This blog responds to a comment to my post, Discovery Efficiency: Dynamite Discovery Decisions, Part 21. The comment pertained to carrier delay in the claim and litigation processes and also noted the seeming desire of insurance companies to “run the clock out” through delay. I will address each of these comments in turn; but, first, allow me to set the stage by briefly explaining why a lot of insurance companies are delay-oriented.

There are several reasons why insurance companies delay claim resolution,1 but they all seem to relate back to one thing – augmentation of corporate profit. First, most unrepresented policyholders will give up on a claim or settle a claim for pennies on the dollar if the insurance company drags things out long enough. Of course, repeatedly winning this war of attrition against unrepresented policyholders is highly profitable for insurance companies. Second, insurance companies reap the benefit of accrued interest and investment gains on withheld benefits. This is also highly profitable for insurance companies.

Fortunately, statutory tools are available to Florida policyholders confronted with carrier delay tactics. For example, Section 626.9541 of the Florida Statutes sets forth various unfair trade practices that insurance companies are not supposed to engage in, and a couple of these unfair trade practices pertain to the timeliness of claim adjustment and decision-making. And Section 624.155 of the Florida Statutes affords a private cause of action to policyholders damaged by an insurer’s violation of 626.9541. One condition precedent to the statutory bad faith cause of action is the Civil Remedy Notice (“CRN”), which allows the insurance company sixty days to cure (usually by way of paying the claim) the wrongs complained of in the CRN. If cure does not occur within the sixty-day safe harbor period, the insurance company is exposed to extra-contractual damages.

Delay in the claim adjustment / investigation process is fairly common. It is also fairly common for the carrier’s delay to continue into litigation. Indeed, the comment to my November 15 post spoke of such – “the company sues the insured to delay and then drops their suit and still doesn’t pay.” Although it is common for insurance companies to continue delay into litigation, it seems that, in bad faith litigation, an insurer’s litigation conduct too often plays second fiddle to an insurer’s claim adjustment / investigation conduct. Let’s not forget, an insurance company’s litigation conduct is fair game in bad faith, and potentially as important as claim handling conduct.2

Regarding the “running out the clock” concern mentioned in the comment to my November 15th post, I suggest that one should simply not let this happen. Section 95.11(2)(e) of the Florida Statutes makes clear that a breach of property insurance contract action must be brought within five years of the date of loss. If your claim has not been resolved within six months of loss (let alone five years of loss), I suggest you at least consult with a lawyer well before the five year statute of limitation runs out.

1 A couple of the good books on the subject, include From Good Hands to Boxing Gloves: The Dark Side of Insurance and Delay, Deny, Defend: Why Insurance Companies Don’t Pay Claims and What You Can Do About It.
2 See, e.g., Home Ins. Co. v. Owens, 573 So. 2d 343, 344 (Fla. 4th DCA 1990) (“the insurance company’s litigation conduct was admissible, relevant evidence”).