When policyholders are faced with a catastrophic event like a hurricane or fire that damages their home or business, they typically are both emotionally and financially vulnerable. Insurance companies recognize this potential weakness and frequently attempt to exploit it. Insurance companies might bury an insured in paperwork to support their claim denial, or the insurer might offer a settlement that is far below the actual loss suffered by a policyholder. These bad faith strategies are part of a “war of attrition” that insurance companies use to wear an insured down and to minimize the amount paid on a claim. Policyholders can protect their interest by keeping in mind three important facts about Florida insurance bad faith law.
An insured cannot pursue a claim for insurance bad faith until there has been a determination that the insurance company breached the terms of the insurance policy.
In Florida, the insured must have established (1) a breach of contract by the insurance company, and (2) the value of the insured’s loss before pursuing a first-party bad faith claim. Since these are elements of the bad faith action, the insured must allege these facts when filing a complaint to initiate a lawsuit for insurance bad faith. When an insured does not obtain a prior finding on liability of the insurer and value of the loss, some Florida appellate courts rule that the action must be dismissed without prejudice while others abate (suspend) the proceedings until there is a decision on liability and damages. Florida courts have reasoned that permitting both a breach of contract and bad faith claim to move forward simultaneously would unfairly prejudice insurance companies. The bad faith evidence could color the jury’s judgment about whether the contract provides coverage and the value of the loss. Appellate courts in our state have further reasoned that bifurcation is needed because the insured generally is not entitled to discovery of the insurer’s claims practices, the claims file, or business policies until the issue of coverage has been decided.
When an insurance carrier engages in bad faith, the insured might be entitled to “extra-contractual” damages.
While Florida lawmakers have narrowed the scope of bad faith insurance lawsuits for certain types of claims in recent years, bad faith lawsuits against insurance companies can seek damages that go beyond the value of the insured’s loss. An insured can pursue a first-party bad faith claim seeking “consequential damages.” This includes monetary losses that are “reasonably foreseeable” given the insurer’s actions, which can exceed policy limits. This may include the full value of the claim, emotional distress, attorney fees, court costs, and interest on unpaid benefits.
Florida law imposes a monetary limit on punitive damages in insurance bad faith lawsuits.
Punitive damages also may be awarded in both common law and statutory cases depending on the facts and circumstances. Generally, punitive damages may be awarded under Fla. Stat. Section 624.155 when the misconduct is so frequent as to reflect a general business practice. The insurer’s conduct must be willful, wanton, and malicious, or demonstrate a conscious disregard for the rights of the policyholder. Fla. Stat. Section 768.73, places a cap on punitive damages based on certain factors. Proceedings to determine punitive damages are bifurcated in Florida. This means that a prior determination must be made regarding liability of the insurer and the amount of damages.
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].
