The 90-day period to resolve claims made for damages caused by Hurricane Maria may expire soon. To protect insureds from the bad faith and delay of the insurer, Puerto Rico’s Insurance Code provides under Art. 27.162, that insurance companies should be diligent in the processing of claims within the 90-day period for claims to be resolved, and if the insurer cannot comply within this period, just cause must be presented to the Commissioner.1 Bad faith is considered the frivolous or unfounded refusal to provide payment or treatment to a plan member or insured. Good faith is presumed, and the one who claims the bad faith has the burden of proof.2
In Quinones Lopez v. Manzano Pozas,3 the court stated that sanctions cannot be imposed on an insurance company that has acted with diligence and good faith in fulfilling those steps within their reach. The court also stated that the fact of denying coverage is not a per se indication of bad faith. The circumstances that surround a case when refusal exists will determine if bad faith may arise from it. Sanctions are not appropriate when the delay is due to the insureds own inaction and carelessness that prevents the final resolution of a claim. If it is evident that an insurer has acted in bad faith by putting its own interests before those of the insured, it is considered reasonable to impose on the insurer the responsibility to pay any amount in the excess of the policy limit, even then the norm is that insurers are liable up to the limits stipulated in the insurance policy.
In Comisionado de Seguros de Puerto Rico v. Antilles Insurance Company,4 the court held that when an insured claims the insurer has made an unreasonable offer and finds it necessary to reject the offer, therefore creating a dispute that results in the claim being delayed, the imposition of a sanction by the Puerto Rico Insurance Commissioner will be justified. A claim will be considered resolved once the insurance company gives a reasonable notification to the insured of the final adjustment of the claim. Judicial review will be limited to preventing the Insurance Commissioner’s office from acting illegally, arbitrarily and contrary to what is allowed by law. The evaluation of the sanctions rests with the Insurance Commissioner’s Office due to its specialization and experience and the court will not review to determine if sanctions imposed are proportionate to the conduct or if they are too strong.5
All insurance companies should comply with the 90-day period to resolve claims and all other agreements under the policies. Insureds should also comply with the requirements under their policy and act on time to avoid delay in final resolution of their claim. The circumstances in each insurance claim will determine if the insurer’s refusal or delay was made intentionally and with bad faith.
1 Puerto Rico Insurance Code, 26 L.P.R.A. §2716b.
2 Gonzalez v. Collazo, 22 D.P.R. 619 (1915).
3 Quinones Lopez v. Manzano Pozas, 141 D.P.R. 139, 174 (1996).
4 Comisionado de Seguros de Puerto Rico v. Antilles Ins. Co., 145 D.P.R. 226, 233 (1998).