Welcome to the Responsibilities of the Insurer course. The purpose of this course is to arm you, the insurance adjuster and insurance agent, with the relevant and adequate knowledge on matters pertaining to responsibilities of the Insurer. At the end of this course, you should be capable of understanding the basics of Insurer responsibilities.

Please be guided that the contents of this course should only serve as guidance and an overview of the course. All the materials covering Responsibilities of the Insurer cannot be exhaustively covered under the course due to its dynamic nature. You are therefore encouraged to use supplementary materials on the topic to equip yourself further. 

The content of the course shall be as hereunder:

  1. The Insurer
  2. Responsibilities of the Insurer
  3. Case Studies
  1. California
  2. Florida

The Insurer

Who is an Insurer? An Insurer is the party that compensates a policy holder or claimant when an event covered by the insurance policy occurs. The Insurer is also in charge or formulating the policy. Insurance companies are responsible for generating insurance quotes, selling policies, processing claims filed by policyholders, and providing coverage in the form of financial compensation if and when necessary. The term ‘Insurer’ is often interchanged with the word “Underwriter”. Let us look at different definitions of an Insurer across different states.

In Florida, under the Insurance Code 624.03, “Insurer includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity.”  Under 624.02, “Insurance is a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies.”

As per the Georgia Code, 33-1-2, “Insurer means any person engaged as indemnitor, surety, or contractor who issues insurance, annuity or endowment contracts, subscriber certificates, or other contracts of insurance by whatever name called. Hospital service nonprofit corporations, nonprofit medical service corporations, burial associations, health care plans, and health maintenance organizations are insurers within the meaning of this title and “Insurance” means a contract which is an integral part of a plan for distributing individual losses whereby one undertakes to indemnify another or to pay a specified amount or benefits upon determinable contingencies.”

In Washington state RCW 48.01.050 “”Insurer” as used in this code includes every person engaged in the business of making contracts of insurance, other than a fraternal benefit society. A reciprocal or interinsurance exchange is an “insurer” as used in this code. Two or more hospitals that join and organize as a mutual corporation pursuant to chapter 24.06 RCW for the purpose of insuring or self-insuring against liability claims, including medical liability, through a contributing trust fund are not an “insurer” under this code. Two or more local governmental entities, under any provision of law, that join together and organize to form an organization for the purpose of jointly self-insuring or self-funding are not an “insurer” under this code. Two or more affordable housing entities that join together and organize to form an organization for the purpose of jointly self-insuring or self-funding under chapter 48.64 RCW are not an “insurer” under this code. Two or more persons engaged in the business of commercial fishing who enter into an arrangement with other such persons for the pooling of funds to pay claims or losses arising out of loss or damage to a vessel or machinery used in the business of commercial fishing and owned by a member of the pool are not an “insurer” under this code. Two or more nonprofit corporations that join together and organize to form an organization for the purpose of jointly self-insuring or self-funding for property and liability risks under chapter 48.180 RCW are not an “insurer” under this code.

The California Insurance Code states that “Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event. The person who undertakes to indemnify another by insurance is the insurer, and the person indemnified is the insured. The written instrument, in which a contract of insurance is set forth, is the policy.” In the Cal. Code Regs. Tit. 10, § 2695.2, a claimant/ insured/ policyholder has been defined as follows; “”Claimant” means a first- or third-party claimant as defined in these regulations, any person who asserts a right of recovery under a surety bond, an attorney, any person authorized by operation of law to represent the claimant, or any of the following persons properly designated by the claimant in the manner specified in subsection 2695.5(c): an insurance adjuster, a public adjuster, or any member of the claimant’s family. “First party claimant” means any person asserting a right under an insurance policy as a named insured, other insured or beneficiary under the terms of that insurance policy, and including any person seeking recovery of uninsured motorist benefits; “Third party claimant” means any person asserting a claim against any person or the interests insured under an insurance policy;”

Let us briefly look into the insurance provided by the Insurer:

Individuals and families obtain personal insurance to cover their risk requirements. Life, health, disability, auto, homeowner, and long-term care insurance are all examples of this type of coverage. Employees are covered by group insurance, which is provided by the employer. Life, disability, health, and pension plans are all covered under group insurance. Property and casualty insurance for businesses and other organizations is known as commercial insurance. Personal lines staff are educated to look for risk variables that determine the occurrence and intensity of claims among individuals and families such as driving records and types of home construction. Group underwriting considers the personnel group’s features and demographics, as well as prior experience. The commercial division comprises underwriting experts that specialize in the risks that businesses confront. 

Death, medical expenditures, incapacity, and old age are all covered by life/health insurance. These dangers are insured by private life insurance firms, and individuals choose whether or not to purchase their policies. Health insurance is usually supplied by life/health insurers, but some property/casualty insurers also sell it. All of these services are accessible both individually and in groups. On an involuntary basis, the Social Security program offers considerable amounts of life and health insurance. 

Property/casualty insurance protects against direct and indirect property losses caused by risks such as fire, windstorm, and theft. It also provides coverage for the potential of being found legally responsible for compensating another individual for damages. Property and casualty insurance had to be written by different insurers prior to the implementation of multiple-line underwriting rules in the late 1940s and early 1950s. They are now frequently written in the same contract for example, homeowner’s and business package insurance. 

A life/health insurer or a property/casualty insurer are two types of private insurers. Health insurance can be sold by either of these companies. Some insurance companies specialize in one form of coverage, such as property insurance. Others are affiliated insurers, which are groups of insurers (and sometimes noninsurance firms) managed by a holding corporation that offers all or nearly all sorts of insurance.

