In a previous blog I addressed the two different types of bad faith actions available in a Florida Bad Faith action (first and third party bad faith actions). This blog will discuss, in general, the different types of remedies available in each action.
A third party bad faith action has two different remedies available; common law and statutory. The common law remedy establishes that an insurer (insurance company) has an obligation to defend the insured in good faith and with due regard to the interests of the insured. This obligation is necessary given the great exposure an insured faces when there is a low policy limit which leaves the insured responsible for the portion of the adverse judgment should the judgment exceed the policy limit.
The insurer’s common law imposes the following duties: 1.) advising the insured of settlement opportunities; 2) advising the insured of the possible outcome of the litigation; 3) warning the insured of the possibility of an excess judgment 4) advising the insured of steps that might avoid an excess judgment; 5) investigation the facts of the claim; 6) fairly considering a settlement offer that is not unreasonable under the facts; and 7) settling the third party claim where a reasonably prudent person, faced with the prospect of paying the total recover, would do so. See Hartford Accident & Indemnity Co. v. Mathis, 511 So.2d 601 (Fla. 4th DCA 1987). In the event an insurer fails to fulfill the above duties, the bad faith common law requires that the insurance company pay the entire judgment against its insured.
The second available remedy in a third party bad faith action is found under Florida Statute 624.155 and is also available in a first party bad faith action. First party bad faith actions do not have a common law remedy because the exposure of the insured being responsible for a judgment beyond the policy limit is not an issue.
Florida Statute 624.155 creates a statutory civil remedy for any person damaged by certain violations of the insurer, as well as any person damaged by certain actions of the insurer.
In short when moving forward with a Florida personal injury law suit or insurance dispute, it is important to analyze each claim for a possible bad faith action. A bad faith action may be a second law suit to the underlying law suit and it is important that all additional claims are not waived or lost.