Insurance Bad Faith

Insurance bad faith is defined as any insurance claim that is wrongfully denied by the insurer. An insurance policy is a legal contract between the policy holder (the insured) and the insurance provider (the insurer). This contract requires that the insurer acts in “good faith” toward the insured.

When an insurance company fails to fulfill its obligations to the insured, instituting a bad faith claim may be the only way to hold the insurance company accountable. There are many examples of insurance bad faith. Below are just a few:

* Failure to fairly and thoroughly investigate a claim
* Failure to provide justification for denying a claim
* Failure to offer the full value of a claim’s worth
* Failure to settle a claim when it should and could

There are often substantial financial advantages for insurance companies to deny claims. In Florida, the essence of a "bad faith" insurance suit is that the insurer breached its duty to its insured by failing to properly or promptly defend the claim (which may encompass its failure to make a good faith offer of settlement within the policy limits). Kelly v. Williams, 411 So. 2d 902 (1982). Examples of bad faith can include all kinds of insurance, from health and dental to automobile and homeowners. Other examples may include failure to provide for a defense as required in the event you are sued, or failure to follow contractual procedures in the event of a dispute as to the amount of compensation to be provided to you under your own coverage after an accident.

Interpreting Insurance Contracts

Insurance law routinely provides that should there be an ambiguity or uncertainty in a policy, an uncertainty in choice of wording or ambiguity in meaning would be resolved in favor of the policyholder and against the insurer. In the absence of a misrepresentation regarding coverage or exclusions, if the language of the policy is clear and explicit, the clear meaning will be enforced.

Insurance contracts are interpreted by judges and courts to effectuate only the objectively reasonable expectations of the insured. Any personal, or subjective, expectation of a policyholder which cannot be reasonably supported by the language of the contract is unenforceable. It matters not what the policyholder/customer truly and honestly believes in his or her own mind. That subjective opinion is never in issue in a court of law. The real contest is to decide what the words of the policy mean to an objective person or a disinterested, common reader. So, when reading an insurance policy, the words selected by the insurance company are to be interpreted by judges according to their plain meaning. A plain meaning is one which an ordinary person would attach to such words, not the meaning which might be utilized by an insurance company executive or an attorney.

Exclusions and limitations in a policy, because they often result in denying coverage when there is a loss, must be in clear and written in unmistakable language. It is for this reason that exclusions and limitations are always narrowly, or strictly, construed. If there is more than one meaning to be given to an exclusion or a limitation, the narrowest interpretation will be adopted by the court. Any exclusionary clause that is not clear and conspicuous will be interpreted in the interests of the insured.

Duty to Deal Fairly

Every insurance contract contains an unwritten, invisible, or implied term referred to as the covenant or promise of good faith and fair dealing. This is a promise imposed by law upon an insurance company to always act fairly towards its insureds in handling their claims. Whether or not such a clause is included in the policy, judges will read the policy as if it were there. Carriers must meet the reasonable expectations of the policyholder and an insurer must always give as much consideration to the financial interests of its insureds as it does to its own financial interests.

Damages In Bad Faith Cases

Where a policyholder successfully shows that an insurer breached the covenant of good faith and fair dealing, the insured can recover all damages caused by the breach. This includes all consequential losses, loss of use of the insurance proceeds, general damages, attorneys’ fees and in cases of egregious and outrageous misconduct, punitive damages.

In all bad faith cases it is essential that measures be taken promptly to review all communication with the insurance company and investigate the insurance coverage in question before the statute of limitations expires. If you or a loved one is a victim of insurance company bad faith, call Williams & Moore, P.A. now at (866) 258-6700. The initial consultation is free of charge, and if we agree to accept your case, we will work on a contingent fee basis, which means we get paid for our services only if there is a monetary award or recovery of funds. Don’t delay! You may have a valid claim and be entitled to compensation for your injuries, but a lawsuit must be filed before the statute of limitations expires.