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Policyholders — in Florida and throughout the country — often do not realize the extent of their legal rights accorded by their insurance coverage. If you have been sued by a third-party pursuant to a claim that is (potentially) covered by your policy, then Florida law may require that your insurer step in and defend you in the litigation at issue.
This is a very useful mechanism, of course, as it shields you from the substantial out-of-pocket costs associated with defending a complex legal dispute. When the insurer steps in to defend you a lawsuit, they take on the costs of such litigation.
Perhaps unsurprisingly, many insurers refuse to make good on their “duty to defend” the policyholder, and instead reject the duty altogether on several bases — for example, they may attempt to argue that the allegations do not involve a claim covered by the insured’s actual policy.
There’s no need to accept this outcome, however — we encourage you to get in touch with the team here at Ver Ploeg & Marino for assistance. We are an experienced Miami insurance law firm that will help you move forward and secure the defense that you are entitled to under Florida law.
What is the Duty to Defend, and When Does it Activate?
Insurers have a duty to defend an insured in litigation when the “alleged basis of the action against the insurer” falls within the policy’s coverage. It’s important to understand that the duty to defend does not require absolute certainty that the plaintiff’s claims are actually covered by the insurance policy.
In fact, the insurer may be required to defend you in a lawsuit even if later on the evidence reveals that the policy coverage does not apply to the claims at issue. Further, the insurer may be required to defend you in a lawsuit even if the plaintiff’s claims lack sufficient merit.
Ultimately, you can impose the duty to defend on your insurer so long as you can show that the allegations involve a covered — or potentially covered — claim. Many insurance policies are written rather ambiguously, or have complicated exceptions that may require further litigation to clarify. As such, it is unreasonable to expect policyholders to know “precisely” what is covered by their policy. The duty to defend is significantly broader than many policyholders realize.
Earlier Denial of Insurance Claims May Not Necessarily Lead to a Defense Denial
Notably, if you submitted an insurance claim and had it denied by your insurer, that is not necessarily a guarantee that the duty to defend won’t apply.
How does this work?
Suppose that you submit a liability insurance claim. The insurer denies coverage on the basis that the policy contains an exception to such claims. Though the insurer believes this to be true, it may not actually be the correct legal conclusion — the fact that they denied the claim does not eliminate the “potential” of such a claim, and so they may still be required to step in and defend you in litigation.
It’s worth noting that insurers often deny initial insurance claims strategically, in an attempt to put pressure on policyholders to either challenge their denial decision (through internal mechanisms, and eventually litigation), or to resign themselves to the decision. This can lead to many denied claims where the denial has no reasonable or legitimate basis. As such, not only could you possibly challenge the denial itself, but you should not use it as a yardstick for determining whether the duty to defend is applicable.
Negotiating a Reasonable Settlement
In Florida, insurers have a duty to initiate (when necessary) and resolve the litigation through a negotiated settlement if: a) the liability of the policyholder is clear, and b) if it is likely that the judgment would be in excess of the policy limits.
For example, suppose that you own a convenience store, and a customer slips-and-falls, thus injuring themselves. They bring a case against you, seeking $1.5 million in damages. Your liability insurance policy limit is $1 million. Your insurer steps in to defend you in litigation, but refuses to accept the plaintiff’s settlement offers, despite the fact that your liability is clear based on the facts of the case.
Under the above circumstances, you could ostensibly sue your insurer for bad faith misconduct in defending such litigation. This would not only potentially entitle you to compensatory damages (to cover your out-of-pocket losses), but could lead to bonus punitive damages in some cases.
Contact VPM Legal for Guidance on How to Proceed
If you have been sued by a third-party in a Florida liability case that you reasonably believe should be defended by your insurer — but the insurer has refused to step in and provide a defense — then it’s important that you contact the team here at Ver Ploeg & Marino for guidance on how to proceed.
Insurers often refuse to defend policyholders in lawsuits centering around claims that could potentially fall under their coverage. As such, it’s important to understand your legal rights and push (appropriately) so that your insurer holds up their end of the bargain.
Here at VPM, our Miami insurance attorneys have decades of experience helping policyholders secure their rights under their insurance policies, whether they have had their claims denied unfairly by the insurer, or have had the insurer refuse to provide a defense in litigation. Over the years, we have developed key insights into the many complicated issues underlying insurance disputes, and how best to go about resolving them.
If you’d like to speak to a qualified attorney at our Miami insurance law firm, we encourage you to get in touch with our team directly. Contact us to request a consultation.Share