Has your insurance company denied your claim for damage to covered property?  Or is it pressuring you to settle for less than you deserve? There are several legal remedies available to you.  Here is a quick and dirty guide to bad faith insurance claims in the sunshine state.


Duties of Insurers

            Insurers have specific duties in their dealings with insured parties.  Some of these duties derive from statutes and apply to all insurers regardless of whether they are made explicit in an insurance policy, while others are policy-specific.  Statutory duties include:

1.        Duty to Advise:  An insurer has an affirmative duty to advise the insured of the opportunity to settle a claim, including potential settlements within and in excess of the insured’s policy limits.  The insurer is also obligated to advise the insured on the probable outcome of litigation concerning a claim and the possibility of an excess judgment against the insured.


2.       Duty to Investigate:  An insurer has a duty to investigate all claims.  If the insurer learns of damage to property that it insures, the insurer has a duty to investigate to determine its liability.


3.     Duty to Settle


·         An insurer has a duty to determine when settlement is reasonable.  An insurer has a duty to attempt to settle a case if a reasonably prudent person, faced with the prospect of paying the total recover, would do so.  Berges v. Infinity Ins. Co., 896 So. 2d 665 (Fla. 2004).

·         An insurer is required to initiate settlement negotiations when liability is clear and injuries or damage are so extensive that a judgment in excess of the policy limits is likely.

·         An insurer may take into account its own interest in determining whether or not to settle.  The insurer must, however, prioritize the insured’s interests as much as its own.  Springer v. Citizens Cas. Co. Of N.Y., 246 F.2d 123 (5th Cir. 1957).


4.       Implied Covenant to Perform Contract in Good Faith:  The American judiciary in the early 20th century began to recognize that there is an implied covenant in every contract that parties will perform its terms in good faith.  However, interpretations of this covenant vary from state to state.  Florida courts have taken the position that the implied covenant of good faith is not an independent term of a contract, but rather a prohibition on a party that performs in bad faith from benefiting from his conduct.  Hospital Corp. Of America v. Florida Med. Ctr., Inc., 710 So. 2d 573, 575 (Fla. 4th DCA 1988).

            So a breach of the implied covenant of good faith doesn’t appear as a distinct cause of action in Florida claims against insurance companies, but can be used as an affirmative defense (if your insurance company sues you for breach of contract after it acted in bad faith, you can raise this defense in your response).


What is Bad Faith?

        Bad faith refers to conduct by an insurance company that is calculated to delay or deny payment of legitimate claims to an insured.  It is usually characterized as worse than negligence but less than intentional wrongdoing.  Bad faith causes of action against insurance companies have a long history, but the precise meaning of the term varies from state to state.  Many states, including Florida, have enacted statutes that define specific practices that constitute “bad faith” and remedies available to the victims of these practices.

            When a party breaches a contract (including an insurance contract), the injured party may always sue for damages.  Damages for breach of contract are limited, however, to compensatory damages, while attorney’s fees and court costs are generally not recoverable.  Florida’s bad faith insurance statute permits an insured to recover compensatory damages as well as court costs and attorney’s fees for violations.  If he can prove that a violation was a part of a general business practice of the insurer and was willful or malicious, the insured may also recover punitive damages. 


Statutory Bad Faith Violations

      F.S. 624.155 sets forth forbidden practices for which an insured may sue:


1. Not attempting in good faith to settle claims when it could and should have done so, had it acted fairly and honestly toward its insured ;


2. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or


3. 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 coverage.


4. Violations of the Florida Unfair Insurance Trade Practices Act (F.S. 626.9541), which include:

A. Making a material misrepresentation to an insured to make a less favorable settlement than he is entitled to.

B. Committing or performing with such frequency as to indicate a general business practiceany of the following:

         C.  Failing to adopt and implement standards for the proper investigation of claims;

D.  Misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue;

E.  Failing to acknowledge and act promptly upon communications concerning claims;

F.  Denying claims without conducting reasonable investigations based upon available information;

G.   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.

Statutory Safe Harbor

            As a condition precedent to filing a claim for statutory bad faith, the insured must give the Florida Department of Insurance, as well as the insurer, sixty days written notice of the alleged violation.  The insurer then has the opportunity to cure the alleged violation.  If the insurer pays the alleged damages, during the “safe harbor” period, it is absolved of liability to the insured for the violation.  Talat Enterprises, Inc. v. Aetna Cas. And Surety Co., 753 So. 2d 1278 (Fla. 2000).


            As you can see, Florida law imposes quite a few duties on insurers.  In spite of these laws, some insurers routinely break the law in the name of profit.  If your insurance company has denied or delayed settling your claim or you have any legal question concerning your insurance policy, you should seek the assistance of an experienced attorney, such as John Clarke.  Call (305) 467-5560 today for a free 20 -minute consultation with no obligation to you!