TAMPA — Proposals for settlements (PFSs) are on the rise for the insured in Florida, but are they really more cost-effective than completing the litigation process? 

From car accidents to home invasions, battles with insurance companies can get extremely costly for both the insured consumer and the insurer in Florida. But a more cost-effective way for the insured to protect themselves in expensive legal matters has become more popular. Still, while a PFS seems like the easiest way to reduce costs, is it really the cheapest and best method to use in order to close the case fairly?

While those questions are difficult to answer, the insured should keep in mind several factors when faced with the decision to accept or decline a PFS. A defendant’s monetary offer is typically only a percentage of the plaintiff’s claim. Still, there is potential for both parties to win and protect themselves if they choose to go this route and avoid a costly litigation process.

“They only come into play once there’s a lawsuit," Timothy Engelbrecht, a lawyer who represents insurance companies' property-related lawsuits in Florida told the Florida Record. "Once in litigation, they do serve in the big picture a useful purpose. But like any other sort of tool, it works in some settings better than others. And it sort of got its highlights and lowlights depending on when it’s used and how it’s used. It sort of is the counterbalance or often acts as the counterbalance to the attorney fee in Florida.” 

He said a PFS is a way for both parties to protect themselves in the process. While it has its “lowlights,” not accepting a PFS can have detrimental consequences for the insured.

“In my experience, for the folks that have accepted it, they felt like the insurance company did make a fair offer and it did manage the risks well," he said. "When the insured does not accept it and we go through the court process and the insured loses, they are often times disappointed because their attorney’s fees can be three or four times their claim.”

Engelbrecht said this is almost always the route the insurance companies he represents try to go in hopes of avoiding attorney fees. Even though “litigants” are using PFSs “more often than in the past,” the process isn’t easier.

“They are becoming more difficult to enforce because of some court decisions in the past few years,” he said. “I don’t know if they are having a bigger impact now than they used to in years’ past in terms of causing cases to settle.”

In the end, consumers are encouraged to consider the pros and cons before agreeing or denying a PFS.

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