FPJL Successfully Passes Law to Protect The People of Puerto Rico From Bad Faith By The Insurance Industry.

FPJL Successfully Passes Law to Protect The People of Puerto Rico From Bad Faith By The Insurance Industry.

By Ricky K. Patel Esq. 

On September 20, 2017, Hurricane Maria brought unthinkable devastation to the doorsteps of Puerto Rican citizens and businesses by destroying homes, livelihoods, and the island’s scenic coastline. In the aftermath of the hurricane, policyholders on the island were met with an adversarial claims process marked by long delays, mismanagement and repeated violations of the provisions of the insurance code, making it hard for these communities to rebound from the disaster.

At FPJL, we believe that our firm has an ongoing commitment to constantly work to advance the interests of policyholders and fight to strengthen laws that hold insurance companies to their promises and obligations. Insurance companies are at an advantage because they draft the policy language in policies and design the claims process. We recognize that a homeowner’s ability to hire a competent lawyer to enforce the laws that require insurance companies to pay claims in full and on time is a pivotal balancing force that keeps integrity in the insurance system. That is why, as part of our immediate disaster response efforts after Hurricane Maria, the team at FPJL sat down with home and business owners who illustrated a widespread issue of unfair dealings on behalf of the insurance companies on the island. Our team knew that something had to be done, we felt that if the insurers on the island were unwilling to fairly resolve claims, we would have to use the law to force them.

In response, our firm immediately got to work with legislators and spent several months advocating on behalf of policyholders to help identify the issues facing consumers and advance a workable solution. Our firm helped author a bill to enhance consumer protections for hurricane victims and authorize a new legal cause of action against insurers that fail to act reasonably or in good faith in their handling of claims. Essentially, we wanted to grant an individual the right to sue their insurance carrier for acting in bad faith.

We want to thank the Puerto Rican legislature for standing up and taking action to protect consumers. In a historic and significant win for all policyholders on the island, the legislature of Puerto Rico unanimously passed a number of important insurance laws, effectively reforming its insurance code in 2018. These measures were unanimously passed by both houses of the Puerto Rican legislature and signed into law immediately by Governor Ricardo Rossello. The reforms are designed to expand coverage options for the island’s policyholders and expedite payments following disasters. The passage of the bill our firm backed, creates a new statutory bad faith action for policyholders who feel their insurer is failing to settle a claim in good faith. In addition, the new laws address what terms may be included in insurance policies written in Puerto Rico while other laws reform the insurance market as a whole.

Below is a brief summary of the reforms to Puerto Rico’s insurance code:

PC 1645 Creates a New Legal Cause of Action

The bill our firm backed authorizes a new legal cause of action against insurers that allegedly fail to act reasonably or in good faith in their handling of claims. If a claimant succeeds, the insurer could potentially be liable for punitive damages.

Undisputed Payments Required

This new measure amends Section 2.110 of the Insurance Code (26 L.P.R.A. § 2.110) and is intended to expedite payments to policyholders following catastrophes. Under that law, shortly after a state of emergency is declared in Puerto Rico, an insurance company is required to issue a partial payment on any undisputed loss within 10 days after the policyholder agrees to the insurer’s offer. Additionally, partial payments are not to be interpreted as a full payment or waiver of other portions of the claim still in dispute.

Expedited Mediation Process to Resolve Disputed Claims

In response to the high number of complaints related to the damage caused by Hurricanes Irma and Maria in Puerto Rico, the new laws implement an expedited mediation process for the resolution of claims. The purpose is having the mediation process for disputes arising from claims related to Hurricanes Irma and Maria be resolved in a shorter time than the normal mediation process and in a way that is fair and reasonable for the parties. Accordingly, Section 2.030(16) of the Insurance Code, 26 L.P.R.A. § 235(16), establishes that the Commissioner of Insurance may refer the parties that have a dispute before their consideration to submit to an alternative process for the resolution of claims. Under this Section, the Commissioner created a mediation process to resolve claims in a more economic, efficient, and expeditious manner.


PC 1729 makes low-cost “micro-insurance” available for the first time on the island. In the event of a catastrophic event, policyholders will receive a predetermined amount of compensation for their loss without having to go through the adjustment process.

Legal Notice Requirement

An insured may file a civil action against an insurer after providing notice  to both the Insurance Commissioner of any violation. There’s a sixty (60) day period that begins to run for the violation to be resolved.

Additionally, the Commissioner must create and publish an official form to be used by insureds to provide notice in the event of a violation. Punitive damages will only be awarded when the violation has been produced with such frequency that constitutes a general commercial practice and the insurer has been willful, insensitive, malicious and acted recklessly against the insured’s rights.


After Hurricane Maria, insureds were faced with unethical insurance companies who refused to pay valid claims or offered ridiculously low amounts of money to settle claims. for a loss. This is why it is so important for policyholders to be diligent in pursuing their property insurance claims after a loss.

Farrell, Patel, Jomarron & Lopez successfully fought for many months to ensure that these changes were made to Puerto Rico’s insurance code to help our clients and the thousands of Puerto Rican citizens who are being victimized by insurance companies’ bad faith practices. We are eager to put these laws into action for anyone who needs help resolving their claim.

Contact our law firm today at (305) 300-3000 for a free consultation!

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