Articles Posted in Insurance Law

One of the primary objectives of every Plaintiff’s personal injury lawyer is to fairly and honestly maximize his or her client’s recovery. For Defendants and their insurance companies, the opposite outcome is their primary goal.

For a Plaintiff’s lawyer to be successful, he must know the personal injury insurance laws.

In the area of personal injury law involving motor vehicle accidents, uninsured/underinsured motorist insurance frequently comes into play. See F.S. 627.727. While there are many different aspects to UM/UIM coverage, this blog will focus on whether the UM/UIM carrier is entitled to a credit for the money its insured receives for personal injury damages from a self-insured.

The subject of this blog is a recurring theme in our law firm and in every law firm in the state involved in motor vehicle accident litigation.

Insurance coverage is a key issue in every Florida motor vehicle accident case. It is relevant to medical expenses, lost wages, vehicle repairs or replacement, and compensation for non-economic losses like pain and suffering.

Florida law controls some aspects of every motor vehicle insurance policy issued in Florida. At the moment, every new policy must include Personal Injury Protection (“PIP”) and Property Damage — Liability coverage. PIP provides a limited amount of coverage for the insured’s own medical expenses and lost wages — see Florida Statute 627.736. Property Damage — Liability provides a limited amount of coverage for damage to the property of others caused by the at-fault insured.

Nothing more in the way of insurance coverage is required for a vehicle registered in Florida to be operated lawfully in the state. The minimum mandatory policy is the least expensive policy available, explaining why so many motorists purchase it. Because it complies with Florida law, its owners often think they have “Full Coverage.”
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Every insurance policy issued in Florida contains the requirement, in some form or another, that the insurance company be put on notice of the claim and certain other claim events. Failure to provide notice in accordance with the policy’s terms may allow the insurance carrier to deny the claim.

Florida law is quite clear that notice to one’s agent or apparent agent is notice to the principal. That is true in the context of insurance. See Johnson v. Life Insurance Company of Ga., 52 So.2d 813, 815 (Fla. 1951). Insurance brokers, on the other hand, are not agents. Therefore, notice to brokers is typically not imputed to the principal.

In Gay v. Association Cas. Ins. Co., So.3d , 38 FLWD74 (Fla. 5th DCA 12-28-2012) (on rehearing) the insured maintained an insurance policy with Association Casualty Insurance Company for uninsured and inderinsured motorist coverage which was purchased through Burkey Risk Services, Inc. The insurance policy contained notice instructions. Following a serious motor vehicle accident, Gay informed Burkey of the accident and claims to have received permission from Burkey to cash a check issued by GEICO, the tortfeasor’s carrier, in partial payment of his damages. When Gay sought underinsured coverage through his policy, Association denied the claim, citing a breach of the policy’s notice provisions.
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Most Florida insurance policies require the insured to give notice of a loss to the insurer within a prescribed period of time, typically 30-60 days. The reason for the requirement is to allow the insurer to investigate the claim while the facts are fresh. While late reporting is presumed to prejudice the insurer, the presumption may be rebutted by showing that the insurer has not been prejudiced by the late notice. See Bankers Ins. Co. v. Macias, 475 So.2d 1216 (Fla. 1985) (failure to cooperate is a condition subsequent and it is proper to place the burden of showing prejudice on the insurer) Kings Bay Condominium Association, Inc. v. Citizens Property Insurance Company, 4th District. Case No.4D11-4819. December 12, 2012 (the trier of fact was allowed to consider if the insurance company was prejudiced by a 29 month delay in filing the notice of claim); Bontempo v. State Farm Mut. Auto. Ins. Co., 604 So.2d 28 (Fla. 4th DCA 1992); Ramos v. Northwestern Mut. Ins. Co., 336 So.2d 71 (Fla. 1976) (an insurer may not avoid liability under its policy by merely showing the violation of a clause requiring “assistance and cooperation” of the insured without a further showing of how this violation prejudiced the insurer); American Fire & Cas. Co. v. Collura, 163 So.2d 784 (Fla. 2d DCA), cert. denied, 171 So.2d 389 (Fla. 1964); American Fire & Cas. Co. v. Vliet, 148 Fla. 568, 4 So.2d 862 (Fla. 1941); United States Fidelity & Guar. v. Snite, 106 Fla. 702, 143 So. 615 (Fla. 1932).

