Bad Faith Defense

What are bad faith claims?

There are two types of bad faith claims in Florida: first-party bad faith and third-party bad faith. First-party bad faith claims occur when an insurance company unreasonably denies, delays, or undervalues a claim made by its own policyholder. On the other hand, third-party bad faith claims occur when an insurance company unreasonably fails to defend, indemnify, or settle a claim within policy limits or to investigate a claim for a different party, such as when the insured buys liability insurance from the insurance company to protect against claims from another.

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What legal issues typically arise related to bad faith claims?

The following disputes are among the most common to bad faith claims:

• Setting Up a Bad Faith Claim: An insured may try to set up a bad faith claim by proposing a settlement offer that would be difficult for the insurer to comply with.  Aware of this difficulty, the claimant will wait for the insurer to fail to settle and then bring a bad faith claim.  In some circumstances the claimant may make a settlement offer containing an arbitrary acceptance deadline before the insurer even has the opportunity to complete a full investigation of the claim. When the insurer is reluctant to immediately accept the claimant’s demands, a bad faith claim is filed.
• Procedural Time Limits: Section 627.426, Florida Statutes, imposes certain time requirements that an insurer must comply with before denying coverage based on a coverage defense.

What are relevant laws related to bad faith claims in Florida?

Much of Florida law related to actions for insurer bad faith claims comes from common law, or caselaw, based on the previous judicial decisions of Florida courts. Florida courts can decide how to interpret an insurance policy, whether and when an insurance policy will be enforced and whether certain provisions of an insurance policy will be enforced. Importantly, courts can also impose damage awards that exceed the coverage limits allowed by the insurance policy.

Statutorily, Florida’s bad faith statute permits a civil action against an insurer if the insurer fails to settle a claim when, under all the circumstances, it could and should have settled.

What is required to prove a case of insurer bad faith in Florida?

The standard for evaluating bad faith claims is whether the insurer acted fairly and honestly toward its insured with due regard for the insured’s interests. A court will determine whether an insurer has acted in bad faith in handling claims under a totality of the circumstances standard.

A court will evaluate an insurer’s conduct based on:

• Whether the insurer was able to obtain a reservation of the right to deny coverage if a defense were provided;
• Efforts or measures taken by the insurer to resolve the coverage dispute promptly or in such a way as to limit any potential prejudice to the insureds;
• The substance of the coverage dispute or the weight of legal authority on the coverage issue;
• The insurer’s diligence and thoroughness in investigating the facts specifically pertinent to coverage; and
• Efforts made by the insurer to settle the liability claim in the face of the coverage dispute.

We are value-based attorneys at Jimerson Birr, which means we look at each action with our clients from the point of view of costs and benefits while reducing liability. Then, based on our client’s objectives, we chart a path forward to seek appropriate remedies, such as compensatory damages.

Have more questions about a bad faith-related situation?

Crucially, this overview of bad faith defense does not begin to cover all the laws implicated by this issue or the factors that may compel the application of such laws. Every case is unique, and the laws can produce different outcomes depending on the individual circumstances.

Jimerson Birr attorneys guide our clients to help make informed decisions while ensuring their rights are respected and protected. Our lawyers are highly trained and experienced in the nuances of the law, so they can accurately interpret statutes and case law and holistically prepare individuals or companies for their legal endeavors. Through this intense personal investment and advocacy, our lawyers will help resolve the issue’s complicated legal problems efficiently and effectively.

Having a Jimerson Birr attorney on your side means securing a team of seasoned, multi-dimensional, cross-functional legal professionals. Whether it is a transaction, an operational issue, a regulatory challenge, or a contested legal predicament that may require court intervention, we remain a tireless advocate every step of the way. Being a value-added law firm means putting the client at the forefront of everything we do. We use our experience to help our clients navigate even the most complex problems and come out the other side triumphant.

If you want to understand your case, the merits of your claim or defense, potential monetary awards, or the amount of exposure you face, you should speak with a qualified Jimerson Birr lawyer. Our experienced team of attorneys is here to help. Call Jimerson Birr at (904) 389-0050 or use the contact form to set up a consultation.