As discussed in my previous blog post, Should an Insurance Company Pay Adjustable Claim Amounts Not in Controversy While Another Amount Is Still In Dispute?, the payment of undisputed amounts is an issue that is frequently being argued in Puerto Rico courts for Hurricane Maria claims. As recent as this week (May 12, 2021) the First Instance Court of Carolina, Puerto Rico, granted a Partial Summary Judgement and ordered the carrier to pay the adjustable amounts not in controversy.
The Plaintiff in Consejo de Titulares Del Conominio Montecillo Court vs. Chubb Insurance Company of Puerto Rico,1 filed a Motion for Partial Summary Judgment on April 19, 2021, based on the following facts:
- Defendant issued a property insurance policy to Consejo de Titulares Del Condominio Montecillo Court, that included property damage coverage for two residential buildings that consisted of 185 units, a two-floor parking, power poles, pool, clubhouse, mailbox station, mechanical arm (entrance), equipment for game area, generator, water reserve, seawall, and other property.
- On October 2, 2018, an engineer prepared a report with pictures of the damages observed in common and units of the buildings. The estimated damage for the common areas was for $285,960.25, and the estimated damages for the building units was for the amount of $787,211.53. These were liquid and enforceable debts.
- On October 24, 2017, Chubb confirmed receipt of the insurance claim and sent an expert to inspect the property on November 20, 2017. Chubb then assigned claim number #804-16667698 to Consejo de Titulares Del Condominio Montecillo Court.
- Chubb provided a “Proof of Loss,” which recognized that after deductible they owed $287,458.00 to the insured. Therefore, it was a liquid and enforceable debt.
- Chubb only paid the Plaintiff the amount of $143,729.00.
The court held that the Puerto Rico Insurance Code regulates unfair practices and fraud actions related to claims adjustments made by insurance companies, and when an insurer chooses to comply with its obligation through a reasonable offer to the insured, that offer becomes the estimate for the property damages suffered.2 Since an offer should be the product of an adequate investigation and analysis, an insurance company is not permitted to rescind the offer from that adjustment unless fraud or any other extraordinary circumstances occurred that were not possible to discover during the insurer’s investigation. Therefore, a final offer is not the same as a transaction offer or negotiation, which are not subject to the same intense and specific regulations of the Insurance Code.3 When a debt has a settled and unsettled amount, the insured can request the debtor the payment from the insurer of the settled amount without having to wait for the unsettled amount to be determined.4
In this case, the court granted the Partial Summary Judgment and ordered Chubb to immediately pay Plaintiff the amount owed of $143,729.00, plus the total of $643,482.53, that was also already recognized as owed to the Plaintiff.
1 Consejo de Titulares Del Condominio Montecillo Court vs. Chubb Ins. Co. of Puerto Rico, Civil Case Number CA2020CV01829, Partial Summary Judgment granted May 12, 2021.
2 Article 27.161, Puerto Rico Insurance Code, 26 L.P.R.A. sec. 2716a.
3 Carpets & Rugs v. Tropical Reps, 175 D.P.R.614, 635 (2009).
4 Art. 1123 Puerto Rico Civil Code, 31 L.P.R.A sec. 3173.