All Florida drivers must have car insurance. Drivers rely on Florida’s insurance system to provide fast and fair payments for people who are hurt when an accident occurs. Even though insurance exists so people can receive hassle-free payments after a car accident, the insurance companies don’t always honor the terms of their policies.
Insurance companies are supposed to treat people fairly, but they often try to deny good claims to save money and increase their profits. Understanding bad faith laws can help ensure you know how to proceed if you ever have to deal with an insurance company who is using questionable tactics. Here’s what to know about bad faith laws and car accident claims.
What Is Bad Faith?
When an insurance company doesn’t pay a claim that they’re contractually obligated to pay, they’re acting in bad faith. It means that they’re not doing their part to satisfy the terms of their contract. There are many ways that an insurance company might act in bad faith to try and get out of paying a valid claim:
- Failing to respond when a person makes a claim
- Not giving a reason when they deny a claim
- Asking for an unreasonable amount of paperwork to process a claim
- Making an offer that’s way too low just to see if the person making the claim will accept it
- Failing to pay a claim that they’re obligated to pay under the contract
- Saying things that aren’t true to mislead the person making the claim
- Ignoring a claim rather than accepting or denying it
- Trying to make a unilateral change to a policy
- Not putting enough effort into investigating a claim
The opposite of bad faith is good faith. When an insurance company takes their obligations seriously, and they pay claims honestly, and on time, they’re acting in good faith. When they try to skirt their responsibilities using dishonest tactics, they’re using bad faith.
First vs. Third-Party Bad Faith
Bad faith can occur whether you’re the insured person or you’re trying to make a claim against the other party’s insurance.
First Party Bad Faith
First-party bad faith occurs when you’re trying to make a claim on your own insurance. For example, you fail to signal, and you’re in a crash. You have only minor injuries, and no-fault insurance should cover your $3,000 in damages. However, your insurance refuses to pay, and they don’t even respond to your claim. This is an example of first-party bad faith.
Third Party Bad Faith
In a different scenario, another driver runs a stop sign. They hit you, and you have broken bones and permanent scarring. There’s no question about the cause or extent of your injuries.
You bring a claim to the other driver’s insurance for your damages. You have $100,000 in damages, and the driver’s insurance policy covers damages up to $250,000. Even though the insurance company should pay the entire amount, they offer to settle with you for $5,000. This is an example of third-party bad faith.
Florida Law Prohibits Bad Faith
Florida law 626.9541(3)(c)(i) prohibits insurance companies from acting in bad faith when they settle claims. Florida law 626.4591 prohibits bad faith not only when an insurer settles a claim but in all aspects of their business practices. The law says that it’s unfair and deceptive for an insurance company to fail to investigate a claim in good faith.
You Can Bring a Claim for Bad Faith
In addition to bringing a claim to recover for what the insurance company is supposed to pay you, you can also bring a separate action against the insurance company for acting in bad faith. Florida law 624.155 allows a separate civil action against an insurance company for bad faith.
You can recover any damages that you have because the insurance company didn’t pay like they were supposed to. For example, if you can’t pay your medical bills and they accrue interest, that counts as damages. You can also recover for the attorney fees that you incur because of bad faith.
Punitive damages are also a possibility for a victim of bad faith. You must prove that the insurance company acted willfully, wantonly or maliciously to deny a legitimate claim. You may also show that they acted with a reckless disregard for the beneficiary of the policy.
Florida’s Notice Requirements
If you’re going to bring a claim for bad faith, you must file an official notice of your intent. Both the State of Florida and the insurer must get a copy of the notice. You must submit it 60 days before you file your claim.
When an Insurance Company May Deny a Claim in Good Faith
Bad faith laws don’t mean that the insurance company must pay every claim that they receive. Insurance companies may review a claim and deny it if there’s an honest reason to believe that the insurance policy might not cover it. It’s only bad faith if there’s no reasonable basis to deny the claim.
For example, a driver has a preexisting problem with their knee. They’re in an auto accident, and they hurt only their shoulder. They submit claims for treatment for their knee. If the insurance company believes that the driver didn’t injure their knee in the car accident, they’re within their rights to deny the claim.
In another case, a driver gets hurt in a car accident. Their damages total $50,000. The driver has $25,000 in personal injury coverage. The insurance company is within their rights to pay only $25,000 in benefits. They have a good faith reason to believe that the insurance policy covers only $25,000.
Fighting Bad Faith
When you’re hurt in a car accident, it’s hard enough just to get back on your feet. When an insurance company adds bad faith to the mix, it can be exhausting and worrisome to try to fight the insurance company while you try to recover.
An experienced car accident attorney can help you take the necessary steps to fight back. They can help you take on the insurance company, file the proper notice, and bring a carefully prepared claim for recovery for your losses and damages.
Finding an Experienced Car Accident Attorney
At Jack Bernstein, Injury Attorneys we are dedicated to protecting your rights, especially in regard to insurance bad faith. We will use our expertise and resources to help you fight against bad faith and get the compensation you need to recover from your car accident.