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Bad Faith Insurance Claims in Florida

Wed Sep 16th, 2020 on     Bad Faith Insurance,    

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Insurers are fundamentally profit-motivated.  Though this is a truism that most policyholders accept and understand, it’s often forgotten when it comes time for the policyholder to make an insurance claim — after all, one would assume that the insurance provider would act with some semblance of “honor” and live up to their promises.

The grim reality is that many insurers will do anything and everything — even violating basic good faith conduct — to avoid having to pay out damages in accordance with the coverage sought.

Though insurers can naturally be expected to take a position that is in opposition to the policyholder (i.e., that they do not have to cover the claim due to interpreting the insurance policy differently), they also engage in potentially violative conduct: inadequately investigating the facts surrounding a claim, denying claims without a reasonable basis for doing so, delaying the processing of a claim unreasonably and undervaluing a claim to force an exhausted and vulnerable policyholder to simply resign themselves to the reduced payout.

Florida law does provide some protection to policyholders and others who find themselves subject to this type of misconduct — specifically, this type of insurance misconduct may give rise to a bad faith claim.

If you believe that an insurer has acted in bad faith, then it’s worth exploring your legal options.  Here at Ver Ploeg & Marino, P.A., we encourage you to contact our Miami insurance law firm to schedule a consultation with a member of our team.

For now, let’s take a brief look at some bad faith claim basics in Florida.

First-Party Bad Faith Claims

First-party bad faith actions generally involve claims made by the policyholder against the insurer for issues between the insurer and policyholder only.  For example, if a disability insurance policyholder submits a claim with their insurer, only to be unreasonably denied without a proper basis, then they would potentially have a first-party bad faith claim against their insurer.

Examples of misconduct leading to first-party bad faith claims include, but are not necessarily limited to the following:

  • Unreasonable denial
  • Unreasonable undervaluing of the claim
  • Unreasonable delays in claim processing and communication
  • Failure to notify the policyholder of data (factual information, records, etc.) that will be necessary to fully investigate and process the claim
  • Failure to provide an adequate rationale behind the denial or partial payment of an insurance claim
  • Intentionally stirring confusion to compel the policyholder into resigning themselves to an unfavorable result
  • And more

Bad faith claims can be rather diverse, so it can be difficult to “imagine” how it works from merely reading about the theoretical aspects.  Let’s clarify with a brief example.

Suppose that you are a homeowner’s insurance policyholder.  Your home is severely damaged in a flood, your life has been put on hold until you can figure out what to do.  You submit a claim with your insurer so that you can receive a payout and begin to move forward.

Your insurer doesn’t want to pay out the claim, naturally, and they take advantage of the fact that you are emotionally and financially vulnerable.  They unreasonably delay communications with you so that you are mentally exhausted and stressed, they do not give you sufficient information about what records to submit so that they can fully investigate the claim, and finally, they “devalue” your claim significantly — all in the hopes that you will, in your vulnerable state, simply accept their unreasonable offer and move on.

These facts, if well-presented, would likely give rise to an effective first-party bad faith claim.

Third-Party Bad Faith Claims

Third-party bad faith actions generally involve claims in which another individual or entity is in a dispute with you (or has some other claim), and the matter is being mishandled by your insurance provider — who is duty-bound under the policy to defend you and resolve the matter in your favor.

Examples of misconduct leading to third-party bad faith claims include, but are not necessarily limited to the following:

  • Failing to reasonable settle a claim when there was an opportunity to do so in the policyholder’s favor
  • Unreasonably denying a claim
  • Failing to fully investigate the claim
  • Failing to act promptly in communications with the third-party
  • Refusing to defend or indemnify the policyholder despite being legally bound to do so under the policy
  • And more

Suppose that you purchased Commercial General Liability (CGL) insurance, and one day, a customer at your retail store slips and falls injuring themselves.  They are suing for $500,000 in total.  As your CGL policy covers such injuries, you request that your insurer step in and defend you in the lawsuit.  Your insurer agrees that they are required to do so, and steps in.

They engage poorly in litigation, however, as there are times when they could have settled for an amount that was objectively reasonable ($100,000), but refused to do so, thus exposing you to additional risks, as well as time costs.  Under these circumstances, a third-party bad faith claim could potentially be brought against the insurance provider.

Contact VPM for Assistance

If you have had an insurance claim unreasonably denied, undervalued, or otherwise mishandled, then Florida law may entitle you to significant compensation pursuant to a bad-faith lawsuit against your insurance provider.  Litigating a bad faith claim isn’t as straightforward as it might seem, however — it’s important that you consult an experienced team of attorneys who can help you navigate the complexities of bad faith litigation.

Ver Ploeg & Marino, P.A. is a Miami insurance law firm with a focus on litigating challenging insurance disputes, including those that center around bad faith claims — whether first-party or third-party.  We are committed to working closely with our clients to help them secure the benefits they deserve.

If you’re ready to speak to a member of our team about the possibility of litigation, we encourage you to contact VPM to schedule an initial consultation at your earliest convenience.  We look forward to assisting you.

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