It is commonplace for settlement negotiations between a policyholder and their insurance company in a property damage claim. Policyholders need to be aware that the money on the table can often be negotiated if it is done right. Policyholders need to make sure they know that the valuation done by the insurance company is an estimate and can be questioned and challenged. Beware of trying to challenge payment after signing a release or cashing a check marked as full and final payment.

Advocates negotiate claims for policyholders regularly. Public insurance adjusters can negotiate the claims, and attorneys can also represent the insureds. We often meet insureds who feel they have been short-changed by their insurance company’s evaluation of damages, but challenging the insurance company’s offer must be done according to the law and limitations in your jurisdiction.

In the case of Aaron v. Georgia Farm Bureau,1 Alvin Aaron did not handle the negotiations well, and lost his rights to fight for funds to cover the damage from the vehicle that damaged his home.

Georgia Farm Bureau had agreed on the damages to the home but because the damage evaluation had no breakdown of items, the insured wanted to see what was included. Mr. Aaron challenged the insurance company for not allocating any funds for damage to the septic tank or the drainage lines in the $20,336.01 offer. Georgia Farm Bureau advised that because the septic and drain lines were damaged by the clean-up, and not the crash into the building, they were unwilling to pay.

The insurance policy shorted the statute of limitation to file suit from six years to one year. This is a common provision in Georgia policies and it is enforceable (see our prior post, Don’t Dilly Dally with Deadlines).

Mr. Aaron hired counsel and, three days before the one-year anniversary and statute of limitations date on the claim, the carrier sent a letter saying they wanted to negotiate and come to an agreement on the claim. This likely meant payment would be tendered for some amount for the drain lines and septic. However, the parties did not solve the claim in the next few days and Mr. Aaron did not file suit for the loss before the one year limitations deadline.

To push Georgia Farm Bureau to properly pay the claim, Mr. Aaron sought to have the claim appraised and eventually filed a lawsuit but the suit was dismissed in a summary judgment hearing. Mr. Aaron appealed but the appellate court held that the negotiations for a potential settlement were not enough to circumvent the contractual limitations period.

Mr. Aaron also argued specific performance to have the claim put into appraisal but the court again said no.

Insured was not entitled to specific performance of the appraisal provision after the limitations period had passed as appraisal is merely method for calculating the amount of loss, and the suit to recover for the loss was governed by the one-year limitations under policy.

The policyholder had good arguments, including that the appraisal provision is not time-barred when you read the exact provision in the policy, but the court disagreed and found this action was arising under the insurance policy and was limited in the Suit Against Us clause.

Finally, the court found there was no meeting of the minds regarding the settlement communications and a desire by both parties to settle the claim was not an offer and acceptance that could be enforced.

The takeaway with this case is to act promptly and make sure you don’t delay if you want to be properly paid for your claim.