Florida Court Orders State Farm to Face Bad Faith Claim

A recent case in Florida is back after an appeals court ruled State Farm must face claims of bad faith after rejecting an offer to settle a car crash lawsuit that ultimately led to a $3 million verdict. The appeals court believed that State Farm could still have acted in bad faith in the way it handled the offer.

In this case, the trial court stated that State Farm Mutual Automobile Insurance Co. did not have the duty to enter into a consent judgment with the policyholder that was in excess of the policy limits. However, the judge ruled that the trial court should not have made a summary judgment, including the bad faith claims.

The premise here is founded in the 1980 Florida Supreme Court ruling, Boston Old Colony Insurance Co. v. Gutierrez, in which the court determined the insurance company “has the duty to use the same degree of care and diligence as a person of ordinary care and prudence should exercise in the management of its own business.”

Understanding bad faith

Under Chapter 624 of the Florida Insurance Code, Section 155, a person may bring a bad faith claim against an insurer for:

1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests;
2. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or
3. Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

In other words, bad faith is when the insurance company acts in an unfair way when processing or paying out a claim. For example, if an insurance company refuses to investigate a claim a policyholder makes, that could be considered bad faith as it is their duty to do so. Bad faith can also involve instances in which the insurer denies a claim without justification for doing so. Another example occurs when insurance companies simply offer an unreasonably low settlement offer that is nowhere near fair.

If you believe an insurance company acts in bad faith, it is your legal right to seek out justice for the losses you suffered as a result. To raise bad faith claims, you can make a statement to the insurance adjuster stating clearly that you believe the insurance company is “acting in bad faith.” In doing this, you may find they are more willing to listen to what you have to say.

However, the burden of proof is still on your shoulders in this situation. That means you must show that what the insurance company did was in some way bad faith. Here are a few more examples of when this may apply:

• The insurance company makes a hasty decision without fully investigating the incident, therefore not recognizing the extensiveness of the damage.
• The company refuses to settle when there is a clear indication of liability and damages.
• They deny a claim without providing a reasonable explanation.
• The company refuses to pay a reasonable sum, especially when evidence documents those losses.
• The insurance company fails to make a payment at all.

What happens if you raise a bad faith claim?

In a situation where you raise a bad faith claim like this, the insurance company is likely to act because of the potential consequences. If they are taken to court, and the court sides with you that their actions were, in fact, bad faith, the court can award not only the losses you should have received but additional consequences as well. Bad faith damages may be substantially greater than the losses they could have paid to begin with.

If an insurance company treats you badly, that does not automatically mean they are acting in bad faith. However, if they do not justify their actions nor do they provide you with fair compensation, they could be facing bad faith. This is a serious charge, and you need a trusted attorney to fight for you.

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The Best Lawyers in America® recognizes John H. (Jack) Hickey in three areas: Personal Injury Litigation – Plaintiffs, Medical Malpractice – Plaintiffs, and Admiralty and Maritime Law. He is double Board Certified by the Florida Bar (Civil Trial, and Admiralty and Maritime Law) and Board Certified (Civil Trial) by the National Board of Trial Advocacy (NBTA).

If you suffered injuries and losses and believe the insurance company is acting in bad faith, talk to a Miami personal injury attorney at Hickey Law Firm Accident and Injury Trial Lawyers. We have years of proven experience making insurance companies pay for the losses they cause. Learn how we can help you. Set up a free consultation at our Miami office. You don’t pay us unless we win. Let us answer your questions. Call our office or complete our contact form today.