Insurance is offered by private companies as well as state and federal government bodies. Private insurers supply the majority of property/casualty insurance, as measured by premium income. The government provides around a further one-third personal insurance than the private sector. Although some forms of insurance, such as automobile insurance or insurance on mortgages and car loans, are mandated by law or contracts, the majority of private insurance is obtained willingly. 

Automobile liability insurance is required in many states, and if the car is financed, the lender will want property damage coverage. For some people, government insurance is required under specific circumstances. The majority of people are legally compelled to enroll in the Social Security program, which provides coverage for life, health, disability, and retirement. Unemployment and workers’ compensation insurance are examples of government-provided involuntary social insurance. Some government insurance is accessible to individuals who want it, such as flood insurance, but no one is compelled to buy it. 

Responsibilities of the Insurer

According to the Merriam-Webster dictionary, the term responsibility is “1 : the quality or state of being responsible: such as 

a : moral, legal, or mental accountability 

b : reliability, trustworthiness 

2 : something for which one is responsible…”

Both common law and statute law impose obligations on insurance businesses. We will hereby be looking at the duties of the Insurer imposed by law. The Following are the primary responsibilities:

  1. Duty to Defend
  2. Duty to Indemnify
  3. Subrogation
  4. Properly investigate, process, and pay the Insured the claim in a timely and fair manner, as well as to treat the claimant fairly at all times. (California Insurance Code 790.03, 10 California Code of Regulations 2695.9.)

We shall look at the general duties of the Insurer then delve it specific duties referring to different statutes across the US.

Duty to Defend

In most cases, an insurer is required to defend or pay the legal expenses of an insured who is facing a legal action related to the covered risk. When an insured timely discloses a potentially covered claim against them, the insurer is required to appoint and pay for defense counsel to defend the insured against the claim, unless the insured chooses their own counsel. If the insured has chosen their own counsel, the insurer is required to compensate the insured for attorney fees incurred in defending themselves the right to choose one’s own counsel is based on the terms and conditions of the policy and the law of the subject state.

Many states simply enable the insurer to analyze the policy and the lawsuit petition against the insured to determine the duty to defend, and the insurer has a duty to defend if any accusation is even possibly covered by the policy. Because the insurer is confined to reviewing what is inside the “four corners” of the policy and the “four corners” of the petition, this is often referred to as the “eight corners” or “four corners” rule. However, in some jurisdictions, the insurer is allowed to examine evidence that is not related to or not alleged in the petition when determining whether or not there is a duty to defend. In California, unlike in some other jurisdictions, an insurer’s duty to defend is established not just by looking at the “four corners” of the complaint, but also by looking at other events surrounding the occurrence.

When an insurer agrees to defend an insured, the policyholder may get a letter called a “reservation of rights”. Such letters inform the insured that, while the insurer is providing a defense, there may be coverage concerns that prohibit the insurer’s obligation to reimburse or even defend the insured. 

It’s worth noting that a responsibility to defend isn’t included in every professional liability policy. 

There are policies known as “indemnity only,” which allow the insured to conduct, and frequently pay for its own defense. Each policy must be thoroughly examined to see if it includes a duty to defend the insured. 

In Montrose Chemical Corp. v. Superior Court (1993) 6 Cal. 4th 290, 300), the California Supreme Court held that “[t]o prevail [on the duty to defend], the insured must prove the existence of a potential for coverage, while the insurer must establish the absence of any such potential. In other words, the insured need only show that the underlying claim may fall within policy coverage; the insurer must prove it cannot.”

However, insurers frequently contest their duty to defend and hence settle when there is a hint of intent in some of the activity that led to the insurance claim. The court ruled that there was no responsibility to defend in Delgado v. Interinsurance Exchange of Automobile Club of  Southern California (2009) 47 Cal. 4th 302, “when all of the acts, the manner in which they were done, and the objective accomplished occurred as intended by the actor,” and because there “the conduct which gave rise to the suit was done with the intent to cause injury” – a decision the court reached because “there is no allegation in the complaint that the acts themselves were merely shielding or the result of a reflex action. Therefore, the injuries were not as a matter of law accidental, and consequently there is no potential for coverage under the policy.”

According to Hogan v. Midland National Insurance Co. (1970), 3 Cal. 3d 553, if an insurer is required to defend one of numerous claims in a single complaint, it is required to defend the entire litigation. 

When a policyholder files a liability claim with an insurance company, the insurer often chooses to defend the claim under a reservation of rights. Generally, under Florida law, and as stated in Jones v. Fla. Ins. Guar. Ass’n, Inc., 908 So. 2d 435, 442-43 (Fla. 2005), an insurer’s obligation to defend emerges when the complaint’s allegations against the insured “fairly and potentially bring the suit within policy coverage.” (the “four corners” or “eight corners” rule). This rules’ exception is provided in BBG Design Build, LLC v. S. Owners Ins. Co., No. 19-14508, 2020 WL 4218108, at *3 (11th Cir. July 23, 2020) (quoting Stephens v. Mid-Continent Cas. Co., 749 F.3d 1318, 1323 (11th Cir. 2014)), where the court held “a limited exception to the four corners rule” that permits courts to “consider extrinsic facts if those facts are undisputed, and, had they been pled in the complaint, they clearly would have placed the claims outside the scope of coverage.” 

