Many insurance companies collect enormous fees for decades, but when it comes time for them to pay, they do not want to fulfill their end of the bargain. Under the best circumstances, dealing with insurance companies after a catastrophic loss is difficult. Things can go downhill fast when they fight you at every step of the claims process and refuse to pay what they owe. Fortunately, Florida has laws to protect consumers against bad faith insurance.
At Johns Law Group, PLLC, we know how to handle unreasonable insurance companies. Our experienced insurance litigation attorneys know how to hold insurance companies accountable when they deny coverage in bad faith.
Our firm works on a contingency fee basis, meaning we don’t get paid unless we win your case. Whether your insurance company denied, delayed, or underpaid your claim, we can help. Contact us today and schedule a consultation.
What Is a Bad Faith Insurance Claim?
Insurance policies are contracts between an insurance company and the insured. Each party to the contract has a duty to act in good faith toward the other party.
A bad faith insurance claim is a legal action against an insurance company after they improperly respond to a valid insurance claim. These claims can be filed when an insurer unreasonably denies coverage, delays the investigation or payment of a claim, or underpays—in other words, when the insurer does not live up to its duty to deal with its clients in good faith.
What Is Insurance Bad Faith in Florida?
Under Florida law, two avenues exist to pursue a bad faith insurance claim. First, Florida’s Unfair Insurance Trade Practices Act, Florida Statute 624.155, and other laws explicitly state practices that insurance companies cannot engage in and provide a cause of action against insurers. Second, you can pursue a common law bad faith claim against unreasonable insurers.
Statutory claims under the Florida Insurance Code must be brought for specific violations and follow the procedures defined in the statute. These procedures include giving the insurance company 60 days to remedy their mistake before filing a complaint in court.
Common law is a series of principles courts uphold based on prior court decisions rather than explicit statutes. When it comes to bad faith insurance issues, common law claims are often grounded in judicial decisions concerning breaches of contract. For example, there is an implied covenant of good faith and fair dealing in every contract. Violations of this covenant give the aggrieved party a cause to sue the other party.
Types of Bad Faith Insurance Claims
Generally, there are two types of bad faith insurance claims in Florida: first-party and third-party.
First-party claims happen when a policyholder files a lawsuit against their insurance company for a failure to pay out on an insurance claim reasonably. These cases often involve unreasonable delays in payment, wrongful denials, or underpayments.
Third-party insurance claims stem from an insurance company’s failure to adequately defend its client against legal claims by a third party. For example, many car insurance policies have policy limits for liability coverage above which the client is personally liable for damages.
Insurance companies must act in good faith while negotiating with the third party. If an insurance company unreasonably refuses to settle for an amount within the policy limit and a court later awards damages exceeding the limits, the client might have a bad faith insurance claim.
Common Practices Leading to Bad Faith Insurance Claims
Providing concrete examples might better answer the question, What is bad faith insurance? There are several unreasonable practices that insurance companies commonly engage in. These practices allow an insured person to pursue a bad-faith insurance claim against their insurance company.
Insurance companies in Florida can not engage in unfair or deceptive practices, including making material misrepresentations to clients. Material misrepresentations are lies or omissions relating to a significant matter in the insurance contract.
Refusal to Investigate a Claim
Insurance companies must promptly investigate an insurance claim. Sometimes insurance companies take excessive time investigating a claim or outright refuse to conduct a high-quality investigation. Clients can hold their insurance companies financially liable for mishandling a claim in this manner.
Failure to Communicate with the Insured
Proper communication with the insured is necessary for prompt and adequate insurance coverage. Ignoring a client and refusing to return calls or emails is a bad faith tactic some companies use with the hopes that the insured will give up eventually. An experienced insurance attorney can help you file a claim against an insurance company that refuses to communicate.
When an insurance company issues a denial, it must have a good reason for doing so. Claim denials can be issued only after a reasonable investigation reveals a solid legal justification for the denial.
Underpaying a Claim
Intentionally undervaluing a claim and offering an unreasonably low settlement is a common profit-boosting tactic that insurance companies engage in. Insurance companies must evaluate the value of your claim fairly. They should have solid evidence and reasoning to back up the amount they offer to pay.
Common Remedies for Bad Faith Insurance
Florida law allows victims of bad faith insurance tactics to recover compensation for the damage caused by the insurance company’s actions. Compensation for bad faith insurance claims generally falls into three primary categories, including:
- Payment for the initial claim’s value;
- Payment for costs incurred due to the insurance company’s improper acts; and
- Punitive damages.
If you win a bad faith insurance claim against an insurance company, they will likely have to pay you the total value of the initial claim.
Further, insurance companies must often pay for their actions’ additional consequences. These additional consequences include court costs and reasonable attorney fees.
Finally, the court can award the plaintiff punitive damages to punish the defendant for their actions. In Florida, punitive damages can be up to three times the compensatory damages.
How to File a Bad Faith Claim
Insurance companies often fiercely defend themselves against bad faith insurance claims and attempt to lay the blame on the plaintiff. Working with an experienced law firm when taking on an insurance company is critical.
At Johns Law Group, we know how to take on the biggest insurance companies. We handle everything from delayed or underpaid claims to denied claims. Our experienced attorneys can also help clients through the scrutiny of a detailed insurance investigation. Contact us today!