How Florida Homeowners Can Identify and Pursue a Bad Faith Insurance Claim

Insurance companies are expected to settle claims in good faith. Failure to do so is a violation of state law. Florida’s law states that insurance companies must act “fairly and honestly toward their insured and with due regard for her or his interests.” So, what happens when this expectation is not met? Those who feel their insurance company failed to meet this obligation may consider filing a bad faith claim against it.

In Florida, insurance companies are legally obligated to act in good faith when handling claims. However, when an insurer fails to meet these obligations, policyholders may need to file a claim for bad faith insurance. This process can be complex and challenging. Understanding Florida’s bad-faith insurance laws can help you navigate these issues more effectively. Here’s a detailed look at what you need to know:

What Is Insurance Bad Faith?

Bad faith occurs when an insurance company fails to fulfill its legal duty to act honestly and fairly toward its policyholder. Instead of handling your claim promptly, thoroughly, and truthfully, the insurer may engage in tactics meant to delay, deny, or underpay your claim without proper justification.

Types of Bad Faith in Florida:

• First-party Bad Faith: Occurs when a homeowner files a claim with their insurer (e.g., for hurricane or water damage) and the insurer acts unfairly.

• Third-party Bad Faith: Typically applies when someone else files a claim against your policy and your insurer mishandles it, exposing you to liability.

Florida’s Bad Faith Insurance Laws

Florida Statutes § 624.155 allows policyholders to sue insurance companies for acting in bad faith. If you prevail, you may be entitled to compensation beyond your original claim, such as legal fees, emotional distress, and punitive damages.

To file a bad faith lawsuit in Florida, you must first provide the insurance company with a Civil Remedy Notice (CRN) and give them 60 days to fix the issue. If they don’t, you can proceed with litigation.

Common Bad Faith Scenarios for Florida Homeowners

Hurricane Damage Claims

After a hurricane, insurers may delay or underpay claims, citing backlog or claiming damage was “pre-existing” or caused by flooding (which may not be covered under standard policies).

Water Damage Claims

Water damage (especially from broken pipes or roof leaks) is frequently under scrutiny. Insurers may blame homeowner negligence or claim maintenance issues, rather than sudden or accidental events.

Roof Claims

Insurers often cite wear and tear or pre-existing damage to avoid replacing full roofs, despite visible storm-related damage.

Auto Liability Insurer Fails to Settle

You’re sued for causing a serious car accident, and your insurer refuses a reasonable settlement offer within policy limits, resulting in a verdict far exceeding your coverage.

Warning Signs You May Be Facing Bad Faith

Here’s how to recognize if your insurer might be acting in bad faith:

1. Unreasonable Delays

Delays without clear justification are a red flag. Florida law requires insurers to acknowledge and begin investigating a claim within 14 days, and they must pay undisputed portions within 90 days.

Examples:

• Taking months to assign an adjuster
• Repeatedly requesting the same documents
• Delaying without giving a reason

2. Lowball Offers

If your insurer offers a settlement that’s far below your repair estimates or replacement costs without explanation, it could be a tactic to pressure you into accepting less than you’re owed.

3. Denials Without Valid Reasons

Insurers must provide specific reasons for denial. Vague responses like “not covered” or “excluded” without citing policy language may indicate bad faith.

Tip: Always request a written explanation of the denial and a copy of your policy.

4. Failure to Conduct a Proper Investigation

If the insurance company denies your claim without thoroughly inspecting the damage or interviewing witnesses, they may be violating their legal duty.

5. Changing the Policy Interpretation

An insurer cannot reinterpret policy language after a claim is filed just to deny coverage. This includes:

• Adding exclusions that weren’t originally in the policy
• Misapplying limitations

6. Intimidation or Threats

Using aggressive language, threatening to cancel your policy, or suggesting you’re committing fraud simply for filing a claim is a classic bad faith tactic.

Why Insurance Companies Act in Bad Faith

Despite what they claim, insurers are for-profit businesses. Every dollar they don’t pay out in claims adds to their bottom line. Some companies intentionally train adjusters to reduce payouts or deny claims—even valid ones—knowing that most policyholders won’t fight back.

Recent reporting in Florida has uncovered systemic issues in the insurance industry, including:

• Money funneled to affiliated companies
• Inflated administrative expenses
• Delay tactics to avoid mass payouts after hurricanes

 The Challenges of Filing a Bad Faith Claim

Filing a bad-faith insurance claim in Florida can be challenging due to several factors:

• Burden of Proof: The policyholder must prove that the insurer acted in bad faith. This involves demonstrating that the insurer failed to meet its contractual obligations or acted unreasonably.
• Legal Complexities: Bad faith claims often require specialized legal expertise to navigate effectively. Understanding insurance laws, proving bad faith, and calculating damages can be complex and challenging. At Williams Law, P.A., we have over 30 years of experience litigating bad faith claims for Florida property owners and can take on the insurance company for you.
• Insurance Company Defenses: Insurers may argue that their actions were justified or that the claim was handled appropriately. They may also challenge the evidence presented by the policyholder.
• Time Constraints: There are deadlines for filing bad-faith claims. Failing to act within these timelines can affect your ability to seek compensation.

Steps to Take If You Suspect Bad Faith

If you believe your insurer is acting in bad faith, consider the following steps:

• Document Everything: Keep detailed records of all communications, claims, and evidence related to your insurance policy and claim.
• Seek Legal Advice: Consult with one of our expert bad faith claim lawyers who can help you understand your rights, gather evidence, and navigate the legal process.