STATUTORY BAD FAITH AND AN INSURED’S 60-DAY NOTICE TO CURE

shutterstock_262750391A recent case came out in favor of an insured and against a first-party property insurer in the triggering of a statutory bad faith action.   Florida’s Fifth District Court of Appeal in Demase v. State Farm Florida Insurance Company, 43 Fla. L. Weekly D679a (Fla. 5th DCA 2018) held that if an insurer pays a claim after the 60-day notice to cure period provided by Florida Statute s. 624.155(3), this “constitutes a determination of an insurer’s liability for coverage and extent of damages under section 624.155(1)(b) even when there is no underlying action.” 

 

Before a statutory bad faith claim is brought, an insured must file a Civil Remedy Notice giving the insurer written notice of the violation and 60 days to cure the claimed violation. 

 

There are three requirements to sue for a statutory bad faith claim: “1) a determination of the insurer’s liability for coverage; (2) a determination of the extent of the insured’s damages; and (3) the required notice is filed pursuant to section 624.155(3).”    The third requirement is the filing of the Civil Remedy Notice pursuant to s. 624.155 giving the insurer a safe harbor to cure the claimed violation.

 

The first and second requirement are oftentimes determined in litigation, arbitration, or settlement in a coverage lawsuit against an insurer.  However, as this court demonstrates, that does not always have to be the case.  If the insurer pays a claim outside of the 60-day cure period, this establishes (1) a determination of the insurer’s liability for coverage and (2) a determination of the extent of the insured’s damages.  In other words, if an insurer is going to pay a claim, they really need to think carefully about doing so within the 60-day statutory bad faith cure period. Paying afterwards supports the first two requirements of a statutory bad faith claim.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

BAD FAITH IN THE CONTEXT OF PROPERTY INSURANCE CLAIMS (WEBINAR)

Recently, I participated in a national webinar involving insurance bad faith in the property insurance context.  My section of the webinar dealt with the elements and burden of proof in demonstrating bad faith by an insurer in various jurisdictions.  If you are dealing with a property insurance claim, or believe there may have been bad faith by the insurer, make sure you are working with counsel equipped to handle the jurisdictional nuances in advising you of your rights and proving such a claim.

 

Download (PDF, 248KB)

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

CGL INSURER’S DUTY TO DEFEND INSURED DURING PRE-SUIT 558 PROCESS: MAYBE?

shutterstock_287900015In earlier postings, I discussed the issue of whether Florida Statutes Chapter 558′s pre-suit construction defects process triggers a CGL insurer’s duty to defend.  The issue was whether Florida’s 558 pre-suit notice of a construction defect and repair process met the definition of “suit” within a standard CGL policy.

 

A standard CGL policy defines the term “suit” as:

 

“Suit” means a civil proceeding in which damages because of “bodily injury,” “property damage” or “personal and advertising injury” to which this insurance applies are alleged. “Suit” includes:

a. An arbitration proceeding in which such damages are claimed and to which the insured must submit or does submit with our consent; or

b. Any other alternative dispute resolution proceeding in which such damages are claimed and to which the insured submits with our consent.

 

The Florida Supreme Court in Altman Contractors, Inc. v. Crum & Forster Specialty Ins. Co., 42 Fla. L. Weekly S960b (2017) held that Florida’s 558 process is an “alternative dispute resolution proceeding” within the definition of suit in a CGL policy.  However,  since it falls within an “alternative dispute resolution proceeding,” the insurer’s consent is required to invoke its duty to defend its insured during this pre-suit process.  This is especially true since a recipient’s participation in the pre-suit 558 process is voluntary and not mandatory and this process does not produce any binding results.

 

Accordingly, an insured-contractor or subcontractor that receives a 558 notice of a construction defect should absolutely tender the notice to its CGL insurer.  No doubt about it.  In doing so, the insured should inquire and perhaps encourage the insurer to participate in the process and defend the insured’s interests.  If the insurer is not willing to participate in this process, this does not mean the insured should refuse too.  Rather, the insured simply needs to recognize that it will be responsible for its own fees and costs in doing so.  The insurer’s consent is required to invoke its duty to defend the insured during this process.

