Understanding Bad Faith Insurance
The aftermath of a hurricane, a devastating fire, or even a seemingly minor water leak can leave Florida residents reeling. Adding insult to injury, many find themselves battling their own insurance companies, facing unreasonable delays, underpaid settlements, or outright denials of valid claims. When an insurance company fails to uphold its end of the policy agreement, it may be acting in “bad faith.” Navigating the complexities of Florida insurance law can feel overwhelming, but understanding your rights and the legal options available is crucial to obtaining the compensation you deserve. This article provides a comprehensive overview of Florida bad faith insurance claims, empowering you to protect your financial future.
At its core, an insurance policy is a contract – a promise that in exchange for regular premium payments, the insurance company will provide financial protection when covered losses occur. Implicit within this contract is the “covenant of good faith and fair dealing.” This means the insurance company has a legal and ethical obligation to handle your claim honestly, fairly, and in a timely manner. When an insurance company breaches this covenant, it is acting in bad faith.
Bad faith conduct can manifest in various ways. Common examples include:
Unreasonable Delays
Stalling the investigation process, failing to respond to communications promptly, or taking an excessive amount of time to issue a decision on your claim.
Unjustified Denials
Denying a valid claim without a legitimate reason, misinterpreting policy language to avoid payment, or ignoring clear evidence of coverage.
Lowball Offers
Offering a settlement amount that is significantly less than the actual value of your damages, forcing you to accept a substandard payment.
Communication Failures
Failing to keep you informed about the status of your claim, ignoring your inquiries, or providing misleading information.
Misrepresentation of Policy Terms
Incorrectly explaining your policy coverage to deny or underpay your claim.
Bad faith laws exist to level the playing field between policyholders and large insurance corporations. They provide a legal avenue for policyholders to hold insurance companies accountable for unfair and unethical practices, ensuring that valid claims are paid fairly and promptly.
Florida’s Specific Laws on Bad Faith Insurance
Florida Statute 624.155 is the cornerstone of the state’s bad faith insurance law. This statute outlines the specific actions that can constitute bad faith and provides a mechanism for policyholders to sue their insurance companies for damages resulting from such conduct. It distinguishes between first-party and third-party bad faith claims. A first-party claim arises when you are making a claim against your own insurance policy (e.g., a homeowner’s claim for hurricane damage). A third-party claim arises when someone else is making a claim against your insurance policy (e.g., someone sues you for negligence after a car accident, and they make a claim against your auto insurance policy).
Under Florida law, several actions can trigger a bad faith claim. These include, but are not limited to, failing to properly investigate a claim, failing to acknowledge and act promptly upon communications regarding a claim, failing to adopt and implement reasonable standards for the prompt investigation of claims, and failing to attempt in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for his interests.
The Critical Sixty-Day Cure Period
A critical aspect of Florida’s bad faith law is the sixty-day “cure period.” Before filing a bad faith lawsuit, you must provide the insurance company with written notice of the alleged bad faith conduct. This notice, often referred to as a Civil Remedy Notice, must specify the details of the alleged violation and give the insurance company sixty days to correct its actions and resolve the claim. The Civil Remedy Notice must include specific details like the statutory provision the insurance company violated and the facts and circumstances giving rise to the violation.
If the insurance company fails to take corrective action within this sixty-day window, you can then proceed with a bad faith lawsuit. Properly submitting this notice is a vital step; failure to do so can be fatal to your claim.
Florida case law further defines and clarifies the application of these principles. Cases involving hurricane damage, sinkhole claims, and uninsured/underinsured motorist coverage have all contributed to the body of law surrounding bad faith in the state. For instance, landmark cases have addressed issues like the burden of proof in bad faith claims and the types of damages that are recoverable. These rulings provide valuable precedent for future bad faith litigation.
Florida law provides for additional statutes related to unfair claims settlement practices. These statutes, in addition to 624.155, paint a clear picture of the standards to which insurance companies must adhere.
Common Bad Faith Scenarios in Florida
Florida’s unique environment and legal landscape give rise to specific types of bad faith claims.
Hurricane Claims
Florida’s vulnerability to hurricanes makes these claims particularly susceptible to bad faith practices. Insurance companies may try to underpay claims by disputing the extent of the damage, arguing that pre-existing conditions contributed to the loss, or unreasonably delaying the adjustment process. Disputes over whether damage was caused by wind versus flood (which may be excluded under some policies) are also common.
