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How Long Can a Property Insurance Company Delay a Valid Claim?

Pekar Law, P.A. April 19, 2021

Delay in insurance payouts can mean a lot of stress for homeowners. For example, you have to make at least temporary repairs to a damaged roof right away so that your home isn’t open to the elements. You also don’t want to have to wait months to make permanent repairs to the damage after a storm or other incident affects your property.

If you do pay out of pocket or use credit to cover the cost of repairs in the hope of reimbursement, you could lose out on interest earned on your resources or end up paying high levels of interest on financed repairs. Being able to depend on a timely payout is crucial for a homeowner’s financial stability. How long can your insurance company reasonably delay a valid claim by a current policyholder?

Insurance Companies Operating in Florida Should Respond Quickly to Claims

There are federal and state laws that specify the obligations of insurance companies to those who purchase policies or who suffer losses caused by policyholders. The law generally requires that companies pay out on any appropriate claim.

The amount of compensation paid should reflect the policy’s coverage amounts and the true financial losses of the claimant. Payment in a timely manner is also important. Unreasonable delays are tactics insurance companies sometimes use to discourage claimants. To keep the company from dragging out a claim indefinitely, Florida statutes require a prompt response to a claim.

A policyholder theoretically has up to four years to file a claim, but the insurance company has a significantly smaller time frame to respond. They must acknowledge receipt of the claim within 14 days. Then, the law requires that they propose a settlement to a valid claim within 90 days of receipt of that claim. Once the person who filed a claim accepts a settlement offer, the company should start making payments within 20 days.

Delays Are a Noteworthy Form of Bad Faith Insurance

Bad faith insurance involves a company intentionally refusing to pay a valid claim or delaying a payout, but it can also involve unreasonable delays in paying a valid claim. Those dealing with unnecessary and excessive delays on a straightforward property insurance claim could potentially have grounds for a bad faith insurance claim against the company involved.

If successful, a bad faith insurance claim could mean that a policyholder receives not only payment for their claim as they should but also possibly punitive compensation or interest paid by the insurance company as a means of penalizing them for their inappropriate delays.