The general contractor for a rehabilitation project at a domestic abuse help center in Florida was BBG Design Build. Patricia Armor, a resource center employee, was injured when she came into contact with construction debris. She filed a lawsuit against BBG Design Build, saying that the company was irresponsible in its construction site management. According to the original lawsuit, significant amounts of building material debris, such as dust and airborne fiberglass, were released into the air without necessary controls or safeguards, resulting in Armor respiratory sickness. The plaintiff then submitted an amended complaint, the operative pleading, in which “construction debris” was not described and the plaintiff’s “bodily injury” was also not described. The Eleventh Circuit accepted that the insurer would have a duty to defend if it limited its analysis to the accusations in the revised complaint. 

Before bringing suit against BBG Design Build, the underlying plaintiff issued a pre-suit demand package to BBG Design Build’s commercial general liability insurer. The plaintiff was allegedly hurt after being exposed to harmful fumes and dust as a result of the restoration project, according to the demand. The demand package also includes medical records indicating that the plaintiff was exposed to fiberglass from a construction site while working and that the plaintiff was diagnosed with bronchitis as a result of the exposure. The insurer “had knowledge that Armor was claiming bodily injury that would not have occurred in whole or part but for the alleged release or escape of pollutants” based on this information. These facts were uncontroverted and remain so.”

While the amended complaint “attempts to plead into coverage by not describing the ‘construction debris’ or her ‘bodily injury,’ it was undisputed that Armor’s alleged injuries included bronchitis resulting from fiberglass exposure, as made clear by Armor’s demand letter, initial complaint, and medical records,” the court noted. The pollution exclusion of the policy prevents coverage for bodily harm “which would not have occurred in whole or part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of ‘pollutants’ at any time.” “Any solid, liquid, gaseous, or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste,” according to the regulation referred to pollutants.

“Waste includes materials to be recycled, reconditioned or reclaimed.”

In a blatant attempt to ‘plead into coverage,’ the plaintiff’s amended suit “omitted a ‘crucial, undisputed fact.” (citing Wilson ex rel. Estate of Wilson v. Gen Tavern Corp., 469 F. Supp. 2d 1214, 1220 (S.D. Fla. 2006). The Eleventh Circuit concluded that the insurer did not breach its obligation to defend BBG Design Build in the underlying action, notwithstanding the plaintiff’s unclear accusations in her revised complaint, because the pollution exclusion was unequivocal and prohibited coverage for the uncontroverted injuries. As a result, where the underlying plaintiff files a unclear, boilerplate complaint and the real facts are not in question, courts must examine extrinsic evidence in determining an insurer’s obligation to defend. 

Carithers v. Mid-Continent Case, a Florida appellate court case, articulates the difference between these duties duty to defend and indemnify, succinctly. An insurance provider is only obligated to indemnify under Florida law if the circumstances of the underlying action against the policyholder prove the availability of coverage under the policy’s terms. The Carithers court, on the other hand, supports the idea that an insurer’s obligation to defend an insured is substantially broader than the duty to indemnify. If there is even a remote chance that the facts and claims in the underlying tort litigation against an insured will be covered by the policy, the duty to defend is triggered. 

Once this lenient criterion is reached, the insurance carrier is obligated to defend even if the accusations in the lawsuit also demand damages that obviously fall outside the scope of the policy’s covered losses. If any of the allegations inside the four corners of the complaint specify claims and related damages that might be covered, the insurance carrier must defend against all causes of action and types of damages sought. The Carithers decision further broadens the scope of the duty to defend by establishing that an insured can seek a defense based on facts other than those in the underlying liability suit. Uncertainties and ambiguities in the law, according to the appeal court, also establish a duty to defend. 

Duty to indemnify

The duty to indemnify” refers to the insurer’s responsibility to pay the claim, whether through a settlement or payment of a judgment against the insured. As a result of a covered risk, an Insured is responsible for indemnifying the policyholder or paying for losses experienced by the insured or a third party. Unlike the duty to defend, which is usually decided by the policy and petition, the responsibility to indemnify is based on any and all information gathered during the course of the underlying suit or claim. In many professional liability policies, the insurer’s duty to indemnify or pay the claim is restricted to the policy maximum, which may be decreased by payment of defense costs. 

A claim for indemnity can be made in a variety of ways, but the most popular are comparative equitable indemnity that are based on principles of fairness, implied contractual indemnity (inferred by the terms of a contract), and express indemnity, which is expressed within the “four corners” of a contract. If the claimant is entitled to reimbursement under comparative equitable indemnity principles, each party compensates the claimant in approximately proportionate shares, which are based on the percentages of liability given to each defendant or cross-defendant. Equitable indemnification emerges because of the special factors, or equities, of a particular case, and the duty is imposed by operation of law, a court or jury determines what is just.

Jurisdictions disagree over whether a finding of no duty to defend entails a finding of no duty to indemnify. In some jurisdictions, even if a duty to defend exists, there may be no duty to indemnify, and the opposite is true as well. Other jurisdictions hold that there can be no responsibility to indemnify if there is no duty to defend. An insurer and an insured may differ on whether a claim should be paid in various instances. Several policies include a clause stating that the insured must acquire the insurer’s permission before settling. These provisions are commonly referred to as “voluntary payment” provisions. Certain policies allow an insurer to settle without the approval of the insured, while others incorporate “consent to settle” provisions that also require the consent of the insured. 

