Last week, our blog began discussing how even though people might understandably feel powerless when dealing with insurance companies, which have seemingly inexhaustible resources at their disposal, they should nevertheless derive comfort from the fact that they are extended considerable rights and protection under the law.
To illustrate, we started discussing how Florida has long recognized the right of insured persons to pursue bad faith lawsuits against insurance companies for failing to fulfill promises set forth in policies and how these policies are actually viewed in the eyes of the law.
The next logical step in this dialogue is to examine how Florida law permits an individual to hold an insurance company liable for damages through the civil courts.
Specifically, Florida law expressly declares that an individual may pursue an insurance bad faith lawsuit if they are damaged by their insurance company's failure to attempt to settle claims in good faith 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."
An insurance bad faith lawsuit brought under this statute, in turn, will generally be structured around what is known as either a first-party bad faith claim or a third-party bad faith claim.
In the former, the plaintiff is alleging that their insurance company refused to settle their own claim in good faith, meaning it underpaid a loss, delayed payment without sufficient justification or improperly denied coverage.
By way of example, consider a plaintiff who is seriously injured in an accident caused by an uninsured driver and is unable to arrive at a settlement with their own insurance company over the damages associated with the UM claim.
In a third-party bad faith claim, however, the plaintiff is alleging that the insurance company failed to settle the claim of a third party against them in good faith, such that they were exposed to liability in excess of their coverage.
As you can plainly see from the foregoing discussion, the issue of insurance bad faith is extremely complex. Indeed, we haven't even broached the wholly arcane subject of pursuing a common law remedy versus a statutory remedy.
Nevertheless, here's hoping that this information has proven empowering, and that people understand more than anything that they should strongly consider speaking with a skilled legal professional if they believe that their insurer has failed to live up to its obligations.