Insurance bad faith cause of action provide a valuable remedy for an insured whose insurance company fails to properly adjust and pay his or her claim. This blog provides an overview of some important information that an insured should know about insurance bad faith claims.
A distinction that policyholders should be aware of is the difference between first party and third party bad faith claims in Florida. A first party claim involves the insurance company of the named policyholder. When policyholders file claims with their own insurance company, the insurer has a responsibility to settle the claim within a reasonable time period for the reasonable value of the claim.
By contrast, a third party insurance claim involves a claim against someone else’s insurance coverage. For example, if you are involved in an auto accident where the other party is at-fault, the insurance company for the at-fault party is obligated to indemnify its insured up to the policy limits by paying your claim, if liability and damages exist. A third party insurance claim also involves a liability carrier’s duty to defend its insured against a lawsuit or claim. Bad faith handling of a third party claim can open up the insurance company to bad faith liability.
Despite the prominent role of insurance, there is no federal insurance bad faith law that would dictate what constitutes an insurance company’s duty of good faith and fair dealing toward its insured. The insurance industry wields so much financial influence that it has enormous ability to lobby Congress to prevent federal legislation that would protect policyholders from bad faith conduct.
The void in terms of federal legislation of insurance bad faith means that such claims are governed by state law. While every state has insurance bad faith laws, these laws differ from state to state. However, there are certain general principles that apply which include the general principle that bad faith refers to denying, underpaying or delaying policy benefits when a legitimate claim is filed under a valid policy. Generally, most states hold insurance companies to a fiduciary relationship with policyholders. This special trust relationship means that insurance companies have a legal duty to give the interests of policyholders as much consideration as they give their own interest.
Under Florida law, insurance companies owe a fiduciary relationship toward policyholders. This special relationship generally means that insurance companies are obligated to search a policy for a basis to cover a claim rather than scour the policy to find a justification for denying coverage. Insurance companies also have a legal obligation to make a timely determination regarding whether it will pay or deny a claim and to communicate this decision to the policyholder.
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].