Property Damage Claims (Non-Hurricane)
Water damage, mold infestations, and fire damage can all lead to bad faith claims. Insurance companies may deny coverage based on alleged policy exclusions, dispute the cost of repairs, or fail to properly investigate the cause of the damage. Sinkhole claims, particularly prevalent in certain areas of Florida, are often met with resistance from insurers, leading to protracted legal battles.
Auto Insurance Claims
Denials of Uninsured/Underinsured Motorist (UM/UIM) claims are a frequent source of bad faith litigation. Insurance companies may dispute liability, the extent of the injured party’s damages, or the reasonableness of medical expenses.
Steps to Take When You Suspect Bad Faith
If you believe your insurance company is acting in bad faith, immediate action is necessary.
- Document Everything: Maintain a meticulous record of all communication with the insurance company, including dates, times, names of representatives, and summaries of conversations. Save all emails, letters, and claim-related documents. Take photographs or videos of the damage to your property.
- Seek Legal Counsel: Bad faith claims are inherently complex and require the expertise of an experienced Florida insurance attorney. An attorney can evaluate your case, advise you on your legal rights, and represent you in negotiations and litigation.
- Submit the Sixty-Day Notice: Working with your attorney, ensure you submit the required sixty-day notice to the insurance company, detailing the alleged bad faith conduct. This is a prerequisite for filing a lawsuit.
- Gather Evidence: Work with your attorney to gather evidence to support your bad faith claim. This may include expert reports, internal company documents (obtained through discovery), and witness statements.
- Explore Alternative Dispute Resolution: Consider mediation or appraisal as a way to resolve your claim outside of court. These methods can be less expensive and time-consuming than litigation.
Recoverable Damages in a Florida Bad Faith Claim
If you prevail in a bad faith lawsuit, you may be entitled to recover various types of damages.
Compensatory Damages
These damages are intended to compensate you for the losses you suffered as a result of the insurance company’s bad faith conduct. This typically includes the amount of the original claim that was wrongfully denied or underpaid, as well as any additional expenses you incurred as a result of the denial (e.g., temporary housing costs, lost income).
Consequential Damages
These damages cover losses that were a direct and foreseeable consequence of the insurance company’s bad faith. This could include lost profits if a business was forced to close due to the denial of insurance benefits, or property damage that worsened due to delays in repairs. In some cases, emotional distress damages may also be available.
Punitive Damages
In rare cases, punitive damages may be awarded if the insurance company’s conduct was particularly egregious or malicious. Punitive damages are intended to punish the insurance company and deter similar behavior in the future. The bar for proving entitlement to punitive damages is high.
Attorney’s Fees and Costs
Florida law often allows policyholders to recover their attorney’s fees and costs if they prevail in a bad faith lawsuit. This can significantly reduce the financial burden of pursuing a claim.
Common Defenses to Bad Faith Claims
Insurance companies often raise various defenses to bad faith claims. They may argue that the claim was not covered under the policy, that the policyholder failed to cooperate with the investigation, or that the insurance company acted reasonably in handling the claim. A strong defense is that they cured the alleged bad faith conduct within the sixty-day cure period. An experienced attorney can anticipate and counter these defenses.
Finding the Right Florida Bad Faith Insurance Attorney
Choosing the right attorney is paramount to the success of your bad faith claim. Look for an attorney who specializes in Florida insurance law and has a proven track record of success in handling bad faith cases. Ask potential attorneys about their experience, success rate, fee structure, and client testimonials. Resources like The Florida Bar Association and online legal directories can help you find qualified attorneys in your area.
Conclusion: Stand Up For Your Rights
Dealing with an insurance company after a loss can be stressful, but understanding your rights under Florida law is essential. If you suspect your insurance company is acting in bad faith, don’t hesitate to seek legal advice. An experienced Florida bad faith insurance attorney can evaluate your case, protect your interests, and help you obtain the compensation you deserve. By asserting your rights, you can ensure that insurance companies are held accountable for their promises and that you receive the financial support you need to rebuild your life after a loss. Protecting yourself and your property requires a proactive approach, including understanding your insurance policy and being prepared to take legal action if necessary.
