Insurance bad faith is a legal term used to describe an insurance company putting its own interests above those of the policy holders, or acting in a malicious or negligent manner. Under Florida law, policy holders have the legal right to recover damages when an insurance company acts in bad faith when settling a claim.
There are several different insurance policies for drivers, homeowners, business owners and other individuals who need to be protected from the liabilities that could cost them out-of-pocket expenses. Bad faith can occur with:
- Liability insurance — This type of insurance often applies to drivers and businesses. It pays for damages inflicted on other parties. For example, drivers in Florida are required to carry a minimum of $10,000 to pay for damages to another person’s property in a crash. Drivers must also carry at least $10,000 in personal injury protection per person injured and $20,000 per incident.
- Property insurance — This type of insurance often applies to homeowners and owners/operators of cars. It protects policy holders from damages accrued from property damage or loss of property. Property damage or loss of property can occur in car accidents, major weather events, fires, robberies and other catastrophes.
Duty of good faith owed to policy holders
When an insurance company issues a policy to a policy holder, it acts as a contract. The insurance company and the policy holder both have a duty to act in good faith.
Insurance companies have an obligation to:
- Provide adequate communication and put the needs of policy holders first.
- Pay out compensation within a timely manner.
- Pay compensation in full.
- Conduct thorough and unbiased investigations.
- Explain your policy and coverage in full detail.
- Explain the basis for claim denials within a timely manner.
- Provide a copy of your policy within three days (certified copies within 30 days).
Examples of insurance bad faith
When an insurance company fails to fulfill it’s obligation, it can end up creating losses for the policy holder. This is when an insurance company acts in bad faith or puts its own interest above the needs of its policy holders.
Here are examples of insurance bad faith:
- Not paying an injured person an agreed amount of compensation within a timely manner. Or, paying less than the agreed amount of compensation.
- Failing to make a decision on a claim within a timely manner or at all.
- Conducting a biased investigation, or no investigation at all.
- Denying or delaying a claim without giving a reason.
Contact a Sarasota lawyer to pursue an insurance bad faith claim
You may be able to make an additional claim that your insurance company acted in bad faith. Failure of an insurance company to act in good faith can result in a policy holder having to pay for attorney’s fees and other out-of-pocket costs.
There are two types of insurance bad faith claims. These include:
- First-party claims — When a policy holder sues his or her insurance provider. For example, a person involved in a hit-and-run crash may pursue compensation from his or her own insurance company, but the insurance company underpays or denies coverage.
- Third-party claims — When an insurance company fails to settle a third-party claim against one of its policy holders.
The Sarasota insurance dispute lawyers at Farrow & Pulice, P.A. know how difficult it is to deal with insurance companies. If you are in a dispute with your insurance company, let our experienced legal team sort it out for you.
We’ll leave no stone unturned when reviewing the details surrounding your claim and the actions your insurance company took to protect you from liability costs. We’ll also fight to help you recover all financial and non-economic losses accrued from your insurance dispute.
We serve clients in Sarasota and throughout southwestern Florida. Contact us online today for a free case evaluation.