Caselaw Wednesdays – Should I cash the check the Insurance Company sent me?

Accord and satisfaction is a legal doctrine under which, when the creditor accepts payment tendered on the expressed condition that its receipt is deemed to be a complete satisfaction of the debt. In other words, when payment is presented on the express condition that its acceptance will settle the debt, and the creditor accepts the payment, the creditor cannot later claim that they were not paid in full and sue to get more money. 

In Florida, accord and satisfaction is governed by Florida Statutes 673.1111 et. seq. Certified Property Restoration v. Universal Insurance Company of North America. decided by Florida’s 4th District Court of Appeals, gives an example of how this statute is applied to insurance claims.

Certified Property Restoration did some work on an insured’s home for damage that was covered by the policy. They sent the insurer the bill for $8710.84. The insurance company sent a check for $3000 and a letter that said coverage for the type of work CPR did was limited to $3000 or 1% of the coverage limits and any request to exceed this limit had to be made before the work was done. The memo area of the check read “Dwelling, LO, MH COV A EMS Limit.” CPR deposited the check and sued the insurance company for the amount remaining on the invoice. Among its defenses, the insurance company claimed accord and satisfaction.

The matter turned on whether the check contained a conspicuous statement that it was tendered as full satisfaction of CPR’s claim. The insurance company argued that, while the check itself did not contain language that would entitle it to claim accord and satisfaction, such as “paid in full”, the letter enclosed with the check did contain such a statement. The court disagreed. The court noted that, while the letter said that the insurance company did not receive or approve a request to exceed the policy limits, it did not state that no further benefits would be payable, nor did it state that $3000 was the maximum amount payable. Further the court noted that even in cases where the insurer did enclose a letter with a check that no further benefits were payable, such language was merely a statement of the insurer’s position and did not imply that accepting the check constituted agreement with the insurer’s position.

If your insurance company issues you a payment on a claim, be sure to review what the check or draft says on its face. The insurance company may try to assert on the check or draft that the payment is a full and final settlement of your claim which may bar your ability to contest the payment if the check or draft is cashed. If you have questions about a payment your insurance company has made, contact Alvarez Law Group for a free consultation about your rights under the insurance policy.

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