An overwhelming number of claims are settled on a mutual understanding with respect to the covered loss and the amount necessary to indemnify the policyholder. The question is then: What can a policyholder do if the insurance company is taking an unreasonable amount of time to tender settlement payment. Florida law remains focused on strong public policy encouraging settlement of claims. To accomplish that goal Florida legislature has implemented statutes to protect the policyholders even when an amicable resolution has been reached between the policyholder and the insurance company.

The applicable statutory provision is Florida Statutes, § 627.4265, which states:

In any case in which a person and an insurer have agreed in writing to the settlement of a claim, the insurer shall tender payment according to the terms of the agreement no later than 20 days after such settlement is reached. The tender of payment may be conditioned upon execution by such person of a release mutually agreeable to the insurer and the claimant, but if the payment is not tendered within 20 days, or such other date as the agreement may provide, it shall bear interest at a rate of 12 percent per year from the date of the agreement; however, if the tender of payment is conditioned upon the execution of a release, the interest shall not begin to accrue until the executed release is tendered to the insurer.

Recently, the Circuit Court for the 15th Judicial Circuit sitting in appellate capacity found that the trial court erred in denying Plaintiff interest for late-payment on a settlement amount. In Joseph v. Citizens Property Insurance Company,1 Plaintiff filed suit against Citizens Property Insurance Company (“Citizens”) for failure to remedy a water damage claim at Plaintiff’s residential home. The parties agreed to an amount to amicably resolve the dispute without the necessity of a trial. At some point after settlement but before case dismissal, Plaintiff filed a motion to enforce settlement, and moved for interest on the settlement amount pursuant to Florida Statutes, § 627.4265, as well as for attorney’s fees and costs and sanction. Plaintiff argued that the payment was not made within 20 days after the settlement was reached. The issue on appeal was whether Citizens paid the settlement timely in accordance with Florida law.

Pursuant to the settlement release, Citizens was to tender two (2) settlement checks within 20 days of receipt of a fully and properly executed settlement release, one for damages made payable to Plaintiff as the sole payee and one for fees and costs to Plaintiff’s counsel. Citizens mailed the settlement checks within the 20 days required by statute and there was no issue with the indemnity check. However, the check for the attorney’s fees and costs was incorrectly made payable to Plaintiff and Plaintiff’s counsel’s former firm, rather than his current law firm.

Plaintiff advised Citizens regarding the error on the fees and costs check and Citizens agreed to reissue the check. However, Citizens mailed the corrected check for legal fees and costs to Plaintiff’s counsel after Plaintiff had already filed its motion to enforce settlement. Citizens argued that this was excusable neglect because of a scrivener’s error and the issue on appeal is whether a scrivener’s error on a timely issued check creates a right to statutory interest.

The appellate court found that the release provided for the complete terms of the agreement, including to whom the checks should have been made payable to and the correct spelling of the payees’ names, as well as Citizens was to issue the settlement checks within 20 days of receipt of a fully and properly executed settlement release. The court further concluded that neither the release nor Florida Statutes, § 627.4265 excused Citizens’ late payment due to a scrivener’s error for which the fault is attributable to Citizens. Thus, Citizens owed interest at a rate of 12 percent per year from the date of the executed release was tendered to Citizens.

As Plaintiff’s counsel pointed out, though the interest amount was relatively small, the intent of the Florida Statutes, § 627.4265 is consistent with public policy. This decision motivates the insurance companies to tender payment within the time allowed by Florida law and prohibits them from escaping trial deadlines at the expense of the policyholders. It further serves to deter insurance companies’ conduct of agreeing to settle and then hold the funds for profit without regard to consequences.
1 Joseph v. Citizens Prop. Ins. Co., No. 2017AP000131, 26 Fla.L. Weekly Supp. 556a, (Fla. 15th Cir.Ct. Sept. 6, 2018).