Insurance is critical in your life, particularly in areas like auto insurance, renter’s coverage, and homeownership. Its purpose is to safeguard you and your property against the risks of damage, theft, or loss. However, some insurance companies give policyholders a hard time. Apart from dealing with the loss, victims may also face challenges when dealing with their insurance provider. Despite clients filing genuine claims, insurers stand hangs on protecting their financial interests. Therefore, these companies will often act in bad faith, leaving victims in a tenuous financial position. If you find yourself in this precarious position, you should contact a lawyer to help you resolve your situation.

What Does Bad Faith Mean?

Bad faith is a dishonest, unfair, or intentional act which happens by failing to fulfill contractual or legal obligations, misleading someone else, violating basic honesty standards in dealing or transacting with others, or signing a contract without the means or intention to fulfill it.

Insurance companies are supposed to handle the claims of the insured people in good faith. They’re required to diligently and promptly look into damage claims and pay the arising benefits per the policy after the duty to pay has been made apparent. Put otherwise, after an insurance company establishes that loss occurred and the insurance policy covers the cause for that loss, the company must immediately settle that claim and offer payment.

Unfortunately, insurers will at times try to intentionally or unfairly drag the process by waiting to inspect the loss or demanding more documentation or inspections without any reasonable explanation of why the additional documentation or inspections is required, delaying an insurance coverage determination. For other cases, the insurance company utterly denies the claim without doing a thorough investigation. Companies may also determine coverage liability but pay out far less than what the insured person is owed under the terms of their insurance policy.

To Understand Bad Faith, You Must First Understand Good Faith

To know what bad faith is, you must understand what good faith means, plus what your insurer’s duties are towards you, the insured party. Both statute and common law obligate insurers to do various things (common law refers to judicial precedent, that is, what’s been created through the courts, while statutes are the laws that lawmakers make). They’re obligated to:

  • Recognize your insurance claim.

  • Investigate it promptly.

  • Treat you honestly and fairly when assessing your claim’s validity.

  • Respond faster to any of your communications.

  • Not slow down the progression with unnecessary forms.

  • Settle any claims against you if the claim lies within the coverage limit.

  • Provide actual reasons why they’ve denied your insurance claim or are delaying the process.

Essentially, every insurance company is obligated to act in good faith and engage in fair dealings. This has evolved through common law.

Types of behavior that might constitute bad faith include:

  • Failure to settle or pay a claim that’s within the insurance policy limits with no reasonable basis.

  • Using intentional misrepresentations or deceptive practices to evade paying claims.

  • Failure to give justification for denying an insurance claim.

  • Giving an unreasonably low offer to compensate damages or failure to offer the full value of a claim’s worth.

  • Failure to promptly and properly defend or investigate a claim.

  • Failure to quickly communicate with a policyholder.

  • Denying a claim without carrying out reasonable investigations.

  • Failure to promptly notify the policyholder of additional info necessary for processing a claim.

  • Failure to deny or affirm partial or full coverage of an insurance claim upon the insured’s written requests within thirty days after proof-of-loss statements have been completed.

  • Failure to explain clearly the kind of information they’re requesting and reasons why that info is necessary.

You Also Have to Understand Insurance

Insurance refers to an agreement between the insured (you) and the insurer (insurance company). If you’ve been insured, then it’s likely you paid an insurance premium. Two typical forms of insurance include liability insurance (found on auto insurance) and property insurance (homeowner’s insurance). Usually, the agreement is known as a policy. You’re given a copy of this policy after you’ve executed the agreement and paid the premium.

Automobile Insurance

Most auto insurance coverage policies include:

  • PIP (Personal Insurance Coverage — this coverage will reimburse you, your family, relative, or any other individual riding in your auto a minimum amount per individual or injuries, irrespective of liability. Typically, coverage includes lost wages, medical expenses, funeral expenses, and rehabilitation expenses. The degree of insurance benefits varies significantly from one state to another. PIP laws in Florida have changed and are intricate.

  • Liability coverage — this insurance coverage pays for damages resulting from property damages and bodily injury to other people for which you’re liable. If you are sued, it’ll also pay your court costs and defense. Lost wages, pain & suffering, and medical expenses are a few examples of the losses that liability coverage covers.

  • Uninsured driver coverage — this coverage protects you directly. It pays if you’ve been injured in a hit-and-run accident or by a motorist who doesn’t have automobile insurance. In essence, this coverage replaces the liability insurance the other motorist should’ve purchased but didn’t. Underinsured motorist insurance coverage applies whenever the other motorist is liable, and their liability limits are lower than the loss you suffered. Your underinsured motorist coverage pays you an extra amount up to your policy limits.

  • Extended transportation expense coverage — this coverage pays for a rental auto if your car was damaged by a loss covered under your insurance policy.

  • Property damage liability — this insurance reimburses for the damage you cause to other people’s property, for instance, damage to someone else’s vehicle, light pole, or fence caused by a crash.

  • Emergency road service or towing — this coverage reimburses the expenses of towing your auto to a repair shop.

  • MPC (medical payment coverage) — this pays for your funeral and medical costs for you and other parties killed or injured in a crash while driving or riding in your car. This insurance coverage also frequently extends to policyholders that are hit by an auto while they’re pedestrians. Covered costs include funeral, dental, chiropractor, surgical, and hospital expenses. This may be identical to the benefits your health insurance company provides.

Property Insurance

Most homeowner’s insurance will insure you for your:

  • Dwelling — dwelling coverage pays to rebuild or repair your home, including plumbing, air conditioning and heating, and electrical wiring, if the damage was due to a cause covered under the insurance. You want to purchase sufficient dwelling coverage that’ll cover the rebuilding cost.

