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Bad Faith Insurance Claims

In Florida, individuals can sue their insurer if they believe the insurer acted fraudulently or in "bad faith" when defending or settling a claim. The law allows individuals to sue their insurer if they believe their insurance company's actions resulted in additional damages and legal costs.

The cornerstone concepts of the bad faith cause of action are intended to promote the following:

• Economically protect the defendant insured from an excess judgment when the insurer has control of a the defense and settlement of a claim;
• Make available to injured persons specified dollar limits that are available as compensation;
• Encourage insurers to behave responsibly by making them liable for the financial damage that is caused by their breach of good faith duties.

However, in Florida bad faith claims are not limited to insured parties. Currently, injured third party plaintiffs can also sue an insurer if they believe the company acted in "bad faith." In Thompson v. Commercial Union Ins. Co. of New York, 250 So.2d 259, 260 (Fla. 1971) the Florida Supreme Court extended the right to bring a bad faith cause of action to third parties. The court declared that third party plaintiffs could directly sue an insurer "for recovery of the judgment in excess of the policy limits, based upon the alleged fraud or bad faith of the insurer in the conduct or handling of the suit.

This is based on the determination by Florida courts that our current bad faith laws allow "any person aggrieved" to sue an insurer for alleged improper conduct. These standards act as an incentive to sue, making insurance companies the target for excessive lawsuits seeking multi-million damage awards that far exceed the policy limits of the policyholder.

We must fight to defend these principles that keep insurance companies honest. Please participate in legislation that is intended to protect the consumer. You may need the protections one day.