Insureds have the right to clearly understand the reason why their claim has been denied, delayed, or underpaid. Insurers have the duty to explain how they determined their adjustment and payments.
The Puerto Rico insurance code defines as an unfair settlement and claims handling act, an insurers’:1
Failure to provide promptly a reasonable and proper explanation of the basis for a denial of claim or transaction based on facts or the applicable statute.
In Rivera Márquez v. MAPFRE Insurance Company,2 the court of appeals reversed a trial court decision dismissing the insured’s claim because it was unclear if the insurer had sent along with the check a complete explanation including the following documents: Case Adjustment, Cost Estimate Report, Main Unit Estimate, and Case Notes. The appellate court stated that if the insurer sent the check without any explanation it can be considered an unjust advantage over the claimant and an impediment for the insured to accept the check without clear understanding that it represents a proposal for the extinction of the obligation.
It is important for insureds to understand the claim process before giving their consent to sign any release and accept any offers. Many times, insureds sign or accept offers believing they are partial when they are really consenting to a full release of any further claims or amounts due under their coverage.
Therefore, when an insurer denies or underpays a claim the insured should request a clear explanation of the determination. If the insurer fails to provide such explanation the insured should also try requesting a re-evaluation or reconsideration of the claim. An insured should never accept a check or sign a release without having a clear understanding of its consequences.
1 Laws of Puerto Rico, Unfair Claim Adjustment Practices or Actions. (26 L.P.R.A. § 2716a).
2 Márquez v. MAPFRE Ins. Co., No. FA2018CV00623, 2019 WL 7876460 (P.R. Cir. Oct. 29, 2019).