BAD FAITH INSURANCE CLAIMS

Under certain scenarios, Florida law allows a party to recover against an insurance company when it has acted it bad faith.  Typically, this occurs when an insurance company fails to settle a claim when considering all the circumstances, it could and should have done so by acting fairly and honestly.

There are two types of bad faith claims – first party claims, and third party claims.

First Party Bad Faith Claims

First party bad faith claims are statutory in nature.  They occur when an insurance company fails to treat its own insured or policyholder in a fair manner.  Examples of bad faith acts by an insurer include the following.

  • Not attempting in good faith to settle claims when, under all the circumstances, the insurer 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.
  • 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.

Other examples of bad faith are noted below, which are considered “unfair claim settlement practices” pursuant to Florida Statute § 626.9541 (entitled “Unfair methods of competition and unfair or deceptive acts or practices defined”).

  • A material misrepresentation made to an insured or any other person having an interest in the proceeds payable under such contract or policy, for the purpose and with the intent of effecting settlement of such claims, loss, or damage under such contract or policy on less favorable terms than those provided in, and contemplated by, such contract or policy.
  • Committing or performing with such frequency as to indicate a general business practice any of the following:
    • Failing to adopt and implement standards for the proper investigation of claims;
    • Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;
    • Failing to acknowledge and act promptly upon communications with respect to claims;
    • Denying claims without conducting reasonable investigations based upon available information;
    • Failing to affirm or deny full or partial coverage of claims, and, as to partial coverage, the dollar amount or extent of coverage, or failing to provide a written statement that the claim is being investigated, upon the written request of the insured within 30 days after proof-of-loss statements have been completed;
    • Failing to promptly provide a reasonable explanation in writing to the insured of the basis in the insurance policy, in relation to the facts or applicable law, for denial of a claim or for the offer of a compromise settlement;
    • Failing to promptly notify the insured of any additional information necessary for the processing of a claim; or
    • Failing to clearly explain the nature of the requested information and the reasons why such information is necessary.
  • Failing to pay undisputed amounts of partial or full benefits owed under first-party property insurance policies within 90 days after an insurer receives notice of a residential property insurance claim, determines the amounts of partial or full benefits, and agrees to coverage, unless payment of the undisputed benefits is prevented by an act of God, prevented by the impossibility of performance, or due to actions by the insured or claimant that constitute fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which benefits are owed.

There are certain complex prerequisites to pursuing a first party bad faith claim against an insurer.  For example, a “civil remedy notice of insurer violations” (commonly called a “CRN”) must be filed with the Florida Department of Financial Services pursuant to Florida Statute § 624.155 (entitled “Civil remedy”).  There is also a waiting period to allow the insurance company to cure the alleged bad faith.

Third Party Bad Faith Claims

Third party bad faith generally occurs when a liability insurer fails to settle a claim within policy limits on behalf of its insured, which causes the insured to incur an excess judgment – that being a judgment for more than the available insurance coverage.

If you believe your insurance company has treated you unfairly, call The Law Offices of Donald M. Kreke today.  We can help evaluate your potential bad faith claim.

Other Legal Matters Handled by The Law Offices of Donald M. Kreke

In addition to bad faith insurance claims, The Law Offices of Donald M. Kreke handles other legal matters including: personal injury matters (including, but not limited to, truck crash claims, automobile accident claims, motorcycle wreck claims, boating collision claims, claims against cruise lines, premises liability claims, slip and fall accident claims, negligent security claims, dog bite claims, and defective products claims), property insurance claims – both residential and commercial – and inception claims, and supplemental and re-open claims (including, but not limited, broken pipe claims, fire claims, flood claims, hail claims, hurricane claims, mold claims, roof leak claims, sinkhole claims, storm claims, tornado claims, vandalism and theft claims, water claims, wind claims, loss of business income claims, and extra expense claims), property damage claims, collection matters, criminal defense matters, traffic offenses (including speeding tickets), claims against insurance brokers and/or agents, medical malpractice claims, nursing home claims and elderly abuse claims, and matters involving contract disputes.  We also assist clients with reviewing and drafting contracts.  If your legal issue or matter is not listed above, please contact us.  We may be able to help.

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