Bad Faith Insurance Claims

Despite the advertising jingle that one insurer has about being a “good neighbor,” the ultimate reality is this: insurance companies are businesses. Their object is to maximize their profits, not to take care of injured claimants.

The more they pay for your claim, the smaller their profit margin becomes. That puts you and the insurance company at odds since your interests are adverse to each other. 

Don’t ever forget that the insurance adjuster is a professional negotiator who works for your adversary: the insurance company. You don’t want to face them alone.

Sometimes an insurance company will do something that angers you. That alone does not constitute bad faith. In the below scenarios, the insurance company has the legal right to deny your claim:

• You failed to file your claim before the statute of limitations deadline expired.
• You fell behind on paying your insurance premiums, and your insurance company cancels your policy before your claim arises. This does not apply to third-party claims.
• You didn’t provide the insurance company with enough information.
• The policy does not cover your accident or the risk that resulted in the accident.
• There is a legitimate dispute over the defendant’s liability.

There are many other good reasons why an insurance company might refuse to pay your claim.

In general, an insurance company commits bad faith when it acts with a dishonest purpose, conscious wrongdoing, or an ulterior motive with the intention of misleading or deceiving you.

The following acts can constitute bad faith, depending on the circumstances:

• Arbitrary policy cancellation;
• Changing the policy terms to your disadvantage after you file your claim and then trying to apply it retroactively;
• Unnecessary delaying payment;
• Arbitrarily denying your claim;
• Refusal to communicate with you about a claim;
• Failure to investigate your claim;
• Ignoring expert opinion;
• Deliberately misrepresenting policy terms;
• Refusing to settle a valid claim;
• Demanding unnecessary documentation;
• Threatening you;
• Underpaying your claim;
• Engaging in fraudulent practices; and
• Conflict of interest.

This is a very abbreviated list. If you’re not sure if you have a valid bad faith claim, contact an experienced personal injury lawyer for a free consultation.

Florida applies a no-fault system to car accidents. That is why Florida law requires its drivers to purchase personal injury protection (PIP) insurance. By default, unless an exception applies (such as if your losses exceed your policy limits), you’ll look to your PIP insurance provider for benefits after a crash.

Since PIP is no-fault, in almost all cases, your PIP insurer is not entitled to deny your claim simply because the accident was your fault (except in extreme cases such as an intentional road rage accident).

In a third-party claim, you file a claim against someone else’s liability insurance policy. The policyholder is typically the at-fault party.

Under Florida law, you are a third-party beneficiary of the insurance contract between the at-fault driver and their liability insurance company. The insurance company cannot deny your claim just because your name doesn’t appear on the policy.

If you win your bad faith claim, you will be entitled to two recoveries: once for your underlying personal injury claim and once for your bad faith claim. Damages for the bad faith claim alone might include:

• Any adverse impact on your health. If the insurance company failed to pay, for example, you might have found yourself unable to afford medical treatment.
• Compensation for the time and money you spent pursuing a claim that should have been paid in the first place.
• Your emotional distress and suffering.

Bad faith insurance claims can be difficult to win, but they can result in large payoffs if you do. Importantly, the insurance company will always be able to afford to pay your claim.