Because Florida requires that actions for breach of contract and bad faith insurance claims be bifurcated, insurance companies routinely oppose discovery and presentation of evidence pertaining to an insurance carrier’s conduct in processing the claim. While an insured generally will contend that evidence of an inadequate investigation should be relevant in discovery and admissible at trial for purposes of impeachment, insurance carriers routinely claim that such evidence has no bearing on the issue of whether a breach of the insurance contract has occurred.
It is not surprising that insurance companies would prefer to keep this type of evidence out of the breach of contract phase of an insurance policy claim dispute. However, evidence of an investigation that fails to comply with industry standards can be relevant in a breach of contract case and expose the insurer to consequential damages that are caused by the breach of contract. Florida insurance law imposes obligations on insurers to act in specific ways, such as those that require carriers to create and implement procedures and policies for proper investigation of claims brought by policyholders. Florida insurance laws also prohibit insurance carriers from denying a policyholder’s claim without undertaking a reasonable investigation that includes all available facts and information.
Admittedly, violation of these requirements is most commonly associated with bad faith claims that cannot be pursued until after a policyholder is successful in a breach of contract action. Florida does not recognize a common law bad faith action for disputes arising out of insurance contracts in the context of first party insurance claims, but it does have a bad faith statute that applies to the conduct of insurance companies in processing a claim. The Florida Supreme Court has indicated in Grant v. State Farm Fire and Cas. Co., 638 So. 2d 936 (Fla. 1994) that statutory requirements are incorporated as terms into Florida insurance policies.
Florida breach of contract claims against insurance companies that are predicated on an insurer failing to comply with statutory duties imposed by Florida insurance laws must result in actual damages to provide a basis for a viable claim. See Lutz v. Protective Life Ins. Co., 951 So. 2d 884, 887 (Fla. 4th DCA 2007). However, this theory can often be used to obtain recovery for damages that might not be available in a routine breach of contract claim without the additional challenge and expense of filing a separate lawsuit for insurance bad faith after the successful breach of contract lawsuit.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].