In Florida, persons can sue an insurer if they believe the insurer acted in “bad faith” by refusing to settle a claim or when defending a claim. Among other things, the law allows for persons to sue their insurance company if they believe the insurance company’s actions resulted in additional damages or legal costs. Florida has had bad faith remedies available through the common law (case law decisions) and statute for a very long time. The purpose of these safeguards is to protect consumers from unfair practices of insurers. Obviously, insurers are in a superior position than consumers, and laws such as these are designed to help the insured-those in a much powerless position than the big insurance companies-transact business with insurance companies in a way that is fair and equitable. Some critics of these safeguards, however, have alleged that the current laws allow for causes of action by insureds or third parties that require the insurance company to defend against unfair, yet legal, tactics.
What statute governs insurance bad faith, and under what circumstances may civil suits be brought?
The statute that governs such actions is Florida Statute sec. 624.155. The statute discusses that a civil action may be brought when an insurer does not attempt in good faith to settle claims when, with regard to all the surrounding circumstances, it could have and should have done so. Suits may also be brought against insurers for making claims payments to insureds or beneficiaries without an accompanying statement stating the coverage under which payments are being made. With the exception of liability coverage, one may also have a cause of action for the insurance company’s failure to promptly settle claims when they should, under one portion of the insurance policy coverage, in order to influence settlements under other portions of the insurance policy coverage. (Other situations where suit may be brought under this statute: pursuant to Unfair Methods of Competition and Unfair or Deceptive Acts, subsections – Unfair claim settlement practices, illegal dealings in premiums, excess or reduced charges for insurance (Fla. Stat. sec. 626.9541(1)(i), (o), and (x)); for rejecting a policy for favoring an insurer or coercing a debtor to pay certain fines pursuant to Fla. Stat. sec. 626.9551; for refusing to issue a life insurance policy or a disability insurance policy because someone has a sickle-cell trait; or, if an insurance policy is cancelled, for refusing to return an unearned portion of the premium).
What are some of the requirements prior to bringing suit?
Prior to bringing suit, The Department of Financial Services and the insurer must be given 60 days written notice of the violation. If the Department of Financial Services returns the notice for lack of specificity, that 60 day time period does not run until the proper notice is filed. The notice is a form provided by the Department of Financial Services and must specifically state the insured’s name, the facts surrounding the incident, the specific language of the policy relevant to the claim (unless the party bringing the action is a third party claimant and hasn’t been provided the specific policy language by the insurance company), and a statement that the notice was given.
May I receive compensation pursuant to the common law and pursuant to this statute?
No. While this statute does not preempt any other remedy or cause of action from another statute or pursuant to the common law (case law), a person may obtain a judgment under either the common-law remedy of bad faith or the statutory remedy, but not both.
How much money can I receive in damages? Damages recoverable include “those damages which are a reasonably foreseeable result of a specified violation of this section by the authorized insurer and may include an award or judgment in an amount that exceeds the policy limits.” Fla. Stat. sec. 624.155.
What should I do if I think my insurance company has acted in bad faith under this statute?
Please note that this post is a brief overview of the statute, procedure, and requirements. If you think your insurance company has acted in bad faith, contact the attorneys at Saunders Law Group today to ensure your action is handled properly. Do not delay! We can evaluate your situation and determine if a cause of action exists against your insurance company and whether you may be entitled to any compensation as a result.