In Mid-Continent Casualty Co. v. Delacruz Drywall Plastering & Stucco, Inc., Mid-Continent accepted to defend Delacruz in an underlying state court action made by a general contractor alleging that Delacruz conducted defective work in relation to the construction of a single-family homes in Fort Myers, Fla. Mid-Continent filed a coverage action in federal court while the underlying complaint was underway, seeking a determination that it had no duty to indemnify Delacruz and no duty to defend or indemnify the general contractor. Mid-Continent’s complaint was dismissed and the summary judgment denied without prejudice by the federal court, which found that Mid-Continent’s responsibility Continent’s to indemnify was not ready for a decision. 

Upon reconsideration, the Eleventh Circuit upheld, citing a previous Fifth Circuit decision that held the claim was not ripe “because the issue’ might never arise'” in circumstances where “the damage suits had never been tried, no one had yet paid or become legally liable to pay,” and no party could state whether anything would be paid in the future. Even though the court acknowledged that there is an exception to this rule when “the court can determine that the allegations in the complaint could under no circumstances lead to a result which would trigger the duty to indemnify,” The court ruled that the exception was not binding and declined to consider the issue since Mid-Continent had neglected to bring up the issue in the lower court.

Furthermore, the court dismissed Mid-Continent’s debate on the lower court’s decline to examine the duty to defend. Given that “the duty to defend is broader than the duty to indemnify,” and that “courts must look to the underlying complaint in to determine the duty to defend, not the true facts of the cause of action against its insured,'” the court found that Mid-Continent had not sought affirmative relief on the duty to defend, which even if ripe, was not at issue in the operative complaint. As a result, the complaint by Mid-Continent was dismissed without prejudice by the court. 

As held in Prince v. Pacific Gas & Elec. Co. (2009) 45 Cal.4th 1151, 1159. “there can be no indemnity without liability.” 

The California Civil Code – CIV, under Title 12. Indemnity [2772 – 2784.5] and specifically 2778., the rules for interpreting an indemnity contract are provides viz:

“In the interpretation of a contract of indemnity, the following rules are to be applied, unless a contrary intention appears:

1. Upon an indemnity against liability, expressly, or in other equivalent terms, the person indemnified is entitled to recover upon becoming liable;

2. Upon an indemnity against claims, or demands, or damages, or costs, expressly, or in other equivalent terms, the person indemnified is not entitled to recover without payment thereof;

3. An indemnity against claims, or demands, or liability, expressly, or in other equivalent terms, embraces the costs of defense against such claims, demands, or liability incurred in good faith, and in the exercise of a reasonable discretion;

4. The person indemnifying is bound, on request of the person indemnified, to defend actions or proceedings brought against the latter in respect to the matters embraced by the indemnity, but the person indemnified has the right to conduct such defenses, if he chooses to do so;

5. If, after request, the person indemnifying neglects to defend the person indemnified, a recovery against the latter suffered by him in good faith, is conclusive in his favor against the former;

6. If the person indemnifying, whether he is a principal or a surety in the agreement, has not reasonable notice of the action or proceeding against the person indemnified, or is not allowed to control its defense, judgment against the latter is only presumptive evidence against the former;

7. A stipulation that a judgment against the person indemnified shall be conclusive upon the person indemnifying, is inapplicable if he had a good defense upon the merits, which by want of ordinary care he failed to establish in the action.”


When one individual or group is substituted for another in a legal environment, this is known as subrogation. If you have an insurance claim, subrogation is defined as the act of your insurance company acting in your place and assuming your legal right to pursue a claim against another individual or organization on your behalf.  Subrogation can therefore be a rights and a responsibility of the insurer.

Subrogation, in its most basic definition, is a strategy employed by insurance companies to recover money that has been paid out in connection with insurance claims. There are three parties engaged in this situation: the insured (the policyholder), the insurer (the insurance company), and the party who is liable for the losses. A section on subrogation will be included in an insurance policy, and it will clarify the insurance provider’s legal right to utilize this strategy in specific circumstances. 

Subrogation, it might be said, starts with an insurer compensating a claimant for damages incurred under the claim. The insurance then decides to take legal action against the party that was responsible for the damages in an attempt to reclaim the money that it paid the insured, the Insurer is essentially representing the insured’s interests in a court of law. 

Based on the occurrence of the covered risk, an insured inherits the insured’s identified interest. Based on the injury to the insured’s interest, the insurer may pursue recovery or contribution for the harm sustained; funds paid to the insured or third parties. Insurance coverage is at the heart of the bulk of civil lawsuits in the United States. Bad-faith refusal, or an insurer’s failure to fulfill its obligations under an insurance policy, is a typical source of litigation.

It is common for insurance firms to cut their insurance premiums as a result of this method. 

As a result, both the insurance provider, who receives the money from the claim, and the policyholder, who may pay a lesser premium as a result of the subrogation, may benefit from the practice. 

Generally speaking, a waiver of subrogation is a contractual term that states that an insured waives their insurance carrier’s right to seek restitution or recompense for damages from a third party that has been negligent. In most cases, insurers will charge an additional price for this specialized policy endorsement to be issued. Waiver of subrogation clauses are commonly included in building contracts and lease agreements. This type of clause prevents an insurance carrier for one of the contractual parties from bringing a claim against the other contractual party in an attempt to recover money paid by the insurance company to the insured or to a third party in order to resolve an insured claim. If subrogation is waived, the insurance company will not be able to step into the shoes of the client after a claim has been settled and sue the other party to recover their losses. 

If subrogation is waived, the insurer will be subjected to a higher level of liability. 

