Insurance laws are complex, and insurers have developed various strategies and tactics to circumvent them. A basic definition of insurance bad faith—the insurer’s knowing, willful avoidance of a contractual obligation—may create more questions than it answers for anyone dealing with a wrongful claim denial or other insurance dispute.

Indicators of bad faith may include:

Unreasonable Denial of Claims: Denying a valid claim without a reasonable basis.
Delaying Payment: Taking excessive time to process and pay a claim.
Underpaying Claims: Offering significantly less compensation than the claim’s value without justification.
Failure to Investigate: Not conducting a proper investigation into the claim.
Misrepresentation: Providing misleading information about policy coverage or terms.
Unreasonable Interpretation of Policy Terms: Interpreting policy language in a way that unjustly favors the insurance company.

What are Some Examples of Bad-Faith Insurance Practices?

Examples include:

Denying a claim without a valid reason or proper investigation.
Failing to provide a timely response to a claim or communication.
Offering a settlement that is significantly lower than what is reasonable.
Misrepresenting the terms of the insurance policy to avoid paying a claim.
Refusing to pay a claim without conducting a thorough investigation.
Using coercive or deceptive tactics to pressure policyholders into accepting a low settlement.

How Can I Determine if My Insurance Company Is Acting in Bad Faith?

If you believe your important, high-value insurance claim has been denied unfairly, your best next step is to contact a lawyer with extensive insurance knowledge and a track record of success in litigation. The same is true if you are “getting nowhere” with a claim due to lengthy delays in investigation or processing or if you have been offered a seriously inadequate settlement.

Why Do Insurance Companies Knowingly Break the Law and Risk Having to Pay Additional Bad Faith Damages in Addition to the Value of Claims?

The most direct answer to this question is that insurance companies are intensely focused on profitability, which provides an incentive to find (or manufacture) reasons to deny and underpay claims. Further, insurers exploit the fact that most people do not understand complex policy language, do not know all their rights, and may give up in the face of a claim denial or other resistance.

Why Is It Important to Prove Insurance Bad Faith Was a Factor in a Claim Denial or Delay?

Under certain circumstances—when the policyholder suffers additional damages because of the insurer’s actions—proving insurance bad faith results in an award, including damages in addition to the claim value and payment of the wronged policyholder’s attorney fees associated with the case.

What Is Florida’s Bad Faith Statute?

Florida’s bad faith statute is primarily outlined in Florida Statutes Section 624.155, which provides the legal framework for civil actions against insurers who engage in bad faith practices. This statute allows policyholders and third parties to seek damages from insurance companies failing to act in good faith to handle claims.