A presumption which can be overcome by competent evidence is known as a rebuttable presumption.
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Have you ever wondered why insurance companies settle claims? The answer is not because they are kind and generous. The reason is because it is often cheaper for them than the potential alternatives. In other words, carriers settle in order to save money.

What would happen if one of those alternatives, the one that is the most threatening of all to insurance companies, is watered down so as to lose much of its practical value? The answer is simple: carriers will be less likely to settle claims when they could and should do so.

There are two types of optional (i.e., non-mandatory) coverages available under every Florida-issued motor vehicle insurance policy that compensate those damaged by the negligence of others for economic (e.g., lost wages and medical expenses) and non-economic (e.g., pain & suffering) losses. One is BI or bodily injury insurance, the other is UM or uninsured/underinsured motorist coverage. (UM: Florida Statute 627.727.)

Through legislation and court opinions, a body of law has developed in Florida with the purpose of compelling insurance companies to act in good faith towards their insureds (i.e., their premium paying customers). In the context of BI and UM insurance, this means that carriers must settle claims when it could and should do so based on the circumstances. The punishment for failing to do so, i.e., acting in bad faith, is that the carriers may be responsible for paying court judgments in excess of policy limits. This can be an extremely compelling threat. Consider this UM example: the insured, who has contracted for a $100,000 UM policy, is severely injured in a rear end crash caused by an uninsured drunk driver. Past and anticipated future medical expenses and lost wages exceed $500,000, while the victim will experience a lifetime of daily pain and suffering from her severe injuries. In spite of knowing all this, the UM carrier refuses to tender the $100,000 to its insured. Unwilling to accept a lesser amount from the carrier, the insured sues and obtains a jury verdict (subsequently turned into a final judgment) in the amount of $1,500,000. In other words, after considering the same facts available to the UM carrier, a jury has decided that the insured’s damages are 15 times greater than her UM policy limits.

Until recently, it was thought that the insured could then proceed to collect the $1,500,000 by proving bad faith against the carrier in a separate civil suit. Importantly, damages, already determined in the underlying civil suit, did not have to be established again. Unfortunately, this is where things may be changing for the worse for premium-paying insureds.
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The Florida Legislature has made Personal Injury Protection (PIP) insurance a mandatory coverage for all owners of operational motor vehicles. It is coverage that is designed to pay up to $10,000 in medical expenses and/or lost wages incurred by the insured regardless of fault, hence, the reason why it is commonly called “no-fault” insurance. In some instances, the coverage will apply to others, such as some resident relatives and pedestrians.

Before the policy is written, an insurance application must be completed. Insurance companies rely on the information provided in the application to set premium rates. The greater the risk, the higher the premium. Risk is determined by a number of factors, including the age and driving record of the applicant, and the number of potential individuals covered under the policy.

Section 627.409 Florida Statutes outlines the circumstances which allow insurance carriers to deny coverage. The statute reads as follows:

627.409 Representations in applications; warranties.–
(1) Any statement or description made by or on behalf of an insured or annuitant in an application for an insurance policy or annuity contract, or in negotiations for a policy or contract, is a representation and is not a warranty. A misrepresentation, omission, concealment of fact, or incorrect statement may prevent recovery under the contract or policy only if any of the following apply:
(a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.

(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.

(2) A breach or violation by the insured of any warranty, condition, or provision of any wet marine or transportation insurance policy, contract of insurance, endorsement, or application therefor does not void the policy or contract, or constitute a defense to a loss thereon, unless such breach or violation increased the hazard by any means within the control of the insured.
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The term “Full Coverage” means different things to different people.

For a vehicle to be registered in Florida, Florida law requires the owner to maintain nothing more than Personal Injury Protection (“PIP”) and Property Damage Liability insurance. PIP covers 80% of medical expenses and/or 60% of wage losses up to a total of $10,000, while Property Damage Liability pays for the damage or loss of property caused by the at-fault driver or owner of the motor vehicle. (The minimum coverage limit for PD Liability is $10,000.)

Neither of these coverages compensates anyone for bodily injury losses, also known as non-economic or pain & suffering damages.

Only Bodily Injury Liability (“BI”) insurance and Uninsured/Underinsured Motorist (“UM/UIM”) insurance compensate for non-economic damages. Neither of these coverages is mandatory, which means that a policy containing one or both of the them costs more than the basic PIP/PD Liability policy. Because of the additional cost, many people forego the coverages.
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