Insurance provides two principle benefits: protection against financial loss in the case of damage caused by a covered peril and a defense to a civil lawsuit. While many policyholders are aware that they might have the option to pursue a lawsuit when their insurance company fails to pay a legitimate claim, they might not know that they can seek compensation beyond the value of the claim if the insurer engages in bad faith practices. Further, bad faith practices are not limited to non-payment of claims but also include unreasonable and unjustifiable delays in adjusting and paying a claim.
A decision last year from the Middle District of Florida provides an example of how a delay in tendering policy limits can justify bad faith liability. In Kropilak et al. v. 21st Century Security Ins. Co., the insured was determined to be legally responsible for a car crash resulting in injury to a third party. The policy limit was only $10,000 per person with an aggregate limit of $20,000 per accident. The law enforcement accident report combined with the fact that the third party was airlifted to a hospital made it indisputable that the amount of the damages would far exceed the $10,000 per person policy limit. The insurance adjuster contacted the policyholder a couple days after the accident to inform him of this fact and to advise retaining an attorney. Nonetheless, the insurance company failed to contact the claimant to tender a settlement of policy limits for 37 days. The claimant ultimately declined the offer and obtained a judgment at trial in the amount of $173,097.
When the policyholder brought a bad faith action against the insurer, the carrier filed a Motion for Summary Judgment. The insurance company contended that it could not have acted in bad faith because it tendered an offer of policy limits before a demand by the claimant was made and prior to any lawsuit being filed. The appellate court denied the request for summary judgment and observed that a reasonable jury could conclude that the insurer acted in bad faith by not initiating settlement discussions given that liability was clear in an amount far in excess of policy limits. The court found that the adjuster was simply lackadaisical about endeavoring to resolve the claim.
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].