To be entitled to any subrogation proceeds in Florida, an insurer must first reimburse the insured in full for the amount of the loss before the insurer can be entitled to any subrogation proceeds.

(“made whole” rule). As far as the insured and the insurance company are concerned, the Florida courts recognize that the insurer is responsible for risk of losses. The Court in DeCespedes v. Prudence Mutual Casualty Co. of Chicago, 193 So.2d 224, 227 (Fla. 3d DCA 1966), cert. denied 202 So.2d 561 (Fla. 1967) stated “Subrogation is a normal incident of indemnity insurance where the primary purpose of the insurance is to allow true restitution for the loss suffered…Furthermore, it is not available to an extent greater than the amount paid by the insurer, and then only after the insured has been fully indemnified. ”

The Made Whole Doctrine is recognized by the Florida Supreme Court, “Using the common law subrogation principle, endorsed by Florida courts…the insured was entitled to be made whole before the subrogated insurer could participate in the recovery from a tortfeasor.” The Made Whole Doctrine applies in situations where the responsible party lacks sufficient cash or insurance coverage. The Made Whole Doctrine can be used by insureds to safeguard their direct recovery from a tortfeasor when the insured’s own insurer makes a subrogation claim upon the insured’s recovery, according to Florida law. In Florida, an insurer does not have a common law right to subrogation or reimbursement against a tortfeasor except if the insured has been made whole and has received all of his damages. If the insured has been “made whole” by a full recovery, any payments to the insured in excess of his actual damages may be considered “double recovery,” giving the carrier subrogation or reimbursement rights. 

There is caution, however: Florida accepts that the parties may agree out of the “made whole” concept provided the contract expressly allows for it. So some insurers have inserted subrogation provisions and sections into their policies, which must be carefully reviewed to see whether they are genuine and to explicitly define how subrogation situations change the common law in a contractual sense. These terms appear to be strictly construed against the insurer by the courts in Florida. The “making whole” concept varies from one state to another, sometimes dramatically so, depending on the circumstances. 


Insurers in California have insurance divided in the following classes: Life, Fire, Marine, Title, Surety, Disability, Plate glass, Liability, Workers’ compensation, Common carrier liability, Boiler and machinery, Burglary, Credit, Sprinkler, Team and vehicle, Automobile, Aircraft, Mortgage guaranty, Insolvency and Legal insurance. (Insurance Code – INS-CHAPTER 1. Classes of Insurance [100 – 124.5])

Insure insurable interests

Under Chapter 2. Parties, Events, and Interests [150 – 305], of the Insurance Code, the Insurer is obligated to only cover insurable interests. It states that “If the insured has no insurable interest, the contract is void. Every interest in property, or any relation thereto, or liability in respect thereof, of such a nature that a contemplated peril might directly damnify the insured, is an insurable interest. An insurable interest in property may consist in:

1. An existing interest;

2. An inchoate interest founded on an existing interest; or,

3. An expectancy, coupled with an existing interest in that out of which the expectancy arises.

A mere contingent or expectant interest in anything, not founded on an actual right to the thing, nor upon any valid contract for it, is not insurable. Except in the case of a property held by the insured as a carrier or depositary, the measure of an insurable interest in property is the extent to which the insured might be damnified by loss or injury thereof. A carrier or depositary of any kind has an insurable interest in a thing held by him as such, to the extent of its value. An interest in property insured must exist when the insurance takes effect, and when the loss occurs, but need not exist in the meantime; an interest in the life or health of a person insured must exist when the insurance takes effect, but need not exist thereafter or when the loss occurs. Every stipulation in a policy of insurance for the payment of loss whether the person insured has or has not any interest in the property insured, or that the policy shall be received as proof of such interest, is void.”

Contents of the policy

There are two types of policies under Chapter 4. The Policy [380 – 460] of the Code, an open and a valued policy. An open policy is one in which the subject matter’s value is not agreed upon and is left to be determined in the event of a loss. A valued policy is one that states an agreement on its face that the thing insured will be valued at a certain amount. A running policy is one that contemplates successive insurances and allows the policy’s object to be defined from time to time, particularly in terms of insurance subjects, through supplementary statements or indorsements. 

The Insurer is obligated to ensure that the policy states: 

(a) The individuals or entities with whom the contract is formed. 

(b) The insured property or life. 

(c) The insured’s interest in the insured property, if he is not the only owner. 

(d) The hazards that are covered by insurance. 

(e) The length of time that the insurance will be in effect. 

(f) One of the following options: 

(1) A premium statement, or

(2) A statement of the basis and rates on which the final premium is to be determined and paid if the insurance is of the type where the precise premium can only be determined after the contract has been terminated. 

The Insurer is obligated to ensure that every insurance issued, revised, delivered, or renewed in the state must include coverage for an insured or policyholder’s registered domestic partner that is equal to, and subject to similar terms and conditions of the coverage provided to an insured or policyholder’s spouse. A policy may not offer or give coverage for a registered domestic partner if the coverage is not equal to that provided for an insured or policyholder’s spouse.

Insurer’s name on the policy 

One of the other Insurer’s responsibilities is found under Chapter 4. The Policy [380 – 460],  Article 3 of the Insurance Code that states that every insurer’s policies must bear its own name or a name permitted by the Commissioner, which must be displayed in large bold type on each policy, at least as large as any other size type used in the policy or on the face page.

