Insurance bad faith occurs when your insurer fails to act reasonably and fairly in handling your claim. Every insurance policy in Florida contains an implied covenant of good faith and fair dealing — and when an insurer violates that covenant, it exposes itself to damages that go well beyond the original claim.
Common examples of insurance bad faith include: denying a valid claim without a reasonable basis; failing to investigate thoroughly; making a lowball settlement offer without justification; delaying payment indefinitely; refusing to defend when defense is owed; misrepresenting policy provisions; and failing to communicate claim status timely.
First-party bad faith arises when you seek payment from your own insurer — homeowners, health, or collision claims. Third-party bad faith arises when your liability insurer fails to settle within your policy limits, exposing you to an excess judgment. Both types are recognized in Florida.
In a successful bad faith case, you may recover: the original claim amount; consequential damages caused by the delayed or denied payment; emotional distress damages; and in egregious cases, punitive damages. Attorney's fees may also be recoverable, making it economically viable to pursue even modest claims.
Document everything — every denial letter, phone call summary, deadline missed, and representation made by an adjuster. File a complaint with the Florida insurance department to create a public record. Then consult with a Florida policyholder's attorney who handles bad faith claims. Many take these cases on contingency.
The Insurance Professor is trained on Florida insurance law and regulation. Ask about your policy, your claim, or your rights.
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Regulatory resource: Florida Department of Financial Services — https://www.myfloridacfo.com. The Insurance Professor provides education only — not legal or insurance advice.