In any dispute there are, at least, two sides to the story.  In an insurance dispute, it is typically the policyholders claiming their insurance company failed to pay their claim timely or in full.  In response, the insurance company will often raise defenses that they claim justify their delay or lack of payment.  But, what if they fail to raise a certain defense in a timely manner? 

Imagine this: your neighbor hires you to mow his yard.  You both agree to the areas that need mowing, the date for the job, and the payment.  You start mowing on the agreed-upon date.  Your neighbor is watching you, nodding.  He points out certain areas you missed; you mow those.  He helps you load your mower afterward and shakes your hand.  When you ask for the payment, though, he claims he doesn't owe you anything.  “You didn't use the right mower,” he says.  You scoff.  What about this situation feels unfair?  A recent opinion out of the Florida Fourth District Court of Appeal (“DCA”) might help explain.

The Neal v. GEICO Claim for Bad Faith

We have previously discussed the differences between a claim against an insurance company for breach of contract, which involves payment on the insurance claim and must be proven first, and the subsequent claim for bad faith, which involves the other wrongful actions the insurance company took that caused you damages beyond what is owed on your insurance claim.  In Neal v. GEICO Gen. Ins. Co., 2023 WL 2170684 (Fla. 4th DCA 2023) the policyholder first filed her breach of contract action against GEICO, alleging it failed to pay her insurance claim according to the policy.  At the same time, she filed a Civil Remedy Notice (“CRN”) with Florida's Department of Financial Services, which as we have explained in previous blogs, must be filed and must meet very specific filing criteria, in order to perfect the claim for bad faith.  If it does not, the insurance company can claim the CRN is deficient.

But, it is the insurance company's job to raise any deficiency in the CRN as a defense.

GEICO's Failure to Raise the CRN Defense

In Neal, GEICO filed a response to Neal's CRN, as it is required to do, within sixty (60) days after the CRN was filed.  In its response, GEICO did not claim the CRN was in any way deficient.  Instead, it denied any allegations of bad faith.  “We did not do anything wrong” is a common response from insurers to CRNs.  Like the point at which you and your neighbor agreed upon the terms for mowing his yard but your neighbor never mentioned the type of mower he expected you to use, the CRN Response was the first point at which GEICO could—but did not—raise the insufficiency of Neal's CRN as a defense. 

After the breach of contract claim was resolved via a settlement, Neal filed her lawsuit for bad faith, which had been perfected by the CRN she had filed.  In its response to the Complaint, GEICO again failed to raise the insufficiency of the CRN as a defense.  Think of this as your neighbor nodding and watching as you began to mow his yard without mentioning the fact that he felt you were using the wrong mower.  GEICO even went as far as to participate in discovery (the exchange of information) in the bad faith lawsuit without raising the deficiency of the CRN as a defense.  Think of this as your neighbor pointing out patches of grass you missed during your mowing without raising the issue of the mower you were using. 

GEICO's Attempt to Raise The CRN Defense Too Late In the Game

A year and a half after Neal filed her Complaint for bad faith, GEICO attempt to have her Complaint dismissed claiming (for the first time) that her CRN was insufficient because it did not state the allegations with specificity, failed to cite policy language, and failed to state a method for GEICO to cure the CRN.  Unfortunately, the trial court sided with GEICO and dismissed Neal's Complaint.  However, Neal was persistent, and she appealed the trial court's ruling to the Fourth DCA, where the DCA found GEICO's defense came too little, too late.  By filing its Response to the CRN without raising the insufficiency of the CRN as a defense, an Answer to the Complaint without raising this defense, and by participating in discovery without raising this defense, the Fourth DCA found GEICO had legally waived the sufficiency of the CRN as a defense.

How the Neal Opinion Can Help You

While the Neal opinion is certainly relevant in the bad faith-CRN context, this ruling will also translate to other defenses insurance companies are required to raise timely to avoid a court finding they have been waived.  Think about an insurance company's claim that you failed to mitigate your damages.  Shouldn't that be asserted as soon as there is evidence to support it?  What about an insurance company's attempt to avoid litigation by invoking appraisal?  We are currently arguing waiver of the right to invoke appraisal based on facts similar to Neal before the First DCA.  We are also currently filing CRNs against Hurricane Ian insurers who have not treated their policyholders fairly and failed to pay their claims timely or in full.  Sadly this is a growing trend in the industry on which we recently reported.

Rulings like Neal help policyholders hold insurers' feet to the fire.  They cannot act dilatory in both delaying payment on your claim and waiting too long to raise defenses they claim justify their actions.  We are grateful for the Fourth DCA's fair and swift action in this matter.  If you are dealing with a Hurricane Ian insurance company and you feel your insurer has not treated you fairly or keeps pointing to different reasons for not paying your claim on time or in full, never hesitate to contact us for a free, no-cost, no-obligation insurance claim review.  We are here to answer your questions and make sure you understand your rights.