 

This opinion, unfortunately, doesn’t provide a whole lot of value (in my opinion) because if an insurer does not consent to participating in the process and defending its insured, it puts the insured in a position where it may be better off being sued where the insurer will now defend it and engage the consultants to investigate the claimed defects.  Many insurers, however, will capitalize on the 558 process by providing a defense to its insured as opposed to simply waiting for the inevitable construction defect lawsuit.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

MAKE PRUDENT DECISIONS REGARDING YOUR HURRICANE IRMA PROPERTY DAMAGE CLAIMS

shutterstock_710399056Hurricane Irma barreled down on us with all of her forceful winds and torrential rains.  She was scary and relentless.  There was mass evacuation.  Commercial flights were booked.  Trains were booked.  There was gridlock with the concern as to whether gas would even be available.  There were many people that did not evacuate, uncertain as to the eventual path Irma would take.   Originally projecting an easterly course, people on the east coast evacuated to the west coast, central Florida or out-of-state.   She then shifted to a westerly course forcing people on the west coast to evacuate to the east coast, central Florida, or out-of-state.  It was chaos stemming from the total unpredictability of Mother Nature.  It was chaos stemming from the dreadful images of Hurricane Harvey.  Mother Nature and all of her uncertainty is undoubtedly frightening, as proven by her devastation throughout the amazing state of Florida.

  

We are fortunate.  We made it through her wrath.  We have our life and our health. This is the most important.  I repeat — the most important.  Sure, there may be property damage at our house or in our community, but it could always be worse.  I repeat again — it could always be worse.  Assets are replaceable.  Life and health is not replaceable. 

 

When it comes to property damage, perspective is important.   Do not forget perspective.  Please do not engage in an emotional knee jerk reaction and hire the first person that comes your way to assist with the damage and fallout of Irma.  Disaster unfortunately causes others and the unqualified to prey on vulnerabilities.  Take a deep breath and do not neglect to digest your damage and do your due diligence on your course of action and hiring someone you will trust and know will assist in your needs.  Here are some tips I encourage:

 

1) Survey the damage.  After you have initially digested and assessed the damage, do another walk-through of your property and survey and notate the damage you are observing.  Either get a pen and pad and write down your assessment or use your phone, ipad, or laptop to memorialize your observations.

2) Persuasively photograph the damage Sure, everyone tells you to do this.  But, I am telling you to look at the photos you take to ensure you are capturing the damage to the best of your ability.  This means to focus on the elevation of your photo and the proximity of your camera or phone (in the case of a camera phone) to the damage or item you are capturing.  The reason for this is to persuasively capture the damage – take photos from various elevations, angles, and distances to capture the water damage and hurricane-caused damage.   Correlate the photo with your written survey.  If you use a camera that is not a camera phone, date stamp the photograph.

3)  Persuasively video the damage.  Similar to above, if you have a systemic leak, do not just photograph that leak.  Take a video of it that captures the water intrusion and movement of the leak.  Correlate your video with your written survey.  You can also take a video of the damage and narrate that damage as you are observing it. 

4) Obtain a copy, if you can, of your property insurance policy or your declaration page so that you can submit a claim ASAP.  If you have a property insurance policy, have this handy.  Insurance is complex and it is always advisable that you work with a professional when submitting a claim under your policy for hurricane-related damage.   You will want to submit an insurance claim soon to report the damage caused by Irma.  Your property insurer is anticipating claims caused by Irma.

5) Hire a trustworthy and qualified professional.  There will be a lot of lawyers and/or public adjusters soliciting your business.  Lots of them.  They will be offering to help.  Some will have good intentions. Others will not.  They will want you to pay them a contingency percentage of anything you receive from your property insurer (oftentimes, a minimum of 20% or more based on the issue).   You want someone QUALIFIED and you can TRUST – that you know will not take advantage of the situation and will keep you informed and give you the best advice so that you can make the most informed decisions.  This is very important and based on the severity of the damage you may want to explore different options to compensate a professional.

6)  If you hire a contractor, make sure they are licensed.  If you hire a contractor to implement immediate repairs and remediate water intrusion, make sure they are licensed and read what you sign.  A reason to engage a professional is to ensure you are properly notifying your property insurer and you are not being taken advantage of by hiring a qualified professional.  Also, make sure you save all contracts, invoices, and payments you make to preserve a basis for reimbursement from your property insurer.  

7)  Do not unilaterally discard any damaged contents or otherwise.  Do not start throwing things away or discarding damage before you engage in items 1 – 5 above.  A reason you want to hire a professional is so that you do not prejudice your rights by discarding potential evidence before notifying your insurer. 

 

 

The key is not to act haphazardly based on your emotional reaction to the damage. I know it is emotional.  I get it.  But, because it is emotional, you want to make sure that you are implementing prudent decisions moving forward to maximize your property insurance.  You want to make sure you are implementing a path that benefits YOU!

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.