What is Bad Faith?
Bad faith is an intentional dishonest or unfair act which occurs by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the intention or means to fulfill it, or violating basic standards of honesty in dealing with others.
Florida Statute 624.155
Under Florida State Statute 624.155, “bad faith is when the insurer does 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 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 except as to liability coverages, 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.”
What is implied covenant of good faith and fair dealing?
Most states recognize what is called “implied covenant of good faith and fair dealing” which is breached by acts of bad faith, for which a lawsuit may be brought (filed) for the breach (just as one might sue for breach of contract). The question of bad faith may be raised as a defense to a suit on a contract.
Bad Faith and Insurance
In order to understand bad faith, you must understand insurance.
Insurance is a contract between you (the insured) and the insurance company (the insurer). If you have insurance you more than likely paid a premium for it.
Two typical types of insurance are property insurance, also known as homeowners insurance, and liability insurance found on automobile insurance. The contract is usually called a policy and you receive a copy of the policy after you execute the contract and pay the premium.
Elements of Bad Faith Insurance in Florida
So what constitutes a bad faith claim on the part of an insurer?
- Altering an application without the knowledge of the person filing the claim and trying to get them to pay out
- Denying claims without investigation
- Misrepresentations of facts for the purpose of offering a lower settlement
- Not investigating claims in a timely matter
- Failure to communicate in a timely manner with the claimant
- Not notifying the claimant of necessary additional information for claim
If an insurer tries to do any of these bad faith practices, under Florida law you can file a bad faith claim.
Bad Faith in Property Insurance
For example, most homeowner’s policies cover you for the following:
Dwelling coverage. Pays to repair or rebuild your home – including electrical wiring, plumbing, and heating and air conditioning – if damaged by a covered cause of loss. It’s important to buy enough dwelling coverage to cover the cost to rebuild.
Other structures coverage. Pays for damages to detached structures like garages, sheds, and fences on your property.
Personal property coverage. Reimburses you for the personal items in your home that may be damaged or destroyed by a covered cause of loss, which could include your furniture, clothes, jewelry, sporting goods, and electronics.
Loss of use coverage. Pays your additional housing and living expenses if you must move out of your home temporarily while it’s being restored.
Liability Insurance. Helps protect your assets and cover your defense costs in the event of a lawsuit because you or your family members are responsible for causing injuries or damage to other people or their property.
Bad Faith in Automobile Insurance
For example, most automobile policies cover you for the following:
Liability coverage pays damages due to bodily injury and property damages to others for which you are responsible. If you’re sued, it also pays your defense and court costs. Medical expenses, pain and suffering, and lost wages are some examples of what Liability Bodily Injury may cover.
Property damage liability insurance pays for any damage you cause to the property of others, such as damage to another vehicle, fence, or light pole caused by a collision.
Uninsured motorist coverage protects you directly. This coverage pays if you are injured by a hit-and-run driver or a driver who does not have auto liability insurance. This coverage, in essence, takes the place of the liability insurance that the other driver should have purchased but did not. Underinsured motorist coverage applies when the other driver is at fault and whose limits of liability are lower than the damages you sustained. Your underinsured motorist coverage will pay you an additional amount up to your policy limits.
Personal injury protection (PIP) coverage will pay you, your relative, or any other person riding in your car a minimum amount per person for injury regardless of fault. The level of benefits varies widely among states. Florida PIP laws have changed and are complicated. Coverage typically includes medical expenses, rehabilitation expenses, work loss benefits (lost wages), funeral expenses.
Medical payment coverage (MPC) pays for the medical and funeral expenses for you or others injured or killed in an accident while riding in or driving your auto. This coverage also often extends to insureds that are struck by a vehicle while acting as a pedestrian. Covered expenses include hospital, surgical, chiropractor, dental, and funeral expenses. This might duplicate benefits provided by your health insurer.
Rental reimbursement coverage or transportation expenses pay for a rental car if your vehicle is damaged by a covered loss. This coverage is usually purchased with a daily and total maximum. For example, $20 per day up to a total of $600.
Towing or Emergency Road Service coverage pays the cost of towing your car to a repair shop.
How to File a Florida Bad Faith Claim
Most insurance companies have a legal team to fight against any bad faith claims. Therefore you need a team of your own who has the knowledge and experience to help you.
These insurance companies will try to fight the claims by turning the fault on you saying you filed the claim negligently. That means you need to be very careful when following your claim and follow all protocols. Additionally, you should keep thorough records of every step along the way and make sure all communication is done through writing so you have proof.
Before submitting your claim or reaching out to your insurance company speak to a lawyer to ensure you are following protocol and have all the important documentation.
Call Carey Leisure & Neal for Legal Services in Clearwater, FL
Bad faith is extremely complex and you need an experienced Board Certified lawyer to represent you in a bad faith claim. If you think that your insurance company has committed “bad faith” it is always best to consult or hire an experienced Board Certified bad faith lawyer to protect your rights.
Contact us at (727) 799-3900 for a free no-obligation consultation and case evaluation.