Before a first-party bad faith claim may be brought against an insurer, Florida Statute §624.155 requires the insured to provide both the Florida Department of Financial Services ("Department") and the insurer a civil remedy notice. The statute further provides that this notice must be in written form, must be given at least 60 days before bringing suit, and has several other requirements relating to the substance of the notice. For example, the statute provides that for the notice to be proper it must be made on a form provided by the Department and must provide the specific facts involved in the violation, the policy language that applies to the case, the statutory provision(s) that the insurer allegedly violated, and the names of any individuals that are associated with the claim.
Once the insurer and the Department receive the civil remedy notice, the insurer is then given a 60-day window of opportunity to cure the alleged violation(s). If the insurer pays the damages or corrects the violation, then the insured is prevented from pursuing a bad faith action under this statute.
The requirement that the insured provide a proper civil remedy notice is strictly construed. Thus, a bad faith action under this statute will not be entertained if the insured either fails to file a written notice with the Department or fails to provide adequate notice to the insurer. With respect to the Department, the notice is intended to allow the Department to monitor and investigate the various aspects of these claims. Although the Department does not actually get involved in the settling of the claims, the notice allows the Department to monitor the insurance industry. Moreover, the Florida legislature enacted this statute with the claimed intention of reducing unnecessary bad faith litigation by providing insurance companies a safe harbor period of time in which to cure any alleged violation giving rise to the bad faith claim.
Although no specific cure amount is needed, the civil remedy notice must give sufficient information to adequately inform the insurer of the nature of the claim and the insured’s right to recover. If the facts of the claim indicate that benefits are owed, and that an insurer acting in good faith and in all fairness to the insured would pay the claim under the circumstances, then the insured may bring a bad faith lawsuit against the insured at the expiration of the 60-day window, assuming the insurer did not cure.
If the insurer is later found to have acted in bad faith, it will be liable for the insured’s attorney’s fees, court costs, and damages, and may even be subject to punitive damages under certain circumstances. Moreover, if the insured has been subjected to a judgment in excess of the policy limits, and the insurer had an opportunity to accept a settlement within the policy limits, and reasonably should have done so under the circumstances, then the insurer cannot simply cure the violation by offering the insured the policy limits. Because the insurer did not act in the best interest of the insured when it had the chance, the proper cure in these circumstances is for the insurer to pay the entire amount of the excess judgment.
Additionally, an insured will not be precluded from pursuing a bad faith action simply because the insurer has agreed to pay the damages. The statute imposes a clear mandate to either pay the damages or correct the situation. Thus, an agreement to pay is not the same as paying the claim and a bad faith suit will not be barred on these grounds. The civil remedy notice allows regulatory agencies the opportunity to detect consistent patterns of bad faith conduct. Insurance companies with patterns of improper conduct may be sanctioned by regulatory agencies.
Bad faith claims are an important tool in insurance litigation because they reduce an insurer’s incentive to deny claims simply because they are looking to increase their profit margins. Insurance contracts would be meaningless in the absence of repercussions for unfair and deceptive insurance practices. Despite the sanctions associated with bad faith suits, insurance companies all too often deny claims in bad faith. If you have been struggling with your insurance company to get your claim paid you should consult an experienced insurance claims attorney.
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].