Prompt, Fair and Equitable settlement of claims

The Insurer is obligated to settle claims fairly. Section 2695.7. of the Fair Claims Settlement Practices Regulations provides for “Standards for Prompt, Fair and Equitable Settlements”. These are:

  • Non-discrimination in claims settlement methods by insurers against claimants because of their age, race, gender, income, religion, language, sexual orientation, ancestry, national origin, or physical disability, or because of the property or person insured’s location.
  • Every insurer must accept or deny a claim in whole or in part within forty (40) calendar days of receiving evidence of claim. Unless the claim has been denied in its whole, the sums accepted or denied must be fully stated in the claim file.  This time period limit is however not applicable in claims arising from disability insurance policies under Section 10123.13 of the California Insurance Code, disability income insurance policies under Section 10111.2 of the California Insurance Code, or mortgage guaranty insurance policies under Section 12640.09(a) of the California Insurance Code, or automobile repair bills arising from policies of automobile collision and comprehensive insurance policies under Section 560. 
  • If an insurer denies or rejects a first-party claim in whole or in part, it must do so in writing and provide to the claimant a statement outlining all bases for the rejection or denial, as well as the factual and legal bases for each reason given for the rejection or denial that is then known to the insurer. When an insurer denies a first-party claim in whole or in part because of a specific statute, applicable law, or policy provision, condition, or exclusion, the written denial must include a reference to the statute, applicable law, or policy provision, condition, or exclusion and an explanation of how the statute, applicable law, or provision, condition, or exclusion applied to the claim. Every insurer must deny or reject a third-party claim, in whole or in part, or dispute culpability or damages in writing. Nothing herein requires an insurer to disclose any information that may reasonably be expected to alert a claimant to the knowledge that the subject claim is being investigated as a suspected fraudulent claim, except where the insurer is submitting information for review by the California Department of Insurance, on the belief that the claimant has submitted or caused to be submitted to an insurer a suspected false or fraudulent claim.
  • Where a written notification is required, it must include a statement that the claimant may have the matter reviewed by the California Department of Insurance if he or she believes all or part of the claim was wrongfully denied or rejected, as well as the address and phone number of the Department’s unit that reviews claims practices. 
  • If more time is needed than the forty (40) calendar days of receiving evidence of claim, to assess whether a claim should be accepted or denied in whole or in part, every insurer must give the claimant written notice of the need for extra time within the forty (40) calendar days of receiving evidence of claim. This written notice must include any more information that the insurer requires in order to make a determination, as well as any ongoing reasons for the insurer’s inability to do so. After then, the written notification must be given every thirty (30) calendar days until a decision is reached or legal action is taken. If the determination cannot be made until a future event happens, the insurer must continually notify the claimant, subject to the notice period requirement, of the circumstances and provide an estimate of when the determination can be made.
  • An insure shall not be required to disclose any information that may reasonably be expected to alert a claimant to the knowledge that the claim is being investigated as a probable fraudulent claim, except where the insurer is submitting information for review by the California Department of Insurance, on the belief that the claimant has submitted or caused to be submitted to an insurer a suspected false or fraudulent claim.
  • Every insurer must undertake a comprehensive, fair, and impartial inquiry and refrain from requesting information that is not reasonably required for or material to the resolution of a claim dispute.
  • Except as otherwise authorized by policy provisions, legislation, or regulations, including those pertaining to coordination of benefits, no insurer shall delay or deny settlement of a first-party claim on the ground that responsibility for payment should be assumed by others. 
  • Unless a claim has been settled by payment, every insurer must provide written notice of any statute of limitation or other time period restriction that it may use to deny a claim. The claimant must be provided notice of the expiration date not less than sixty (60) days before to the expiration date; however, if the insurer receives notification of the claim within that sixty-day period, the claimant must be given notice of the expiration date immediately. This notice must be given to a first party claimant in a matter involving an uninsured motorist at least thirty (30) days prior to the expiration date, unless the insurer receives notice of the claim within those thirty days, in which case notice of the expiration date must be given to the claimant immediately. This however does not apply to a claimant who is represented in the claim issue by counsel.
  • No insurer may attempt to settle a claim by offering an excessively low settlement offer. In assessing whether or not a settlement offer is unreasonably low, the Commissioner shall examine any admissible evidence submitted about the following factors: the degree to which the insurer examined the claimant’s evidence in determining the claim’s worth; the insurer’s assessment of legal authority or evidence made available to it or reasonably available to it; how much weight the insurance gave to its claims adjuster’s advice on the level of losses; the insurer’s consideration of its counsel’s judgment that a substantial chance of recovery in excess of policy limitations existed; the insurer’s methods for calculating the dollar amount of property damage; the extent to which the insurer weighed the insured’s potential liability and the probable of a jury verdict or other final decision; and any other credible evidence presented to the Commissioner demonstrating that any amount offered by the insurer in settlement of a first-party claim to an insured who is not represented by counsel, (ii) the final amount offered in settlement of a first-party claim to an insured who is represented by counsel, or (iii) the final amount offered in settlement of a third-party claim by the insurer is less than the amount that a reasonable person with knowledge of the facts and circumstances would offer.
  • Upon acceptance of the claim in whole or in part and, if necessary, receipt of a properly executed release, every insurer shall immediately, but no later than thirty (30) calendar days later, tender payment or otherwise perform its claim obligation. The amount of the claim that must be presented is the amount that the insurer has accepted. In claims involving multiple coverage and where the payee is known, amounts accepted by the insurer must be paid promptly, but no later than thirty (30) calendar days, if payment would terminate the insurer’s known liability under that individual coverage, unless it would impair the insured’s interests. When a policy provides for a waiting period after a claim is accepted and before benefits are paid, the time limitations indicated in this subsection do not apply. The above-mentioned time periods shall not apply to claims arising from disability insurance policies subject to Section 10123.13 of the California Insurance Code, disability income insurance policies subject to Section 10111.2 of the California Insurance Code, or mortgage guaranty insurance policies subject to Section 12640.09(a) of the California Insurance Code, or automobile repair bills subject to Section 560 of the California Insurance Code. Any insurer offering a title insurance policy must either tender payment herein or take steps to rectify the situation that resulted in the claim as soon as possible, but no later than thirty (30) calendar days after the claim is accepted. 
  • Unless the information is given for the purpose of notifying the claimant of any applicable statute of limitations or policy provision, or the time limit within which claims must be brought against state or local entities, no insurer shall inform a claimant that his or her rights may be impaired if a form or release is not completed within a specified time period.
  • Unless allowed by the applicable insurance contract and state law, no insurer may request or require an insured to submit to a polygraph examination. 
  • Where there is a reasonable basis, supported by specific information available for review by the California Department of Insurance, for the belief that the claimant has submitted or caused to be submitted to an insurer a suspected false or fraudulent claim as defined in California Penal Code Section 550 or California Insurance Code Section 1871.4(a), the forty (40) calendar days’ time period of receiving evidence of claim when insurer must accept or deny a claim in whole or in part shall be reduced, subject to the requirements of seeking an extension on time covered above, as follows: raised to eighty (80) days on the calendar or alternatively, suspended until the Commissioner orders otherwise, if the insurer has followed California Insurance Code Section 1872.4 and can show the Commissioner that it made a diligent effort to determine whether the subject claim is false or fraudulent within the aforementioned eighty-day period.
  • No insurer may refuse a claim based on information gained through a telephone conversation or personal interview with a source unless the conversation or interview is documented in the claim file.
  • Except in the event of a proven false or fraudulent claim, subject to the provisions of Section 10123.145 of the California Insurance Code, no insurer shall make a payment to a provider pursuant to a policy provision to pay medical benefits and then seek recovery or set-off from the insured on the basis that the amount was excessive and/or the services were unnecessary. 
  • If an insurer requests a medical examination to determine liability under a policy provision, the insurer must do so only if it has a good faith judgment that the examination is reasonably necessary.
  • As a condition antecedent to the settlement of any claim, no insurer may require a claimant to withdraw, rescind, or desist from filing any complaint with the California Department of Insurance over the treatment of a claim or any other matter complained of.
  • Every insurer must notify a first-party claimant in writing whether the insurer plans to pursue subrogation of the claim. When an insurer decides not to pursue subrogation or stops doing so, it must include a statement in its notification that any recovery sought is the responsibility of the first party claimant. If the deductible is waived, the coverage under which the claim is settled requires no deductible to be paid, the loss sustained does not exceed the appropriate deductible, or there is no legal basis for subrogation, there shall be no requirement for issuance of the notification.
  • Every insurer who issues a subrogation demand must include the first-party claimant’s deductible in the demand. Unless the first party claimant has otherwise collected the entire deductible amount, every insurer must split subrogation recoveries proportionately with the first party claimant. Unless the insurance has hired an outside attorney or collection agency to collect the deductible, no insurer may deduct legal or other charges from the deductible recovery. Only a pro rata part of the assigned loss adjustment expense may be deducted. This will not apply to disability and health insurance under California Insurance Code Section 106, and when numerous policies have been issued to the insured(s) covering the same loss and the language of these contracts prescribes different subrogation rights.


