What a Change in Florida’s Insurance Bad Faith Law Can Mean for You: Greater Exposure to Liability
Law Firm of Burman, Critton, Luttier and Coleman
Insurance companies are required by Florida statute and by common law to act in good faith when negotiating a claim on behalf of its insured. An example illustrates this concept. Assume you are involved in a car accident that was, at least in part, your fault. You have an insurance policy that covers bodily injuries sustained by the other driver up to $50,000 per claim (or $100,000 per accident). If the person you hit was injured and makes a claim for such injuries, your insurance company has a duty to investigate the claim, settle the claim if it is reasonable under the circumstances, keep you informed of the status of the claim and minimize your exposure to liability beyond the limits of your insurance policy. Thus, if the person you hit has a claim that equals or exceeds $50,000, your insurance company generally has a duty to try settle that claim for the policy limit of $50,000. If the insurance company does not and the case proceeds to trial, there is a possibility the person you hit will obtain a verdict against you for more than the $50,000 limit. Without the protection of insurance bad faith laws, you would be responsible for the difference. So if the verdict was $250,000, you would be responsible for the amount that exceeds your policy – $200,000. However, that is where Florida’s bad faith law comes into play. If the insurance company acted in bad faith in refusing to settle the claim, the insurance company can be held liable for the $200,000.
Simply put, insurance bad faith laws keep insurance companies honest because they provide consequences if your insurance company does not act in good faith in protecting your interests. At the same time, they can protect you against liability for the $200,000 excess in the example above. The governor and Florida legislature are proposing significant changes to Florida’s bad faith law that may give your insurance company little incentive to protect your interests and also puts a far greater burden on you, the insured, to supply information, paperwork, medical records and additional information. Nevertheless, the current bad faith laws are still in place and the attorneys at Burman, Critton, Luttier & Coleman have many years of experience handling such insurance claims and fighting for clients that are victims of insurance bad faith. Should you have questions regarding your rights, please do not hesitate to contact our office.