Articles Posted in Bad Faith

Recently, an appeals court issued an opinion in a lawsuit stemming from a homeowner’s claim against his homeowner’s insurance company. The Florida insurance dispute arose after the homeowner filed a claim under his homeowner’s insurance for fire damage at his residence. The insurance company’s investigation revealed that the plaintiff filed previous claims and that his failure to repair previous damage overlapped with damage from the current claim. In response, amongst several claims, the homeowner filed a notice of insurer violations contending that the company delayed his claim, failed to act promptly, and offered an unsatisfactory settlement amount. The company responded outside of the statutory period citing outside factors claiming that the civil remedy notice (CRN) was invalid.

Under Florida Statute section 624.155, insurers must act in good faith in settling their policyholders’ claims. Floridians who have suffered damages because of an insurer’s conduct have a right to civil remedies. However, to effectuate these remedies, the policyholder must file a CRN with the insurance company and the Department of Financial Services (DFS). The CRN must state the cause of action with specificity.

In Florida, a CRN must include:

Policyholders who pay their premiums on time expect their insurance company to abide by the terms of their insurance policy. However, many insurance companies prioritize their financial standing over the well being of their policyholders. When an insurance company fails to engage in good faith, they may be liable under Florida’s bad faith insurance laws. Insurance bad faith occurs when an insurance company violates its statutory duty to engage in good-faith resolution of an insurance claim. This includes failing to reasonably evaluate the merits and resolve a claim in favor of the insured.

Recently, a Florida appellate court issued an opinion stemming from an insurance company’s failure to settle a claim. The policyholders purchased coverage from an insurance company and evoked coverage when a water line burst in their home. After reviewing the claim, the insurance company subtracted the insureds’ deductible and issued a $43,708 payment. The policyholders filed a Civil Remedy Notice (CRN) arguing that the insurance company violated their insurance agreement because they did not identify the necessary repairs and instead gave a “low ball offer”.

Under Florida Law, a CRN is a requirement for those who are beginning the process of filing a claim against an insurer. The insurer must provide notice to the insurance company and the Department of Financial Services (DFS). The policyholder must expressly state the facts that gave rise to the violation. In some cases, a policyholder may provide the insurer with a monetary amount to “cure” the violation.

After a Florida accident, most injury victims try and recoup some or all of their damages from their car or home insurance provider. Although consumers expect their insurance company to resolve their claims in good faith, many claimants find themselves in dire financial straits when their company fails to resolve their claims fairly or promptly. Under Florida law, insurance companies must “act fairly and honestly towards its insured” with regard to the policyholder’s interests. Despite the law, insurance companies frequently act with the company’s financial interest in mind, even if it is contrary to the insured’s interest. If a policyholder believes that an insurance company is acting in bad faith in resolving their claims, they may file a lawsuit to demand relief.

Bad faith occurs when an insurance company acts unreasonably towards a policyholder, or otherwise breaches their fiduciary duty to an insured. Determining whether an insurance company acted in bad faith involves evaluating the length the company went to and its efforts in resolving claims in favor of the insured. Insurance companies should take prompt measures to investigate a claim thoroughly, evaluate liability, assess damages, communicate findings with appropriate parties, and settle claims. However, Florida insurers may face bad faith claims if they fail to engage in these steps or if their policies are inherently ambiguous.

Typically, disputes regarding insurance contracts follow the rules generally accepted under contract law. When there is a material, ambiguous term in the contract, the court will construe the term against the company and in favor of the insured. The contracts are viewed as a whole, and if the language is clear, the court will interpret the terms according to their generally accepted plain meaning. To avoid these issues, Florida lawmakers stress the importance of carefully drafted insurance policies that consumers can understand. Although current trends in the law favor insureds, in some cases, courts will find in favor of an insurance provider, despite claims of ambiguous terms.

Under Florida law, insurance companies must act in “good faith” when addressing and resolving an insurance claim made against a policy. However, in many cases, insurance companies fail to do this. Through a Florida bad faith claim, state law provides policyholders with an avenue to seek restitution if they believe that an insurance company has engaged in bad faith practices when attempting to resolve a claim.

Bad faith claims arise if an insurance company breaches its duty to recognize a claim, investigate a claim promptly, respond appropriately to communication requests, act efficiently, or offer valid reasons for a delay or denial. There are generally two types of Florida bad faith claims, first-party and third-party claims. First-party claims occur when an insurance company has a contractual duty to pay benefits to its policyholder. Whereas, third-party coverage protects the policyholder in cases where they may be liable for injuries and damages to a third-party.

Under the law, policyholders who are asserting a bad faith claim must provide the insurance company with a notice of the statutory violation. After receiving the notice, the law provides the insurance company with an opportunity to cure the violation, by paying the claimant’s damages. If the company cures the violation within the time frame, the bad faith claim becomes irrelevant. However, if the company fails to respond, the courts will presume that the plaintiff’s assertion is true.