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Is Your Insurer Acting in Bad Faith?

Tue Aug 31st, 2021 on     Bad Faith Insurance,    

Insurance policies exist to provide policyholders protection should they suffer some sort of loss. They serve to bring peace of mind and security to those that purchase them and are typically a worthy investment. However, situations sometimes occur wherein the insurance company fails to settle a valid claim, denies coverage altogether, or fails to timely investigate a claim. When this occurs, the policyholder is left with a bad faith insurance claim which may cause them significant damages. 

Florida’s Bad Faith Statute

Florida has enacted a statute known as the Bad Faith Statute which holds that a policyholder may have a legal claim against an insurer when they do not 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 towards its insured.” Unfortunately, many insureds are not aware of this statute or the requirements it imposes on the insurance company. In turn, many insurance companies anticipate that the insured will not be aware of this good faith requirement and do not comply with the statute. When this occurs, a Miami bad faith insurance attorney is able to use the statute to hold the insurance company accountable for its actions. 

Our Miami Bad Faith Insurance Attorney Explains the Different Types of Bad Faith Insurance Claims in Florida

There are two types of bad faith insurance claims in Florida, first party and third party. Following is an explanation of the two and how they differ.

First-Party Bad Faith Insurance Claims

A first-party bad faith insurance claim occurs when a policyholder makes a claim under their own policy with no other party involved. First-party insurance claims can involve various types of insurance from health insurance to homeowner’s policies. An example would be when a person or entity’s home or office is flooded. In a case like this, they would have a first-party claim with their insurance company. Should the insurance company fail to comply with the terms of the policy and/or governing law, the claimant will then have a first-party bad faith insurance claim.  

Third-Party Bad Faith Insurance Claims

Third-party bad faith insurance claims occur when a person or entity is sued by a third party and the insurance company is required to defend them in that action. These claims deal strictly with liability. A prime example is when a person, through no fault of their own, is involved in an automobile accident. They are then able to make a claim for coverage with the insurance carrier for the driver that was at fault in the accident, or they may sue the driver directly. In either case, the insurance company is required to pay up to the amount listed as their limit in the insurance policy. When an insurance company fails to comply with its obligations in a third-party bad faith insurance claim, it may subsequently be held liable for all damages regardless of the policy limits. 

Examples of Bad Faith Insurance Claims

Bad faith insurance claims vary from case to case, yet many share some, if not all, of the following elements. 

  • Failure to Act & Unnecessary Delays: The insurance company is obligated to act in a timely manner and conduct a thorough investigation when a claim is made. By not acting at all, or by employing unnecessary delay tactics, an insurance company fails to act in good faith. This includes a needless delay in making a payment under the terms of the insurance policy.
  • Inaccurate Representation or Interpretation: One tactic insurance companies employ to avoid paying a legitimate claim is by inaccurately representing or interpreting the terms of an insurance policy. Insurance policies contain significant “legalese” and may be difficult for someone not well-versed in the industry to understand. To prevent this from happening, policyholders are smart to employ the services of a Miami bad faith insurance attorney.
  • Unexplained Denial: When an insurance company denies a claim, they are required to explain in writing to the insured why their claim has been denied. Failure to do so can provide a policyholder with legal recourse. 
  • Failure to Communicate or Comply with Documentation Requests: By ignoring a claimant’s request for documentation or other attempts to communicate, an insurance company exposes itself to liability as this is a breach of the statutory requirement to act in “good faith” and fairness towards the insured. 

Recognizing a Bad Faith Insurance Claim

Not all denials by insurance companies are made in bad faith. The claimant may genuinely have made a claim for damages that are excluded. Due to the confusing language in most insurance policies, it is a good idea to seek the advice of a Miami bad faith insurance attorney to determine whether or not a bad faith insurance claim actually exists.

Damages in a Bad Faith Insurance Claim

When an insured is successful in their cause of action claim against an insurance company, they may be able to recover the following damages:

    • Reimbursement for total damages incurred
    • Accrued interest
    • Claimant’s attorney’s fees
    • Punitive damages, which are limited to a maximum of three times the compensatory damages or $500,000 (whichever is greater)
    • Compensatory damages, which are those are that reasonably foreseeable and may be for an amount that exceeds the policy limits

Speak with an Experienced Miami Bad Faith Insurance Attorney

Having an insurance claim denied in bad faith can be a traumatizing experience. Knowing that you have preeminent legal counsel on your side not only brings peace of mind but can also mean the difference between failing in court and total recovery for all losses. At Ver Ploeg & Marino, our lawyers are premier counsel for corporate and individual policyholders in large and complex insurance recovery matters. Contact our office today to schedule a consultation with a Miami bad faith insurance attorney at our firm.

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