How to Leverage a Settlement of Your Property Insurance Claim

If you filed a claim on your residential or commercial property insurance policy that you believe was wrongfully denied, you may be thinking about filing a lawsuit against your insurance company for coverage.  As of July 1, 2021, before an insured can file a lawsuit against the insurance company, the insured is required to provide the insurance company with written notice of intent to initiate litigation.  This pre-suit written notice gives the insurance company an opportunity to re-evaluate its initial coverage decision, work with the insured and settle the property insurance claim, and avoid potential liability for the insured’s attorneys’ fees and costs.

Pre-Suit Settlement Demand

Before an insured can file suit against an insurance company related to a residential or commercial property insurance policy, an insured must first submit written notice of intent to initiate litigation to the Florida Department of Financial Services (“Department”).  Fla. Stat. § 627.70152(3)(a).  If an insured fails to submit this written notice to the Department at least 10 business days prior to filing suit, the court will dismiss the lawsuit without prejudice.  Fla. Stat. § 627.70152(5).  

The written notice of intent to initiate litigation must be on the form provided by the Department, and submitted through the Department’s website at the following link: Property Insurance Intent to Initiate Litigation.  Fla. Stat. § 627.70152(3)(a).

If the notice is submitted following the insurance company’s denial of coverage, the notice must include the following information:

1. That the notice is provided pursuant to Section 627.70152, Florida Statutes;
2. The alleged denial of coverage;
3. If provided by an attorney or other representative, that a copy of the notice was provided to the insured/claimant; and
4. An estimate of damages, if known.

On the other hand, if the notice is submitted following acts and omissions by the insurance company, other than a denial of coverage, the notice must include the following information:

1. That the notice is provided pursuant to Section 627.70152, Florida Statutes;
2. The alleged acts or omissions of the insurance company giving rise to the suit;
3. If provided by an attorney or other representative, that a copy of the notice was provided to the insured/claimant;
4. A pre-suit settlement demand, which must itemize the damages, reasonable and necessary attorney fees incurred by the insured/claimant, to be calculated by multiplying the number of hours actually worked on the claim by the claimant’s attorney as of the date of the notice by a reasonable hourly rate, and the costs incurred by the claimant; and
5. The disputed amount, which is the difference between the pre-suit settlement demand (described above), not including attorney fees and costs, and the insurance company’s pre-suit settlement offer, not including attorney fees and costs.

Although not required, the insured can submit any supporting documentation, such as letters or e-mail correspondence from the insurance company, or pictures of the property damage, along with pre-suit written notice to the Department.  Id.

Deadline to Submit Written Notice of Intent to Initiate Litigation

An insured must submit the written notice of intent to initiate litigation to the Department within 5 years from the date of the loss.  Fla. Stat. § 95.11(2)(e).  If the insured fails to submit the written notice within this timeframe, the insurance company will have a statute of limitations defense, resulting in possible dismissal of the lawsuit.  However, submitting the written notice will toll the 5-year timeframe for 10 business days, if such time limit will expire before the end of the 10-business day notice period.  Fla. Stat. § 627.70152(3)(b).

The Property Insurance Company’s Duties Following Written Notice 

Within 10 business days of receiving the insured’s written notice of intent to initiate litigation, the insurance company is required to respond to the insured in writing.  Fla. Stat. § 627.70152(4).  The insurance company must provide its written response by email, if the claimant designated an email in the written notice.  Id.

If an insurance company is responding to a written notice following the insurance company’s denial of coverage, the insurance company must respond by:

1. Accepting coverage; or
2. Continuing to deny coverage; or
3. Asserting the right to reinspect the damaged property.

Fla. Stat. § 627.70152(4)(a).  

If the insurance company asserts the right to reinspect the damaged property, then the insurance company must accept or continue to deny coverage within 14 business days after that response.  Id.  If the insurance company continues to deny coverage, the insured can file suit without providing any additional notice to the insurance company.  Id.

On the other hand, if the insurance company is responding to a written notice following acts and omissions by the insurance company, other than a denial of coverage, the insurance company must respond by:

1. Making a settlement offer; or
2. Requiring the claimant to participate in appraisal; or
3. Requiring the claimant to participate in another method of alternative dispute resolution.

Fla. Stat. § 627.70152(4)(b).  

If the insurance company requires an appraisal or another method of alternative resolution, and the appraisal or alternative dispute resolution is not concluded within 90 days after the expiration of the 10-business day written notice, the insured may immediately file suit without providing any additional notice to the insurance company.  Id.

Recovering Attorneys’ Fees from Insurance Company

If the pre-suit written notice did not yield a resolution of the insured’s claim, then the insured can file suit against the insurance company.  However, the insured must be mindful that he or she can only recover his or her attorneys’ fees and costs from the insurance company in certain circumstances.

• Recovering 100% of Attorneys’ Fees

If the difference between the judgment amount obtained by the insured and the pre-suit settlement offer made by the insurance company, excluding reasonable attorney fees and costs, is at least 50% of the disputed amount (the difference between the insured’s pre-suit settlement demand and the insurance company’s pre-suit settlement offer), the insurance company is responsible for 100% of the insured’s attorneys’ fees and costs.  Fla. Stat. § 627.70152(8)(a)(3).  

For example, if the insured’s pre-suit settlement demand was $100,000 (not including attorneys’ fees and costs), and the insurance company’s pre-suit settlement offer was $50,000, then the disputed amount is $50,000.  If the insured ultimately obtains a judgment of at least $75,000, then the insured will recover all of his or her attorneys’ fees and costs from the insurance company.

• Recovering 20-49% of Attorneys’ Fees

If the difference between the judgment amount obtained by the insured and the pre-suit settlement offer made by the insurance company, excluding reasonable attorneys’ fees and costs, is at least 20 % but less than 50% of the disputed amount, the insurance company is responsible to pay the insureds’ attorneys’ fees and costs equal to the percentage of the disputed amount obtained times the total attorneys’ fees and costs. Fla. Stat. § 627.70152(8)(a)(2).  

Using the same example as above,  if the insured ultimately obtains a judgment of at least $60,000, but less than $75,000, then the insured can recover some of his or her attorneys’ fees and costs from the insurance company.  Specifically, if the insured recovers a judgment of $70,000, then the insured will recover 40% of his or her attorneys’ fees and costs from the insurance company.

• Recovering 0% of Attorneys’ Fees

If the difference between the judgment amount obtained by the insured and the pre-suit settlement offer made by the insurance company, excluding reasonable attorney fees and costs, is less than 20% of the disputed amount, the insurance company and insured are responsible for their own attorneys’ fees and costs.  Fla. Stat. § 627.70152(8)(a)(1).  

Using the same example as above,  if the insured ultimately obtains a judgment of less than $60,000, then the insured is responsible for all of his or her attorneys’ fees and costs.

Conclusion

The pre-suit notice requirement is a useful tool for insureds to leverage a settlement of his or her property insurance claim, without filing a lawsuit.  If the insured and insurance company are unable to reach a resolution following the insured’s pre-suit settlement demand, and the insured files a lawsuit against the insurance company for coverage, then the insurance company may ultimately be liable to the insured for some or all of the insured’s attorneys’ fees and costs.