  • Other structures — insurance coverage for other structures pays for damage caused to detached structures such as sheds, fences, garages on your property.

  • Loss of use— loss of use insurance coverage usually pays for your extra living and housing expenses if you must temporarily vacate your home while it is being repaired.

  • Personal property — a personal property insurance coverage pays for the personal effects at your home that are destroyed or damaged by cause of loss covered under your policy. These personal items may include electronics, sporting goods, jewelry, clothes, and furniture.

  • Liability— liability insurance coverage helps safeguard your property and pay for your defense expenses if you’re facing a lawsuit due to you or your member causing damage or injuries to someone else or their property.

What Now After an Insurer Acts In Bad Faith?

If your insurance provider acts in bad faith, you can file a bad faith claim. There aren’t any limits on bad faith claims, even when the value of your case is beyond the insurance policy coverage limit. You want to have a skilled lawyer defending your rights if you’re pursuing this kind of case.

Florida bad faith claims are generally categorized into two— third-party and first-party claims.

First-Party Claim

You file a first-party claim if your insurer has unreasonably refused to investigate your claim properly or pay you for your claim.

Consider this example: when driving home after work, someone rear-ends you. You’re badly injured, and your damages amount to $70,000. The liable motorist doesn’t have liability insurance; thus, there’s nothing you can recover. You have $100,000 uninsured motorist coverage on your policy, so you file a claim on your policy for $70,000.

However, your insurer drags its feet for several months. It eventually rejects your claim. This goes against any guise of good faith and fair dealings per the policy terms. In this case, you can file a bad faith claim against your insurer for breach of contract as well as failing to fulfill the promise of coverage under your uninsured motorist policy.

Third-Party Claim

You file a third-party claim if the insurer has, without any reason, failed to settle, indemnify, or defend a claim that lies within your policy limits. You can also file it if your insurer has refused to reimburse a genuine claim filed against you by the party you injured, leaving you vulnerable to a substantial personal judgment. A third-party insurance example is liability coverage. As we mentioned, this insurance protects you financially should you cause a crash that results in another person being severely injured; thus, they seek to recover compensation from you.

In this situation, Florida statute permits the injured person to file a bad faith insurance claim directly against your insurance provider. The third-party will be the beneficiary of any successful third-party bad faith claim.

Let’s put this into perspective: say you have $300,000 of liability insurance. So, it happens that you T-bone another car, and the driver is severely injured, accumulating their damages to $700,000. The driver can only recover $300,000 from your liability insurance coverage and not more since that’s your policy limit.

For this reason, the driver’s lawyer sends your insurer a demand letter seeking a $300,000 compensation. If the company agrees to this settlement, the case will be closed, and the company will pay the driver financial compensation. In this case, your insurer will have acted in good faith.

However, most of the time, a different story plays out. Often, insurers fail to settle claims because they’re ‘saving money.’ Should your insurer disagree with settlement terms from the third party and unreasonably refuse to pay compensation or otherwise fail to provide the insurance policy limit on time, the case will have to proceed to trial.

If this happens, the insurer will have put you at high risk. Litigation arises, and the jury rules you’re at fault and delivers a $700,000 verdict. You’ll now have to pay the extra 400 thousand dollars of the compensation awarded.

At this stage, once liability and degree of the owed damages have been determined, Florida statute permits protection for you (the insured respondent) and the driver (the injured complainant) through a bad faith claim.

As the respondent, you could assign the driver the bad faith claim against your insurance company. This releases you from responsibility for the judgment and enables the driver to sue your insurance company for the extra $400,000, so they can recover the whole amount of their damages since your insurer engaged in bad faith practice.

Note that before filing a bad faith insurance claim against your insurance carrier, you must file a Civil Remedy Notice in which you’ll state:

  • The violated statutory provisions.

  • The circumstances and facts constituting the violation.

  • The name of any person involved in the violation.

  • If any, reference to specific policy language that’s relevant to the violation.

Additionally, you have to establish contractual liability then obtain a judgment against the insurance company for breach of contract. After you’ve done all this, the insurance provider is then allowed sixty days to rectify or cure the supposed bad faith practice by reimbursing for the damages or otherwise addressing and rectifying the act constituting the violation before you take further action. If it cures the violation within sixty days, there will be no basis for a bad faith claim.

What If They Fail to Cure the Alleged Violation

If the insurer doesn’t cure the violation, it’ll be presumed they acted in bad faith, and thus, they’ll be required to prove why their failure to cure the alleged violation wasn’t in bad faith. In this case, first, speak with the adjuster’s supervisor to ensure you have all the facts before taking drastic measures. If the adjuster’s supervisors remain adamant on the issue, then reach out to a lawyer.

A personal injury or insurance attorney is helpful in this case. Reporting your insurer to the insurance board will also ensure this does not happen to anybody else. The board can initiate an independent investigation and impose fines if need be.

It’s worth noting that only because your insurer has rejected your claim does not mean it automatically means a bad faith claim. Consulting with a lawyer will assist you in understanding your legal rights and whether you’re viewing the situation from an unbiased angle.

Find a Jacksonville Personal Injury Attorney Near Me

Bad faith in Florida is a complicated concept that involves many issues. Even so, attorneys at Jacksonville Personal Injury Attorney understand this concept by insurance providers. We aim to maximize your claim’s value and ensure your insurer doesn’t wrongfully deny it for fair compensation. We’re prepared to use our experience and apply the state’s law to secure more damages for you or promptly settle your claim for its full value and not only the policy limit. Call us at 904-800-7557 for a consultation.