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How Do You Know If Your Insurance Company Is Acting in Bad Faith?

If you were injured in an accident, you would expect your insurance company to be there to guard you against major economic losses. Unfortunately, that isn’t always the case. Some insurance companies will push boundaries to see if they’re able to get away with not having to investigate claims or pay money owed on a policy. 

“When an insurance company fails to pay out a claim for no reason except to save money, it is said to be acting in bad faith,” explains Gary Alan Friedman, a top attorney at Friedman & Friedman. Insurance bad faith can be a complicated situation, but the right information can help you make an informed decision on whether or not you’ll need to hire a bad faith insurance attorney. Here’s some information to help you get started.

What You Need to Know About Insurance Bad Faith

Insurance companies owe the insured an implied duty of acting in good faith. This means that they also owe a duty to provide coverage, investigate claims, uphold the terms of a policy, and pay valid claims covered under that policy—all in exchange for you paying a premium. It seems straightforward, but insurance companies may sometimes fail to act in a reasonable amount of time. If they take too long processing, investigating, and paying a claim, you may have the right to file a lawsuit. 

In the state of Florida, there are two different types of bad faith claims—first-party claims and third-party claims. First-party insurance bad faith claims are the result of an insurance company’s refusal to investigate or pay a claim for the insured. Third-party insurance bad faith claims arise as a result of the insurance company failing to defend a valid claim or refusing to pay a valid claim that has been brought against the insured by an injured third party. 

Under Florida law, first-party bad faith claims operate solely under statutory law, whereas third-party bad faith claims can operate under common law or statutory law. Common law is a judicial precedent that has been developed through decisions made in the court system, while statutory law is built upon the statutes put in place by lawmakers. If you are filing a third-party claim, you may only choose one law to file under and may not proceed under both. 

Here are some actions that would constitute a bad faith claim:

• Failing to properly investigate a claim in a timely manner.
• Failing to properly communicate with the insured in a timely manner.
• Failing to pay out a claim in a timely manner.
• Denying a claim without conducting a reasonable investigation.
• Failing to notify the insured of any information needed for the investigation and why it is necessary.
• Failing to offer an explanation of why a claim was denied. 

First-Party Bad Faith Claims

Under Florida statute 624.155(1), the insured has the ability to pursue a bad faith claim against their insurer. However, the insurer must have committed one 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.
• 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.

Third-Party Bad Faith Claims

Third-party bad faith claims arise when the insurer fails to properly or promptly defend a claim in remedy of a situation where the insured is exposed to an excess judgment. These claims must clearly be filed under common law or statutory law and cannot be filed under both. More commonly than not, a third-party claim will be filed under statutory law. 

Condition Precedent

When filing a statutory claim for insurance bad faith in both first and third-party claims, a condition precedent known as a Civil Remedy Notice must be filed first. Upon receiving a Civil Remedy Notice, the insurer has 60 days to cure the alleged bad faith violation before any further action is taken. If the insurance company is able to pay the amount owed, then there would be no bad faith claim. 

You Need an Experienced Miami Attorney on Your Side

It goes without saying that insurance companies typically have greater financial resources than the insured. When it comes to dealing with these massive companies, you need a law firm that understands how they operate—and knows how to win. The attorneys at Friedman & Friedman have won hundreds of millions of dollars in verdicts and settlements on behalf of our clients. We’ll channel our experience navigating bad faith insurance claims and work tirelessly to get you the compensation you deserve. If you suspect you may have a bad faith claim, contact us today for your free consultation. 

-Marvin

Tue Sep 3, 9:22am