EUOs or document requests), the statute would be rendered meaningless. So long as there are no “factors beyond the control of the insurer which reasonably prevent” it from making a payment decision, the insurer needs to make a payment decision by day ninety; the insurer’s adjustment needs to be completed by day ninety.
Despite the lack of published decisions on this topic, Florida’s Third District Court of Appeal recently offered hints on the application of Section 627.70131(5)(a) that seem to square with my thoughts. In Great Lakes Reinsurance (U.K.) PLC v. Branam, the trial court determined there was sufficient evidence that the insurer breached the insurance contract by failing to complete its adjustment within the ninety days prescribed by Section 627.70131(5)(a).1 The Third District Court of Appeal reversed this determination, but on fairly technical grounds:
On its surface, Section 627.70131(5)(a) would seem to govern the instant set of facts. Upon closer examination, however, it is clearly inapplicable for two reasons. First, the plain language of Section 627.70131(4) specifies that ‘[f]or purposes of this section, the term ‘insurer’ means any residential property insurer.’ Because Great Lakes in this situation acted as a marine insurer rather than a residential property insurer, it was not subject to this section’s ninety-day requirement. Second, and more importantly, pursuant to the choice of law provision in the contract, the dispute regarding the governing time frame for the adjustment of claims is governed by New York law rather than Florida law. … Because this dispute arises under the contract, and the parties agree that there are no well-established, entrenched principles and precedents of substantive Admiralty law, New York law, rather than Florida law, applies. Thus, the trial court erred in determining that a Florida provision governed this dispute.
So, at the very least, it appears Section 627.70131(5)(a) has some teeth when it comes to Florida residential property insurance policies.
To read previous posts in my series on insurance policy conditions, click here.