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Can mediation be effective for a disputed insurance claim?

On Behalf of | Mar 20, 2024 | Insurance Law and Litigation

People in Florida who suffer property damage or loss and are having trouble with the insurance company in trying to receive full compensation are often unsure of what they can do. For many, the concept of litigation is intimidating and they do not know if it is the wisest strategy.

In some instances, there could be alternative procedures that are effective in reaching an acceptable resolution. Knowing the law for an alternative dispute resolution is vital before moving forward with the process.

How does alternative dispute resolution work?

In a property insurance claim, the insurance company and the property owner are frequently in dispute as to what should be paid after damage has occurred. If there was a tropical storm, a windstorm, a natural disaster or a fire, it can be problematic for the owner as they strive to make the necessary repairs or find a new place to live. The objective of a dispute resolution process is to settle the matter in a fair way that both sides will accept.

The conference is meant to be informal and non-adversarial. Litigation is, by nature, adversarial and a less stressful forum could be helpful in forging a settlement. The policyholder can ask for this form of mediation. The insurer is not required to take part if it is requested by a third-party. A key point to remember is that the policyholder can have legal counsel for the mediation conference. This provides protection and can make sure they are aware of whether any settlement offered is in their best interests.

When the policyholder makes a first-party claim, the insurance provider is obligated to inform them that a mediation conference is an option. The insurer is required to adhere to the law regarding communication from the policyholder about the claim, the investigation of the damage and the adjuster’s appraisal as to what it costs to repair or replace.

Mediation is not free and the costs are legally required to be “reasonable.” The insurer will pay for the cost of continuing conferences. Policyholders will pay for rescheduling if they are scheduled to appear and do not. The insurer will pay for the policyholder’s out of pocket expenses if they are scheduled to appear and do not. A representative for the insurance company is not sufficient for the company to be considered having attended if the representative does not have the requisite authority to settle the claim at its full value. There will be other fees the insurer must pay for rescheduling.

Any discussions during the mediation process are part of the negotiation. This is a non-binding process, but when the sides reach a written settlement, the policyholder will be granted three business days to rescind it unless they cashed a check or were paid for the issues that were in dispute and settled in the conference. The insurer must inform the policyholder that they have the right to mediation. If they do not, it is a breach of contract.

Reaching a fair insurance settlement can be difficult

In the past few years, insurance claims have been prevalent in the Sunshine State. Insurance companies are increasingly balking at paying what the policy says they should pay or finding ways to shortchange property owners through questionable means. People rely on their insurance coverage when they need it and if they do not receive what they expect, it can make a bad situation far worse.

While insurance law can be difficult to sift through and litigation is always a viable option to hold companies accountable, it might be worthwhile to consider mediation. Regardless of whether it is a legal filing or a mediation conference, people need to be protected from the start and know how to maximize their insurance payouts for all that was lost.