Car Insurance Bad Faith Claims

Most people purchase car insurance to protect them and their loved ones in case of an accident. You pay your premiums in full and on time, expecting that when an accident occurs, your insurance has you covered. And that’s certainly what the insurance companies want you to think (otherwise why would you purchase their policies in the first place). Just look at some of the most popular insurance advertising slogans. "You're in good hands” with Allstate. “Like a good neighbor, State Farm is there.” “Liberty stands with you.”

Unfortunately, this isn’t always the way things work out. In a lot of cases, when it’s time for the insurance company to hold up its end of the bargain and compensate you for your losses, the company starts coming up with every excuse in the book as to why they don’t have to pay you (or if they do offer you some money, it’s way less than what you deserve). Regrettably, this happens more often than you might think. Insurance companies frequently deny or substantially undervalue legitimate claims for no reason other than to benefit the company’s bottom line.

When an insurance company fails to attempt in good faith to settle your claim when it could and should have done so had it acted fairly and honestly toward you, it may be guilty of acting in bad faith under Florida law. At Law Offices Cytryn & Velazquez, P.A., our attorneys have decades of experience fighting against insurance companies who have refused to pay our clients what they deserve after an accident. If you or a loved one has been involved in an accident anywhere in Florida and feel that the insurance company isn’t offering you a fair settlement, contact our office today.

What Actions Constitute Bad Faith by an Insurance Company

Florida Statute § 624.155 sets forth instances when an insurance company can be found to have acted in bad faith. A few examples of an insurance company acting in bad faith under this statute include:

  • Not attempting in good faith to settle claims when it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for its insured’s interests
  • Making material misrepresentations in an attempt to settle a claim on less favorable terms than those provided in the policy
  • Denying claims without first making a reasonable investigation of the claim
  • Failing to have standards for the proper investigation of claims
  • Failing to promptly respond to communications concerning the claim
  • Misrepresenting pertinent facts or policy provisions relating to the insurance coverage
  • Failing to affirm or deny full or partial coverage of claims

First Party vs. Third Party Bad Faith Claims

First Party Bad Faith Claims

For first party bad faith claims, the policyholder makes a claim against their own insurance company. At our office, we regularly represent our clients in first party bad faith claims concerning uninsured/underinsured motorist (UM) policy disputes. If you purchase your car insurance policy in Florida and get bodily injury coverage, your insurer must also give you an option to purchase uninsured/underinsured motorist coverage. It costs a little more to get UM coverage, but in Florida, it’s definitely worth the increased premium.

One of the main reasons you want to get UM coverage is because so many people are driving on the streets of Florida without any bodily injury coverage (some estimates say that approximately 25% of drivers in Florida are uninsured). In the majority of cases, people driving without insurance also cannot afford to pay you for your damages in the event of a collision. So, if you get into a crash with one of these uninsured or underinsured motorists, you may have no way of getting compensated no matter how serious your injuries unless you have a UM policy.

The way UM coverage is supposed to work is pretty simple. Generally, if the person who caused the accident is uninsured, or if the extent of your injuries exceeds their bodily injury insurance policy limits, then your own insurance company steps in and becomes obligated to compensate you for your injuries (up to the limits of your UM policy).

Of course, things are rarely as simple as they seem. Disputes arise in a number of situations, including when insurers deny that you are entitled to UM coverage under your policy, or when the insurer refuses to adequately value your claim. If the insurance company acted in bad faith in handling your claim, then the company may be liable not just for your damages resulting from the car accident, but also for additional damages relating to their bad faith handling of your claim (which may include payment of your attorney’s fees).

Third Party Bad Faith Claims

In Florida, third parties can also assert bad faith claims against an insurance company. Third party claims tend to be a little more complicated than first party claims, but here’s one scenario that could potentially give rise to a bad faith claim: You get into a car accident and are seriously injured when another person runs a stop sign and crashes into you. You make a claim against that person’s insurance policy for your damages. Let’s say your injuries are very severe your damages are clearly worth at least $1,000,000. If the person who caused the accident has, for example, a $50,000 bodily injury policy, you can only make a claim against that person’s policy up to the $50,000 bodily injury limits. If the insurer agrees to settle the claim for the $50,000 limits, then there’s no bad faith issue. But if the insurance company refuses to offer you the $50,000 policy limits and acts in bad faith in refusing to resolve the claim, you may later be able to assert a bad faith claim directly against the insurance company.

Very basically, what would happen is the following: you’d file a lawsuit against the person who caused the accident. You go to trial and the jury finds the other person liable for your injuries and awards you, say $1,000,000. Ordinarily, the insurance company would only be liable to pay you the $50,000 policy limits of its insured, despite the $1,000,000 verdict (and the person who caused the accident would personally be liable for the remaining $950,000, but of course, very few people actually have that much money). But, if the insurer did, in fact, previously act in bad faith in refusing to resolve your claim, then you may be able to file a lawsuit against the insurer for the amount of the excess verdict (i.e., the $950,000), plus your attorney’s fees and costs.

Since the jury has made a determination that the person who ran the stop sign was liable for the crash and that your damages resulting from the crash are $1,000,000, you’d be able to bring a third party bad faith lawsuit directly against the driver’s insurance company for your excess damages.

Third party bad faith claims can be brought under either Florida common law or statutory law (and you have to pick only one). The more common situation is for a statutory bad faith claim to be asserted under the provisions of Fla. Stat. § 624.155.

How to Start a Bad Faith Claim

Before filing a lawsuit for statutory bad faith against an insurance company, you have to give the Florida Department of Financial Services (DFS) and the insurance company sixty (60) days written notice of the alleged violations. Nowadays, notice is given to the DFS by filing a civil remedy notice online at https://apps.fldfs.com/CivilRemedy/. Then, the insurance company has an opportunity to resolve the alleged bad faith violation within that 60-day window.

If you and the insurance company settle the claim during this 60-day period, then that’s the end of the bad faith claim. If the insurance company fails to settle the claim within the 60 days, then you can file a lawsuit against them alleging bad faith.

You Cannot Rely on Insurance Companies to Act in Good Faith

At Law Offices Cytryn & Velazquez, P.A., we’ve handled countless cases where insurance companies have been less than forthcoming in their handling of claims.

In one case, our client, a 22-year-old college student, was a passenger asleep in his own car. His friend was driving the car on the Florida Turnpike. His friend lost control during a storm, crossed over the median, and crashed into a dump truck that was traveling in the opposite direction.

As a result of the crash, our client fell into a brief coma and sustained a moderate brain injury and remained in the hospital for a little more than two weeks. He additionally suffered multiple bone fractures and other injuries requiring surgery.

Our client’s friend who caused the crash had a $100,000 bodily injury policy. Initially, the insurance company denied coverage for the crash entirely based on a technicality. We refused to simply accept their word that there was no coverage, and we filed suit against our client’s friend for negligently operating the vehicle and causing the collision. The defendant made multiple offers to settle the case, all of which we advised our client to refuse. We took the case to trial and the jury awarded our client more than $1.8 million. Ultimately, instead of further litigating the bad faith issues against the insurance company, we settled the case post-verdict for $1.9 million, in a case where the insurance company initially didn’t even acknowledge that there was coverage.

Contact Our Office for a Free Consultation

If you or a loved one was injured in an accident anywhere in Florida, contact our office today. Our attorneys have decades of experience handling first and third party bad faith claims against insurance companies.

We handle cases throughout Florida, and we offer free consultations via phone at (954) 833-1440 or via video chat, so you don’t even need to leave your home to discuss your legal options.

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