For a number of years there has been litigation over when, pursuant to Florida law, an insurer must pay interest on amounts that are improperly withheld. While there are differing legal opinions on this matter under the common law, the Florida legislature has enacted statutory provisions that may provide some relief to associations and unit owners that suffer from inappropriately delayed and/or denied claims.
Florida Statute 627.70131 provides, in part:
(5)(a) Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment. Any payment of an initial or supplemental claim or portion of such claim made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, whichever is later, bears interest at the rate set forth in s. 55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. If there is a right to prejudgment interest, the insured shall select whether to receive prejudgment interest or interest under this subsection. Interest is payable when the claim or portion of the claim is paid. Failure to comply with this subsection constitutes a violation of this code. However, failure to comply with this subsection does not form the sole basis for a private cause of action.
(b)Notwithstanding subsection (4), for purposes of this subsection, the term “claim” means any of the following:
1.A claim under an insurance policy providing residential coverage as defined in s. 627.4025(1);
2.A claim for structural or contents coverage under a commercial property insurance policy if the insured structure is 10,000 square feet or less; or
3.A claim for contents coverage under a commercial tenants policy if the insured premises is 10,000 square feet or less.
Because both condominium unit owner policies and the association’s master policies are considered to be “residential coverage” under (b)(1), this applies equally to claims filed under either policies.
The claims process is a stressful time for associations, boards, property manager, and unit owners alike. When claims are improperly delayed or denied, it simply adds insult to injury. Thankfully there are remedies, such as the statutory interest requirement above, that can help compensate policyholders in such an instance.