What a policyholder expects is for their insurance provider to uphold their promise of prompt and fair response to claims. However, this is not always the case. There are instances where insurance companies break the rules when it comes to settling legitimate insurance claims. When such happens, the insurance company may be acting in bad faith.
There are different ways an insurer can act in bad faith but the complexity of your case will depend on the type of bad faith you are dealing with.
What Constitutes a Florida Bad Faith Claim?
If you believe your insurance company is acting in bad faith, then you are obliged to reach out to a Florida personal injury attorney. The cause of action that policyholders must follow if they suspect their insurer is acting in bad faith is outlined in Florida Statute § 624.155.
In a form of statutory action against their insurer, aggrieved policyholders are expected to file a civil remedy notice. The insurer is expected to respond to this civil remedy notice in a 60-day period. If within this period the insurer doesn’t take appropriate action, the aggrieved party or their Florida personal injury attorney may then submit a bad faith claim.
The Two Types of Bad Faith Claims in Florida
There are two ways by which an insurance bad faith can be addressed, it can either be a first-party or third-party claim.
First-party insurance bad faith describes an insurer who refuses to properly investigate a claim or denies it completely.
Third-party insurance bad faith involves an insurer who fails to defend, indemnify or settle a claim as per the policy limits. This term can also be used to describe an insurer who refuses to properly investigate a third-party claim.
First-party bad faith
First-Party insurance covers the insured for damage, injury or loss they sustain to their person or property. Some of the examples of first-party insurance policies include health insurance, fire insurance, medical coverage etc.
Therefore, first-party bad faith actions describe a scenario where an insurer fails to settle claims in good faith despite the insurer being able to and should have done so if they had acted fairly and honestly regarding the interest of the insured. Some of the examples of first-party bad faith actions include delaying the payment of claims, unreasonably denying claims etc.
Third-Party Bad Faith
Third-party insurance is a form of insurance that covers the liability of the insured when he/she is sued by another individual or party for damage, loss, or injury caused by the actions or inactions of the insured. In many cases, third-party insurance presents a contractual agreement where the insurer is required to defend the insured during litigation. This would involve finding and paying an attorney to represent the insured. Examples of this form of insurance include; professional liability insurance, commercial liability insurance etc.
Examples of third-party insurance bad faith include; material misrepresentation at settling claims, denial of legitimate claims, failure to act promptly when notified of claims etc.
It is not uncommon for third-party claims to be difficult to litigate due to an extra party involvement. It is important to understand the type of claim with the help of a legal advocate.