Under the California Insurance Code, Chapter 3. Negotiations Before Execution [330 – 361], It is concealment when a party fails to communicate what he or she knows and should know. The Insured is barred from concealing information under the policy, failure to do so will constitute “concealment” which is prohibited under Article 1 of the California Insurance Code. Intentional or inadvertent concealment would entitle the injured insured to cancel the insurance. The Insurer must reveal to the Insured, in good faith, all facts that are or that he believes are important to the contract and about which he makes no warranty, and which the insured does not have the means of determining. 

The Insurer is not obligated to share information about the following things, save in response to the insured’s inquiries: 

1. Information familiar to the insured. 

2. Information that the insured should ordinarily know, and which the Insurer has no reason to believe the insured is unaware of. 

3. Information the insured refuses to receive communication on. 

4. Information that prove or tend to prove the presence of a risk that is not otherwise material and is eliminated by a warranty. 

5. Information that is not otherwise material and relate to a risk that is not covered by insurance. 

The right to know material facts by the insured can be surrendered in one of two ways: (a) by the conditions of insurance, or (b) by failing to inquire about them when they are obliquely indicated in other facts of which information is disclosed. The probable and reasonable influence of the facts on the insured, in forming his appraisal of the disadvantages of the proposed contract, or in making his enquiries, is the sole criterion for materiality and not the event. The Insurer is however not obligated to give information of his own judgment on the subject topic, even if asked. The responsibilities in this Article are however imposed on all parties to the insurance contract and not just the Insurer. 


Some of the insurance offered by the Insurers in Florida are: Accident and Health, Annuities, Automobile, Flood Insurance, Homeowners’, Life, Long-Term Care, Medicare Supplement, Professional Liability, Title, Warranties and Motor Vehicle Service Agreements and Workers’ Compensation. 


