Life Insurance Claim Delay in Florida
One of the more frustrating experiences for a life insurance claimant is the delayed claim.
Upon the insured’s death, the beneficiary must submit the claim for the death benefit to the insurance company. The sooner the beneficiary performs this act the better. Ideally, the insurance company should respond swiftly and, within no more than a couple of weeks, the beneficiary should receive the proceeds check. But that doesn’t always happen, unfortunately.
In some instances, the insurance company will process the claim slowly, or it will simply let things sit without doing anything for weeks or months. Whether the carrier does so intentionally or unintentionally is hard to say. No matter, this delay will cause frustration and annoyance to the proposed beneficiary.
How does your firm handle claim delay issues?
When a client comes to our firm with a delayed claim, we usually start off with a relatively quick demand letter to the carrier. The carrier’s response, if there is one, will likely tell us if there is a legitimate and credible issue in which to address, or, if the carrier is just giving the claimant the proverbial run around.
If the carrier is obstinate, further action can be taken in one of two ways, as we discuss below.
Filing a Civil Remedy Notice for Bad Faith
One approach is to file a civil remedy notice against the insurance carrier for its bad faith.
Florida statute 624.155 is a statutory law which authorizes an aggrieved person to sue a carrier for damages if the carrier violates certain claim settlement practices. The aggrieved party, however, must first file a civil remedy notice with the State authorities in order to put the carrier on notice of its statutory violation.
In particular, if the carrier fails to settle a claim when, under all of the circumstances, the carrier could have and should have settled the claim, the carrier could be deemed in violation of the civil remedy statute. Such inaction by the carrier would serve as a basis to file the notice with the state.
Filing a civil remedy notice itself is not a lawsuit. The act itself involves a simple filing with state authorities, and is relatively cost effective. Once the notice is filed, the carrier must respond within 60 days of receipt. If the carrier still fails to act it could be liable for statutory damages upon the filing of a lawsuit.
By filing a notice pursuant to the bad faith statute, the carrier might eventually be persuaded to do the right thing and pay out the proceeds. If so, the claimant would avoid the need to have to file a lawsuit at all.
Filing Suit – Potential Breach of Contract
If the carrier persists in delaying payment of the proceeds, the beneficiary could also immediately go to court and file suit.
A carrier’s refusal to pay out the proceeds, we would argue, could be construed as a breach of contract. Under every life insurance policy, the carrier has a contractual obligation to pay the death benefit proceeds after it has received “due proof of death”. So, unless the carrier has a very good reason not to pay the death benefit, its persistent refusal to pay could give rise to an actionable claim.