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Florida insurers have a duty to act in good faith

On Behalf of | Jun 21, 2023 | Insurance Law and Litigation

We purchase insurance with the promise that eligible claims will be paid out in an appropriate amount and in a timely manner per the terms of our policy. We trust our insurers will act in good faith when we submit a valid claim, but this does not always happen. When an insurer acts in bad faith, the policyholders deserve to be compensated for their losses.

Bad faith lawsuits

Under Florida statutory law, insurers who act in bad faith can be sued. Specifically, any person can sue an insurer if they suffer financial losses because the insurer acted in bad faith when refusing to settle a claim that could and should have been settled.

The insured or a third party who suffered harm due to the insurer’s bad faith is permitted to sue under this statute. However, the third party’s claim would be included in the insured’s claim rather than a stand-alone claim.

Examples of bad faith

Florida’s Unfair Insurance Trade Practices Act lists actions that might be deemed insurer bad faith. For example, insurers cannot:

  • Make material representations with the intention of procuring a less favorable settlement
  • Deny claims without performing an investigation
  • Refuse to promptly communicate with the policyholder or third party
  • Refuse to explain in writing why a claim was denied, or
  • Refuse to explain in writing why they are offering a compromise settlement

These are only some examples of insurer bad faith under Florida statute. There are also specific bad faith acts that might apply to specific types of policies, such as homeowners’ insurance or auto insurance.

If you believe you have been the victim of an act of insurer bad faith, you could bring the matter to your insurer to see if you can resolve it together. If that is not possible a lawsuit might be the only way to catch the insurer’s attention and compel them to comply with their duties under the law.