Florida Statutes 626.8817-Responsibilities of insurance company with respect to administration of coverage insured.—

“(1) If an insurer uses the services of an administrator, the insurer is responsible for determining the benefits, premium rates, underwriting criteria, and claims payment procedures applicable to the coverage and for securing reinsurance, if any. The rules pertaining to these matters shall be provided, in writing, by the insurer or its designee to the administrator. The responsibilities of the administrator as to any of these matters shall be set forth in a written agreement binding upon the administrator and the insurer.

(2) It is the sole responsibility of the insurer to provide for competent administration of its programs.

(3) If an administrator administers benefits for more than 100 certificate holders on behalf of an insurer, the insurer shall, at least semiannually, conduct a review of the operations of the administrator. At least one such review must be an onsite audit of the operations of the administrator. The insurer may contract with a qualified third party to conduct such review.

(4) For purposes of this section, the term “insurer” means a licensed insurance company, health maintenance organization, prepaid limited health service organization, or prepaid health clinic.”


Under 627.70131-Insurer’s duty to acknowledge communications regarding claims; investigation.—

(1)(a) Upon an insurer’s receiving a communication with respect to a claim, the insurer shall, within 14 calendar days, review and acknowledge receipt of such communication unless payment is made within that period of time or unless the failure to acknowledge is caused by factors beyond the control of the insurer which reasonably prevent such acknowledgment. If the acknowledgment is not in writing, a notification indicating acknowledgment shall be made in the insurer’s claim file and dated. A communication made to or by a representative of an insurer with respect to a claim shall constitute communication to or by the insurer.

(b) As used in this subsection, the term “representative” means any person to whom an insurer has granted authority or responsibility to receive or make such communications with respect to claims on behalf of the insurer.

(c) This subsection does not apply to claimants represented by counsel beyond those communications necessary to provide forms and instructions.

(2) Such acknowledgment must be responsive to the communication. If the communication constitutes a notification of a claim, unless the acknowledgment reasonably advises the claimant that the claim appears not to be covered by the insurer, the acknowledgment must provide necessary claim forms, and instructions, including an appropriate telephone number.

(3)(a) Unless otherwise provided by the policy of insurance or by law, within 14 days after an insurer receives proof of loss statements, the insurer shall begin such investigation as is reasonably necessary unless the failure to begin such investigation is caused by factors beyond the control of the insurer which reasonably prevent the commencement of such investigation.

(b) If such investigation involves a physical inspection of the property, the licensed adjuster assigned by the insurer must provide the policyholder with a printed or electronic document containing his or her name and state adjuster license number.

(c) Any subsequent communication with the policyholder regarding the claim must also include the name and license number of the adjuster communicating about the claim. Communication of the adjuster’s name and license number may be included with other information provided to the policyholder.

(4) An insurer shall maintain a record or log of each adjuster who communicates with the policyholder as provided in paragraphs (3)(b) and (c) and provide a list of such adjusters to the insured, office, or department upon request.

(5) For purposes of this section, the term “insurer” means any residential property insurer.

(6)(a) When providing a preliminary or partial estimate of damage regarding a claim, an insurer shall include with the estimate the following statement printed in at least 12-point bold, uppercase type: THIS ESTIMATE REPRESENTS OUR CURRENT EVALUATION OF THE COVERED DAMAGES TO YOUR INSURED PROPERTY AND MAY BE REVISED AS WE CONTINUE TO EVALUATE YOUR CLAIM. IF YOU HAVE QUESTIONS, CONCERNS, OR ADDITIONAL INFORMATION REGARDING YOUR CLAIM, WE ENCOURAGE YOU TO CONTACT US.

(b) When providing a payment on a claim which is not the full and final payment for the claim, an insurer shall include with the payment the following statement printed in at least 12-point bold, uppercase type: WE ARE CONTINUING TO EVALUATE YOUR CLAIM INVOLVING YOUR INSURED PROPERTY AND MAY ISSUE ADDITIONAL PAYMENTS. IF YOU HAVE QUESTIONS, CONCERNS, OR ADDITIONAL INFORMATION REGARDING YOUR CLAIM, WE ENCOURAGE YOU TO CONTACT US.

(7)(a) Within 90 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer which reasonably prevent such payment. Any payment of an initial or supplemental claim or portion of such claim made 90 days after the insurer receives notice of the claim, or made more than 15 days after there are no longer factors beyond the control of the insurer which reasonably prevented such payment, whichever is later, bears interest at the rate set forth in s. 55.03. Interest begins to accrue from the date the insurer receives notice of the claim. The provisions of this subsection may not be waived, voided, or nullified by the terms of the insurance policy. If there is a right to prejudgment interest, the insured shall select whether to receive prejudgment interest or interest under this subsection. Interest is payable when the claim or portion of the claim is paid. Failure to comply with this subsection constitutes a violation of this code. However, failure to comply with this subsection does not form the sole basis for a private cause of action.

(b) Notwithstanding subsection (5), for purposes of this subsection, the term “claim” means any of the following:

1. A claim under an insurance policy providing residential coverage as defined in s. 627.4025(1);

2. A claim for structural or contents coverage under a commercial property insurance policy if the insured structure is 10,000 square feet or less; or

3. A claim for contents coverage under a commercial tenant policy if the insured premises is 10,000 square feet or less.

(c) This subsection does not apply to claims under an insurance policy covering nonresidential commercial structures or contents in more than one state.

(8) This section also applies to surplus lines insurers and surplus lines insurance authorized under ss. 626.913626.937 providing residential coverage.”

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