Appraisal Award Determined Sufficient to Permit Bad Faith Claim to Move Forward

Many policyholders who have their home damaged by a natural disaster, fire or vandalism become frustrated when they submit a claim to their homeowners insurance carrier.  It might be reasonable to assume that an insurer will treat its policyholders fairly because this is the basis for paying premiums.  Unfortunately, insurance companies can increase their revenue by minimizing the services they deliver to customers.  The disparity between the reason policyholders pay premiums and the way insurance companies obtain the greatest profits results in a wide range of bad faith insurance company practices.  These practices often include denying, underpaying or delaying claims as well as other unethical or dishonest practices.

Although Florida law permits policyholders to pursue an insurance bad faith claim against insurance companies, these claims must be based on Florida Statutes Section 624.155 which imposes a bifurcation requirement.  Under this provision, an insured must first prevail in a breach of contract action before proceeding with a bad faith claim.  This bifurcation requirement increases the complexity of pursuing a bad faith claim against insurers in Florida.

Fortunately, Florida appellate courts have not required a trial verdict in a lawsuit alleging breach of contract to establish that the insured prevailed on this issue.  The Fourth District Court of Appeals in Cammarata v. State Farm Ins. Co. ruled that an outcome favorable to the insured in an appraisal can provide the basis for a bad faith claim.  In Cammarata, homeowners filed a claim for damage to their home caused by Hurricane Wilma.  The insurer denied the claim based on its determination that the amount of the loss did not exceed the policy deductible.  The insured demanded an appraisal which resulted in an award that exceeded the deductible but was less than the full amount the policyholders indicated was appropriate.  After the insurance company paid the insurance claim, the policyholders filed a bad faith lawsuit.

The insurance carrier sought summary judgment based on the contention that the bad faith action was not ripe for adjudication since there was no judicial determination of a breach of contract.  While the trial judge accepted this argument, the appellate court reversed.  The appellate court indicated that while there must be a determination regarding the insurer’s liability, the insured does not need to prevail in a judicial proceeding or arbitration.  The appellate court concluded that any favorable ruling regarding coverage and damages is sufficient to permit a bad faith claim, including a settlement.

This case makes it much easier for policyholders to deal with bad faith low-ball claims because the question of liability does not need to be tried to conclusion in court.  Insurance companies are much more likely to offer a reasonable settlement of claims since it is easier to pursue a bad faith claim.  If your insurance company refuses to pay for losses covered by your insurance policy, you might have a legal claim for financial compensation. An experienced homeowners insurance claims lawyer can help you counter such denials.   My law firm represents policyholders in claims disputes in Miami and throughout Florida.  The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations.  No Recovery, No Lawyer Fees.  Call 305-461-1095 or Toll Free 1-866-71-CLAIM.

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