The State of Florida, by its case law and statutory authority, recognizes bad faith remedies designed to protect insurance consumers from unfair practices on the part of insurance companies. The intent of Florida’s bad faith laws were designed to implement checks and balances between the wealthy and powerful insurance companies and the individuals carrying the insurance policies. Florida’s statutory and case law authority allows an insured person or someone who has been injured by an insured person to recover damages from an insurer for failing to settle a claim in good faith when the insurer could and should have done so.
Under Florida’s bad faith laws there are two types of bad faith claims; a first party bad faith claim and a third party bad faith claim.
A third party claim arises when an insurer (insurance company) fails to settle, in good faith, a third party’s claim against the insured within the applicable limits of the insurance policy. When an insurance company fails to tender a settlement within the policy limits, they expose the insured (typically the defendant who carries the insurance policy) to a judgment or damages in excess of the insurance policy limits.
A third party bad faith claim can be brought as a statutory claim under F.S. 624.155 or by and through Florida’s common law. Additionally, a third party bad faith claim can have two possible plaintiffs, in that a third party claim can be brought by the insured, having been liable for a judgment in excess of policy limits, or it can brought by the third party either directly or through an assignment of the insured’s rights. F.S. 624.155 provides that a bad faith action is available to any party, instilling the rights to third parties.
However, there are hurdles to climb when bringing a third party action when the third party is not the insured or when there has been no assignment of rights. Because F.S. 624.155 can only be brought when an insurance company fails to act honestly and fairly toward it’s insured, there is no duty owed by the insurance company to a third party plaintiff. Thus, the third party plaintiff must initially receive a judgment in excess of the policy limits against the insured as same establishes that the insurer breached the duty toward its insured.
Florida’s insurance bad faith laws are ever changing and subject to yearly legislative sessions that attempt to bring change and reform. One can only hope that the current state of checks and balances remains in place, providing the residents of Florida a voice and an opportunity to stand against the insurance industry. If you have a question regarding a personal injury or bad faith claim we invite you to contact Givens Givens Sparks for a free case evaluation.