Insurance provides a safety net when someone is facing an unexpected adverse event. If you’re an insurer, you understand the importance of helping your policyholders in their time of need.
Therefore, it’s troubling when one of your policyholders has made a bad faith claim.
Why would a bad faith claim be made?
bad faith claims can arise if your policyholder believes you have not fulfilled your obligations per the terms of the policy agreement. Common reasons for initiating a claim include:
- Unreasonable denial of the claim
- Taking an excessive amount of time to process and settle a claim
- Failing to conduct a thorough investigation before denying a claim
- Misrepresentation of policy terms
There can be severe consequences for a successful bad faith claim, such as:
- Payment of the original claim
- A judgment that could exceed the policy’s limits
- Legal fees and punitive damages
These cumulative repercussions can significantly impact an insurer’s financial standing.
Florida recognizes both first-party and third-party bad faith claims. First-party claims involve an insurance company’s refusal to pay benefits directly to the policyholder. Third-party claims arise when an insurer fails to defend or settle a claim brought by someone else against the policyholder.
Before a policyholder can file a bad faith claim against you, they must provide you with a Civil Remedy of Notice. You then have a 60-day window to resolve the issue before the policyholder can take legal action.
To defend yourself against a bad faith claim, you will need to collect all the documentation related to the claim, including communications between you and the policyholder, investigative reports and policy documents. Discuss your case with someone who can provide invaluable assistance with navigating Florida’s complex legal system. They can help ensure your strong standing in the industry.
