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Fundamental Unfairness in an Insurance Contract

Fri Dec 7th, 2018 on     Insurance Claims,    

Let a Miami Insurance Litigation Lawyer Help

All too often, insurance policyholders find themselves beholden to policies that are fundamentally unfair.  Perhaps the insurance contract includes a mandatory arbitration provision that is not explained properly.  In the alternative, perhaps the insurance contract includes a rather odd and unexpected provision such as indemnity for costs in the event of a challenge.

If you’ve had a legitimate claim for insurance benefits denied on the basis of a fundamentally unfair provision in the underlying insurance contract, then you may be entitled — under pervading Florida common law — to bring an action against your insurer and have the provision at issue modified or ignored.

In Florida, unconscionable contract provisions cannot be enforced, but it can be quite difficult to show that a provision of your insurance contract is unconscionable.  Let’s take a closer look at the concept.

What Qualifies as an Unconscionable Contract Provision Under Florida Law?

A contract provision will be deemed unconscionable if it is both procedurally and substantively unconscionable.  Florida applies a sliding scale when determining unconscionability — stated simply, a contract provision may be deemed unconscionable if it is “mostly” procedurally unconscionable or “mostly” substantively unconscionable.  It is not necessary that both procedural and substantive unconscionability be at the same level.

So, what are the two forms of unconscionability?

Procedural unconscionability involves unfairness relating to the manner in which the contract was entered.  Factors influencing procedural unconscionability include: the lack of a meaningful choice at the time the contract was entered into, the relative bargaining power of the parties, whether the terms were presented on a “take it or leave it” basis, and whether the complaining party had the ability and opportunity to understand the disputed terms of the contract.

For example, suppose that you don’t understand what mandatory arbitration is, and you ask the insurer about what it entails.  The insurer tells you that it’s “no big deal” and to sign the contract and they’ll explain later.  They rush you through the proceedings and you sign the contract.  Depending on the balance of factors, it’s very likely that a court will find these circumstances indicative of procedural unconscionability.

Substantive unconscionability involves contract terms/provisions that unreasonably favor one party over another.  For example, a contract provision that requires that the policyholder indemnify the insurer for the cost of challenging a denial of benefits would likely be considered substantively unconscionable.

Invalidation and Contract Modification

If a provision of your insurance contract is deemed unconscionable, then it may be invalidated and either ignored (with the remainder of the insurance contract being enforced) or modified to avoid an unconscionable result.  For example, if the insurer were to include a provision that required that you pay a substantial fee to the insurer for challenging their denial decision, then the courts are likely to find the provision unconscionable.  The insurance policy can be enforced without the unconscionable payment provision.

Contact an Experienced Miami Insurance Litigation Lawyer for Comprehensive Guidance

Ver Ploeg & Lumpkin, P.A. is a Miami-based insurance litigation firm with a commitment to the provision of thorough, client-centered representation.  Our attorneys have decades of experience advocating on behalf of insurance policyholders in challenging disputes with their insurance carriers, including those that involve underlying contracts that are fundamentally unfair or otherwise unconscionable.

Unlike many other competitor firms, we believe that effective legal representation in the insurance dispute context requires close collaboration with the client and a tailored approach to litigation.  From the very beginning of the engagement process, we are transparent and open with our clients, and we expect the same — this gives us a great deal of insight into the particularities of their claims.

Call 305-577-3996 or send us a message through our Contact Us page to schedule a free and confidential consultation with an experienced Miami insurance litigation lawyer at Ver Ploeg & Lumpkin, P.A.

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