What Is an Excess Judgment in Florida?

Bad faith is the idea that the insurance company purposefully doesn’t pay out a claim fairly. After a car accident, the insurance company should honor the insured’s policy and make a claim quickly and honestly. Bad faith is the term for the legal cause of action that accrues when the insurance policy doesn’t honor their contract. When there is bad faith, the aggrieved party has a legal claim against the insurance company.

In Florida, one critical part of any bad faith claim is excess judgment. An excess judgment must exist for the court to have jurisdiction to hear the bad faith insurance claim. Florida law specifies three situations where the court may have an excess judgment. In the Cawthorn v. Auto-Owners Insurance Company case, decided October 25, 2019, the U.S. Court of Appeals declined to state that an excess judgment exists in cases where the parties stipulate to a judgment exceeding insurance policy limits. Our Florida car accident attorneys explain excess judgments and the status of bad faith claims in light of the Cawthorn decision.


What Is an Excess Judgment in Florida?

An excess judgment in Florida is when the judgment in the case exceeds the policy limit. When the judgment in the case is for a higher amount than the insured party has as an insurance policy limit, that’s an excess judgment.

An excess judgment leaves the defendant personally liable to the victim for their damages. It also fails to fully compensate the victim for their injuries because individual defendants often lack the resources to pay a claim.

Bad Faith in Florida and the Excess Judgment Requirement

Bad faith occurs in a Florida accident claim when the following elements occur:

  • The insurer owes the insured a duty. In Florida, the insurer always has a duty to the insured.
  • The insurance company breaches its duty to the insured.
  • Because of the breach, an injury occurs.

An insurance company must settle a case where a reasonably prudent person would do so. Under Florida law, mere negligence is not enough to amount to bad faith. Bad faith requires a higher standard, as well as causation.

Excess Judgment Requirement for Controversy and Jurisdiction

Under Florida law, there must be an excess judgment for the court to have jurisdiction and a live case and controversy to hear a bad faith claim. Florida courts call this requirement the excess judgment rule. Without a real case and controversy, the court has no power to decide the case.

Florida courts give three situations where an excess judgment exists:

  • Cunningham agreement – A Cunningham agreement occurs when the insurance company and the injured third-party agree to allow a bad faith claim.[1] The injured third-party is not the insured party, but rather the victim who is injured in the case. The parties agree that if the bad faith claim results in a determination of no bad faith, the parties will settle their case for the amount of the policy limit. A Cunningham agreement allows the parties to settle the claim at policy limits while agreeing to litigate the issue of bad faith.
  • Coblentz agreement – A Coblentz agreement arises when the insurance company fails to defend its insured.[2] The insured party agrees to settle the lawsuit without the assistance of the insurance company defending the claim. The parties allow the victim to sue the insurance company on the theory of bad faith.
  • Excess carrier damages – Sometimes, an insured party has a second insurance policy, like an umbrella policy.[3] The second insurance company argues that they have damages because they have to pay out on their policy because of the bad faith of the primary insurer. Excess carrier damages can be a form of excess judgment under Florida law.

When one of these types of excess damages exists, the Florida courts have jurisdiction and controversy to hear a bad faith claim.

Cawthorn vs. Auto-Owners Insurance Company, 18-12067, United States Court of Appeals (October 25, 2019)

In the Cawthorn vs. Auto-Owners Insurance Company case, the court examined whether to classify settlements as excess judgments.[4] The court decided that a mutually agreed-on settled amount cannot be an excess judgment because it is a settlement of the parties; it is not a judgment decided on by a jury. Although the insured claimed that a settlement was the equivalent to a judgment, and the court agreed that the terms are often used interchangeably, the court said that the distinction between a settlement and a judgment are significant.

Legal Concept For Excess Judgment

The Cawthorn case involved a driver who fell asleep at the wheel. The passenger suffered injuries that left him paralyzed from the waist down. The victim brought a claim against the company that owned the vehicle. The vehicle owner had a $1 million liability policy and a $2 million umbrella policy. The victim alleged bad faith on the part of the insurance company in their handling of the claim. During litigation, the parties entered into a consent judgment.

The lower court issued summary judgment stating that the agreement was not an excess judgment. The insurance company, Auto-Owners, was not a party to the consent judgment. The court said that the consenting nature of the agreement and the absence of Auto-Owners as a party to the agreement made it distinguishable from a Cunningham agreement. The court noted that the three classifications of excess judgments are precise and defined. The Cawthorn court declined to extend the categories of excess judgments. The case provides clarification for litigants in the area of bad faith litigation.

Tampa Injury Attorneys for Insurance Bad Faith

Do you have questions about bad faith? Are you wondering how bad faith might impact your car accident case? Our Florida car accident lawyers can help. Bad faith is a complex issue in Florida. Call us today to talk about your case.


[1] Cunningham v. Standard Guar. Ins. Co., 630 So. 2d 179

[2] Navigating the “Good Faith” and “Reasonableness” Requirements of Coblentz. (n.d.). Retrieved 21 January 2020

[3] Should I purchase an umbrella liability policy? (n.d.). Retrieved 21 January 2020

[4] Cawthorn v. Auto-Owners Ins. Co., No. 18-12067

The information contained herein is intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

Click to Call