Understanding how to prove a bad-faith insurance claim is crucial if you feel your insurance company handled your claim unfairly.
To successfully argue a bad faith claim in Florida, you must demonstrate that the insurance company is responsible. Examples include intentionally denying or delaying valid benefit payments. Simply rejecting or denying a claim doesn’t necessarily constitute bad faith claims handling practices.
Florida’s bad faith claim laws are rooted in both common and statutory law. Recent changes to the state’s litigation laws also impact bad-faith lawsuits. You need to gather compelling evidence to make a strong case. It’s also important to hire a strong Florida personal injury lawyer with the experience to understand how to prove a bad faith insurance claim.
First Party vs. Third Party Bad Faith in Florida
Florida allows claims based on either first-party or third-party bad faith. However, there are some important distinctions you need to know as it impacts how to prove bad faith in court.
First-party bad faith claims are rooted in statutory law and permitted under Florida Statutes § 624.155(1). However, they don’t exist under Florida’s common law. Conversely, third-party claimants have the latitude to pursue bad faith claims either under common or statutory law, though not simultaneously.
Fla. Stat. § 624.155(1) stipulates you can bring a bad faith claim when the insurer doesn’t settle a claim in good faith when it could have because they were not acting with fairness or honesty and did not consider your best interests.
While third-party claimants can opt for common law or statutory law, most fall under statutory law because it’s less ambiguous than common law. Common law deals with judicial opinions, which can be interpreted differently.
The Standard for Bad Faith in First-Party Claims in Florida
Statute 624.155 outlines the structure for bad faith claims. It also delineates the actions and omissions that courts may construe as bad faith. Examples include:
- Misrepresentations with the purpose to under-settle.
- Unjustified delays in investigation or communication.
- The denial of a claim without due diligence.
An insurer’s responsibility transcends mere contractual obligations. In essence, the insurance company must prioritize the interests of its policyholder over its financial motives. It is supposed to ensure fairness and abstain from causing unnecessary harm.
Florida courts employ a holistic “totality of the circumstances” test to discern if bad faith was at play. This involves scrutinizing factors like the following:
- The insurer’s responsiveness,
- Any harm inflicted upon the policyholder,
- The insurer’s acknowledgment (or lack thereof) of legal precedents supporting coverage, and
- The insurer’s commitment to factual investigation concerning coverage.
With these guidelines, policyholders and their legal representatives are better positioned to determine and demonstrate bad faith on the part of insurers.
Elements of a Statutory Bad Faith Claim in Florida
Florida’s statutory framework delineates insurance companies’ obligations to their insureds and explicitly identifies actions that could be considered bad faith.
According to Florida’s Unfair Insurance Trade Practices Act, an insurance company may be deemed to be acting in bad faith if it commits any of the following acts.
- Alterations without consent: Trying to settle a claim referencing an application that was modified without the insured’s awareness or consent.
- Misrepresentation: Intentionally distorting vital facts to the insured, aiming to achieve a settlement less favorable than the policy’s stipulations.
- Investigation lapses: Neglecting to execute a timely and thorough investigation of your claim or rashly denying a claim without proper inquiry.
- Communication breakdown: Failing to engage with its insured policyholder promptly and effectively.
- Delayed payments: Procrastinating in settling valid claims.
- Ambiguity in requests: Falling short in informing the insured about additional information required for claim processing or failing to elucidate the necessity of such details.
- Denial explanation: Failing to provide the insured with a convincing written rationale when denying a claim or not fully compensating the policyholder.
In Florida, a third-party bad faith claim isn’t isolated but intertwines with the insured’s primary claim.
Transformation in Florida’s Bad Faith Legislation
The recent passage of HB 837 in March 2023 has resulted in significant changes to the litigation landscape in Florida. Now codified as Florida Statute § 624.155 (4)(b), it mandates that all parties involved—insured, claimant, and their representatives—act with utmost good faith during the claims process, from information exchange to settlement attempts.
A simple oversight or negligence no longer constitutes bad faith against an insurer. The law also eliminates a distinct cause of action for insurer bad faith. Any bad faith actions (or absence thereof) can be weighed when determining damages.
For claims arising from a single incident surpassing policy limits, insurers have a more precise protocol for distributing policy limits. They might try to file an interpleader action or binding arbitration as a way to limit the insurance company’s liability.
Types of Insurance Policies Prone to Bad Faith Claims
Bad faith can happen with any insurance policy; it’s not limited to car accidents or slip and fall claims. Here’s a look at some common bad-faith claims we handle.
- Homeowner’s insurance: Common disputes arise around dwelling coverage when, for instance, a fire devastates a property and the payout is significantly less than expected.
- Contents coverage: Homeowners might have damage estimates to personal property in the six figures, but insurers often pay less than 20% of the claimed amount.
- Loss of use: Insures homeowners for additional living expenses when their property is damaged.
- Denied claims: Instances of suspicious fires or discrepancies in insurance applications can lead to denied claims or investigations for potential fraud.
- Commercial property damage: This is analogous to homeowner’s claims but often involves larger structures and features a business interruption component.
- Business interruption: While businesses can claim coverage for lost revenues following an unforeseen damaging event, procuring the amount can be challenging.
- Life insurance: Common issues involve life insurance interpleaders, where multiple claimants dispute a single death benefit and the denial of claims due to alleged misrepresentations in policy applications.
- Commercial insurance: This covers many potential business-related issues, from lost or stolen property to defamation. Specific types include errors and omissions, cybersecurity and data breach risks, and workers’ compensation.
- Director and officer insurance: Protects company officials from potential liabilities arising from their roles within the company.
- Disability insurance: Unlike Social Security, these are private long-term disability insurance policies, usually governed by complex ERISA laws. A vast majority of these claims get denied.
- Uninsured or underinsured motorist coverage: While not predominantly advertised, notable personal injury claims have involved underinsured motorist coverages.
Understanding the various claim types is crucial because it can help you better understand how to prove bad faith insurance claims handling.
Contact a Florida Bad Faith Insurance Lawyer
If you suspect an insurance company has mistreated you and acted in bad faith, you must contact an experienced lawyer immediately.
At Johns Law Group, PLLC, a significant part of our practice involves pursuing bad faith claims in Florida. If we can prove bad faith, you might receive compensation for additional penalties, typically between 50% to 300% of the money you’re owed, plus attorney’s fees.
Bad faith typically boils down to one of three things—the insurance company wrongfully delayed, denied, or underpaid your claim. However, without proper evidence, you won’t be able to prove bad faith. That’s why you need a Florida bad-faith insurance lawyer.
Contact our office today to schedule a consultation and learn more about how we can help.
Jeremiah Johns is a former insurance defense attorney who now represents plaintiffs in bad faith insurance, catastrophic injury cases, and commercial disputes. He has a unique perspective from his experience representing some of the nation’s largest insurance companies.
Jeremiah is licensed to practice law in Texas, Louisiana, Florida, and Georgia (though he is presently inactive in Georgia). He is also admitted to the 5th Circuit Court of Appeals. For his education, Jeremiah earned an LL.M. in Admiralty from Tulane University, a J.D., cum laude, from Syracuse University, and both a B.A. and B.S., magna cum laude, from Georgia State University.
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