Understanding Florida Bad Faith Claim Procedures
Insurance companies are expected to act in “good faith” when resolving, examining and settling claims made against their customers. Unfortunately, in some situations, insurance companies may act in bad faith. Situations where an insurance company may be acting in bad faith include failing to pay or settle a claim without a reasonable basis for doing so, failing to promptly investigate a claim, denying a claim without proper justification, intentionally misinterpreting a claim to avoid payment, or failing to give the entirety of a claim without justification.
In order to understand Florida bad faith claims, it is important to recognize the types of claims that exist. Florida bad faith claim procedures lump into two categories, first-party claims and third-party claims. In first-party, insurance companies are under a contractual obligation to pay benefits to policyholders for covered claims. In third party claims, insurance companies are obligated to pay policy benefits to the injured party in order to obtain a release of claims for their insured.
Plaintiffs who assert a statutory bad faith claim must first provide 60 days written notice of any alleged violation of the statute made by the insurance company. Upon notice of the alleged misconduct, the insurance company has the opportunity to “cure” the alleged bad faith by paying the plaintiff’s damages. If the insurance company cures the violation within the 60-day time frame, the bad faith claim goes away. However, if the insurance company does not timely respond to the plaintiff’s notice of bad faith, the courts will treat the allegations in the notice as true. Accordingly, the insurance company will be held liable for bad faith unless it rebuts the allegations in the notice to avoid liability.
What Is A First-Party Bad Faith Claim?
First-party insurance covers the policyholder for damage or loss to their property or person. For instance, a first-party insurance claim may include health insurance, medical payment coverage in a homeowner’s policy and fire, flood, earthquake or tornado insurance. First-party claims involve policyholders making a claim against their own insurance company. For this reason, they are the insurance company’s first-party claimant. Under Florida law, a cause of action for first-party bad faith exists in situations where the insurer fails to “attempt in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fair and honestly toward the insured and with due regard to his or her interests …”
What Is A Third-Party Bad Faith Claim?
Third-party insurance covers the policyholder with regard to their liability if he or she is sued by another person for injury or damage sustained as a result of the policyholder’s actions. For example, third-party insurance includes liability under an automobile or homeowner’s policy, professional liability (i.e., malpractice insurance) and commercial liability insurance. Similar to first-party insurance, third-party insurance pays policy benefits to an injured party for damages that are owed. Many third-party insurance policies obligate the insurance company to defend the policyholder during the litigation process. In these situations, the insurance company selects an attorney to represent the policyholder and pays their fees.
Wittmer & Linehan PLLC understands that insurance claims can be complicated, even for seasoned legal professionals. Our attorneys have experience in negotiating and litigating against insurance companies. We understand the complex laws that govern the relationships between policyholders and insurance companies. We will work aggressively to protect your right to the full benefit of coverage that you paid for and deserve. To discuss your insurance dispute, contact us at 941-263-8314.