If you have ever struggled to get your insurance company to cover a claim, you might have learned the painful lesson that insurance carriers are exceptionally good at delaying, denying and underpaying claims. Many homeowner’s insurance policyholders receive claim denials that are essentially pro forma rejections. These denials are not supported by the facts or a reasonable interpretation of the terms of the policy. When insurance companies fail to exercise good faith in performing duties owed to an insured, the carrier might be liable for extra-contractual damages for violation of its obligation to deal with policyholders in good faith. Because my law firm represents homeowners who are being given the runaround by their insurance company, I have provided some facts every insured homeowner in Florida needs to know about insurance bad faith claims.
What does the term "insurance bad faith” refer to under Florida insurance law?
An insurance company enters into a contract with its insured when it underwrites an insurance policy with the policyholder. The insurance company has a legal duty to act reasonably and fairly when exercising its duties and responsibilities under the policy. If your insurance company wrongfully denies your claim, engages in tactics designed to delay payment or lowballs your claim, the insurance company may be acting in bad faith. A successful claim for insurance bad faith can include an award for extra-contractual damages like mental anguish and attorney fees.
What types of actions constitute bad faith practices?
There are hundreds of ways that an insurance company can engage in bad faith conduct, but some common examples include:
- Unreasonable attempts to get a policyholder to accept underpayment of a claim
- Refusing to conduct a thorough investigation of a claim in timely fashion
- Unreasonable delay in paying a legitimate claim
- Offering a clearly undervalued amount on a claim
- Interpreting the contract in an unreasonable way to deny or underpay a claim
- Threatening punitive action for making a claim, such as threating to file an arson complaint in response to a fire damage claim
- Using tactics of intimidation to discourage policyholders from filing a claim
- Unreasonable denial of a claim or termination of a claim when benefits should have been paid
These are merely a handful of examples of bad faith practices commonly used by insurance companies to avoid fulfilling the company’s contractual obligations. Because insurance bad faith practices are common and take many forms, you should speak with an experienced insurance bad faith attorney if you think your insurance company is treating your unfairly.
Why do insurance companies engage in bad faith practices?
Insurance companies engage in these practices because their profits are based on paying out less in claims than they receive in premiums. Insurance companies recognize they have an enormous advantage in bargaining power when dealing with policyholders. While the insurance company can afford to drag out a claim with unjustified denials and stall tactics, a homeowner whose roof is missing cannot afford to wait indefinitely to get his or her roof repaired. An insurance company knows that making the process of obtaining the full value of a claim difficult will result in many of their customers simply foregoing their claim or accepting less than the amount they need to repair their home.
How can I tell if I have a bad faith insurance claim?
Insurance policies are long, confusing and filled with exceptions and loopholes. There is usually language that an insurance company can reference that may appear to justify denial of your claim. However, there may be other language in the policy that indicates coverage of a peril or form of loss. When insurance contracts are ambiguous, they are construed against the insurance company. If your insurance company denies your claim, you need to carefully review your policy and the language referenced in denying your claim.
As a former claims adjuster, I am happy to review your situation and advise you regarding whether you have a bad faith claim. My insurance claims law firm handles disputed claims 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.