Understanding Florida’s Bad Faith Insurance Laws: What to Do When an Insurer Acts Unfairly

Introduction

When someone files an insurance claim after an accident or injury, they expect their insurance company to handle the claim fairly and in good faith. However, insurers sometimes act in bad faith by delaying, undervaluing, or wrongfully denying valid claims. In Florida, policyholders have legal protections against these unfair practices.

This guide explains how bad faith insurance laws work in Florida, what constitutes bad faith, and what steps policyholders can take if their insurer fails to handle a claim properly.

What Is Insurance Bad Faith?

Insurance bad faith occurs when an insurance company fails to fulfill its legal obligation to fairly investigate, process, or pay a legitimate claim. Under Florida law, insurers must act in good faith and deal honestly with policyholders when evaluating claims.

Bad faith can occur in different ways, including:

• Unreasonable delays in processing or paying a claim
• Failure to properly investigate before denying coverage
• Offering a settlement far below the claim’s actual value
• Misrepresenting policy terms to avoid paying a claim
• Failing to communicate with the policyholder about the status of a claim

If an insurance company engages in bad faith practices, the policyholder may have grounds for legal action.

Florida’s Bad Faith Insurance Laws

Florida law provides two main avenues for policyholders to hold insurance companies accountable for bad faith actions:

First-Party Bad Faith Claims

A first-party bad faith claim arises when a policyholder’s own insurance company refuses to handle a claim fairly. This can happen with:

• Auto insurance claims
• Homeowners’ insurance claims
• Health or life insurance disputes

For example, if a driver files a valid uninsured motorist claim and the insurer refuses to pay without justification, this could be considered bad faith.

Third-Party Bad Faith Claims

A third-party bad faith claim occurs when an insurance company unreasonably refuses to settle a claim on behalf of its policyholder, exposing them to a lawsuit and potential financial liability beyond policy limits.

For example, if an insurer fails to settle an injury claim within the policy limits and the insured driver is later found liable for damages exceeding their coverage, the insurer may be held responsible for the excess judgment.

How to Prove Bad Faith in Florida

To succeed in a bad faith claim, a policyholder must prove that the insurance company:

1. Had an obligation to process or settle the claim in good faith.
2. Failed to investigate or respond appropriately to the claim.
3. Acted unfairly, dishonestly, or with reckless disregard for the policyholder’s rights.

Evidence that can support a bad faith claim includes:

• Documentation of delays or ignored communications
• Letters or emails showing unreasonable claim denials
• Records of unfair settlement offers that do not reflect the value of the claim
• Expert testimony from insurance professionals explaining why the insurer’s actions were improper

What Compensation Can You Recover in a Bad Faith Insurance Lawsuit?

If an insurer is found guilty of bad faith, the policyholder may be entitled to:

• The full value of the original claim
• Additional damages for financial losses caused by the delay or denial
• Legal fees and court costs
• Potential punitive damages in cases of extreme misconduct

Florida law allows for significant financial recovery in bad faith claims to discourage insurance companies from mistreating policyholders.

What to Do If You Suspect Bad Faith Insurance Practices

If you believe your insurance company is acting in bad faith, take the following steps to protect your rights:

1. Keep detailed records of all communications with the insurance company, including emails, letters, and phone calls.
2. Request a written explanation for any claim denial or delay.
3. Obtain an independent assessment of damages if the insurer undervalues your claim.
4. File a complaint with the Florida Department of Financial Services.
5. Consult an experienced attorney who can evaluate your case and take legal action if necessary.

How a Bad Faith Insurance Attorney Can Help

A bad faith insurance attorney can:

• Investigate the insurer’s handling of the claim
• Gather evidence to prove bad faith practices
• Negotiate a fair settlement with the insurance company
• File a lawsuit if the insurer refuses to settle fairly

At Bonderud Law, we help policyholders fight back against unfair insurance practices. If your claim has been wrongfully denied, undervalued, or delayed, contact us today for a free consultation.

Conclusion

Florida law protects policyholders from bad faith insurance practices, ensuring that insurers handle claims fairly and in good faith. When an insurance company wrongfully denies or delays a claim, policyholders have legal options to seek compensation.

If you are dealing with an uncooperative insurance company, taking action quickly can help you recover the damages you are owed. Consulting with an experienced attorney can provide the guidance needed to hold insurers accountable.