Insurers have a number of obligations to policy holders pursuant to an insurance contract. An insurance company is required to investigate reported damage, determine whether such damage is covered and pay the proper value for the damaged property.
Insurance companies make money when premiums are collected from insureds but no claims are paid out. If nothing happens - no car accident, no hurricane or sinkhole damage to a home - the insured has no claim for compensation from his or her insurer. When an insured event does happen and causes damage, sometimes an insurance company may deny the insured's claim and again, no money is paid out.
Insurers are far from perfect; complaints range from insurers failing to conduct a proper investigation, refusing to acknowledge legitimate claims and delaying payment of valid claims. These failings are commonly known as 'insurance bad faith' since an insurer has a duty to act in good faith when carrying out its side of an insurance agreement. There may be a number of reasons behind the insurer's actions, but often they may be financially motivated.
A Tampa insurance attorney can help an insured fight a denied claim and fight back against an insurer's bad faith.
Florida Gives Insureds a Right of Action Against Bad Faith Insurers
The Florida Legislature recognized that not all insurance companies were acting as promised according to their own insurance policies, and became the first in the United States to create the right to bring a private lawsuit for an insurance company's violations of the Unfair Insurance Trade Practices Act (UITPA). Also known as Florida's Bad Faith Statute (Fla. Stat. 624.155), the law provides legal remedies to those who have been unlawfully denied insurance coverage.
An insurer can be held liable if it knowingly commits or performs with such frequency as to indicate a general business practice, one or more of the following acts:
- Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests;
- Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or
- Failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
The statute applies to a number of insurance contracts, including homeowners' policies, auto insurance contracts and health insurance contracts.
Consumers injured under this statute may recover consequential losses and damages stemming from the wrongful denial. These can include damages for emotional distress and attorney's fees. In extreme cases, where the insurer has exhibited willful or malicious conduct in denying claims, punitive damages can be awarded.
Why are Insurance Bad Faith Claims Important?
Insurance contracts contain an implied covenant of good faith and fair dealing. This means that the insurer and the consumer promise to act in good faith in exercising the terms of the agreement. If the consumer acts responsibly in paying premiums and adhering to the contract, the insurance company must do the same. When the consumer suffers a loss, the insurer cannot renegotiate the terms or breach the contract to suit its own interests.
Courts recognize that insurance companies hold unique relationships with the people they insure. When consumers have experienced an injury, the death of a family member, a fire, damage to their home or car accident, they have the right to expect that their insurer will uphold its side of the insurance agreement.
Insurance companies must play by the rules, at all times and with every insured. This is especially important given that Florida law requires property to be insured and many consumers have few choices in obtaining insurance. As such, consumers must have the ability to hold insurers accountable.
Florida Statutory Fequirements
Before seeking civil remedies for insurance bad faith claims, consumers must first give their insurer (and the Florida Department of Insurance) 60 days written notice of a violation. Such notices must include the specific language of the statute that the insurer allegedly violated, the facts and circumstances leading to the violation, as well as the names of any individuals involved in the violation. There are additional requirements related to discovery as well.
Because of the statutory and financial hurdles involved in insurance bad faith cases, it is important to contact an experienced attorney for advice. A Florida insurance litigation lawyer can discuss your experience with you and help determine whether a claim of bad faith is appropriate against your insurance company based on your situation.