Bad Faith Claims in Florida
Insurers are expected to handle insured’s claims in good faith. They are required to promptly and diligently investigate claims for damage, and to pay benefits afforded under the policy, once the obligation to pay is made readily apparent. In other words, once a carrier determines that a loss has occurred and that the cause of said loss is one covered under the policy, the carrier is required to immediately settle the claim and issue payment.
Unfortunately, Insurers will sometimes try to drag out the process by waiting to inspect the property damage, or demanding additional inspections or documentation without a reasonable explanation for why these additional inspections or documentation is necessary, delaying a coverage determination. In other cases, the carrier outright denies the claim without conducting a proper investigation. Insurers may also establish coverage liability but offer far less that what the insureds are owned under the terms of their policy.
If your insurance carrier mishandles, wrongful underpays or wrongfully denies your claim, you may be able to file a bad faith insurance claim to seek compensation for the damages you were initially entitled to, as well as additional damages.
Florida’s first-party bad faith claims are authorized Fla. Stat. 624.155(1) which creates the statutory cause of action for first-party bad faith. Under the statute:
“(1) Any person may bring a civil action against an insurer when such person is damaged…
- (b) By the commission of any of the following acts by the insurer:
- Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests;
- Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or
- Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.”
Insurers owe a fiduciary duty to their policyholders and are required to “…refrain from acting solely on the basis of their own interest in settlement.” State Farm Mut. Auto Ins. Co. v. Laforet, 658 So. 2d 55 (1995). Pursuant to Florida’s Unfair Trade Practices Act, any of the following can constitute bad faith:
- Attempting to settle claims on the basis of an application that had been altered without notice to the insured;
- A material misrepresentation made to an insured with the intent of effecting settlement under such contract on less favorable terms than those provided in the policy;
- Committing any of the following as a general business practice:
- Failing to properly investigate claims;
- Misrepresenting pertinent facts or insurance policy provisions;
- Failing to promptly communicate with insureds;
- Denying claims without conducting reasonable investigations;
- Failing to affirm or deny full or partial coverage of claims upon the written request of the insured within 30 days after proof-of-loss statements have been completed;
- Failing to offer a reasonable explanation in writing to the insured for denial of a claim or for the offer of a compromise settlement;
- Failing to promptly notify the insured of additional information necessary for the processing of a claim; or
- Failing to clearly explain the nature of the requested information and the reason why such information is necessary.
Under Fla. Stat. 624.155(3)(a)(b), prior to bringing a bad faith claim against an insurance carrier, a Civil Remedy Notice must be filed, stating (1) the statutory provisions violated; (2) the facts and circumstances giving rise to the violation; (3) the name of any individual involved in the violation; and (4) reference to specific policy language that is relevant to the violation, if any. Additionally, an insured must establish contractual liability and obtain a judgment against the insurer for breach.
The insurer is then given sixty (60) after written notice of violations, to “cure” the alleged bad faith violation, by paying for the damage, or otherwise addressing and correcting the conduct giving rise to the violation(S) before any further action can be taken. If the violation(s) are cured within the 60-day period, there is no longer a basis for a bad faith suit. However, if the carrier fails to respond to and cure bad faith the violations within the cure period, it will be presumed that the carrier acted in bad faith, and they will have the burden to show why its failure to respond and a cure was not in bad faith.
If your insurance company is giving you the run-around and not properly investigating, processing, or fairly paying your claim, you may be able to file a bad faith claim against them. Give us a call at 786-529-0090 to speak with an experienced Florida insurance attorney.