On May 11, 2011, the Florida Fourth District Court of Appeal released an opinion addressing a policyholder’s claim for prejudgment interest following an appraisal award. Green v. Citizens Property Insurance Corp., 2011 WL 1775731 (Fla. 4th DCA 2011). This blog continues the discussion from my March 2011 post, Recent Third District Court of Appeal Ruling Regarding Entitlement To Prejudgment Interest Following An Appraisal Award In Florida, as well as Chip Merlin’s post from a couple weeks ago, Prejudgment Interest Following A Wrongful Denial.
Last week, a very able insurance defense attorney from Florida’s panhandle, Robert Palmer, brought Citizens Prop. Ins. Corp. v. Mallett, 7 So3d 552 (Fla. 3d DCA 2009), which involved prejudgment interest, to my attention. This case is not favorable to policyholders, especially in Northern Florida, and challenges a longstanding case, Independent Fire Ins. Co. v. Lugassy, which provides for prejudgment interest following denial.
Florida’s Third District Court of Appeal just released an opinion related to a policyholder’s claim for prejudgment interest after an appraisal award. In Alberto Jugo v. American Security Insurance Company, No. 3D09-3246 (Fla. 3d DCA 2011), the Third District held that a policyholder was not entitled to prejudgment interest on the supplemental amount of the appraisal award from the date of loss, despite the insurer’s denial of the “supplemental” claim.
Texas law allows for interest to be awarded to a policyholder as a penalty for the insurer delaying payment of a claim, in addition to the amount of the claim. Section 542.060 of the Texas Insurance Code states:
If an insurer that is liable for a claim under an insurance policy is not in compliance with [Chapter 542, Subchapter B – Prompt Payment of Claims], the insurer is liable to pay the holder of the policy, in addition to the amount of the claim, interest on the amount of the claim at the rate of 18 percent a year as damages… .
(Note: This Guest Blog is by Ruck DeMinico, Knowledge Manager with Merlin Law Group).
The recent case of North Pointe Insurance Company v. Tomas, No. 3D08-2245, 2009 Fla. App. LEXIS 12505 (Fla. 3d DCA August 26, 2009), illustrates why many insurers who wrongfully fail to pay a claim choose to unnecessarily delay payment rather than out right deny them.
Why do insurance companies get to play the float in some jurisdictions? After all, most regulations and good faith duties require prompt payment. Without penalties or awards of prejudgment interest, rules of promptness become meaningless because there is no accountability for claim delay.
In the last week, two Florida cases have been released which discuss prejudgment interest.
In Sunshine State Insurance Co. v. Davide, 34 Fla. L. Weekly D1422a (Fla. 3d DCA 2009), Florida’s Third District Court of Appeal held that when an insurer erroneously withholds a portion of a payment due, the insured is entitled to prejudgment interest on the amount not timely paid from the date the payment became due under the policy, not from the date the property was damaged. As I will explain at the end of the case summary, this case applies only to pre-2007 claims. On July 11, 2007, consumer friendly legislation took effect which would have provided Davide with a statutory right to interest from the date Sunshine received notice of the claim.