Understanding “Bad Faith” Claims

It is unfortunate when a customer is unhappy with how an insurance claim is handled, but there are times when they simply don’t meet the requirements to receive a payout, or the payout may be less than the customer expected. When this happens, some people will attempt to file a ‘Bad Faith’ lawsuit to try to get the money they feel they deserve, or as a ‘payback’ for not getting what they wanted from a claim. Bad faith cases need to be taken very seriously by insurance providers because they have the potential to not only be quite costly, but can also seriously damage the reputation of the company.

What Is Bad Faith?

When accused of acting in bad faith, it is important to understand what that really means, legally speaking. To be guilty of acting in bad faith, an insurance company must be shown to intentionally withhold necessary information from the client, fail to perform a proper investigation, or fail to meet the obligations as identified in an insurance agreement. These types of issues can present themselves in many ways, but the important thing in each of them is the intent. An insurance company must have intentionally done something to try to avoid making a payment to a client. This may seem like something difficult to prove, but remember that the prosecuting attorney simply needs to convince the judge of the intent.

Bad Faith vs. Mistakes

If your company has been accused of acting in bad faith, the first thing to determine is whether or not the claim was handled properly. As much as you may try to handle every claim properly, there are many ‘moving parts’ involved, and mistakes can happen. If you do find a mistake in how the claim was handled, an attorney can typically argue that your company did not act in bad faith, but simply that a mistake was made. This may result in having to payout on the claim, but it can save a significant amount in other potential fees and penalties.

Third Party Actions

Florida has a civil statute that allows third parties to sue an insurance company directly for bad faith. If, for example, a client of your insurance company gets into an accident that they cause, the owner of the other car in the accident can sue your company directly. This can introduce some additional complexity into the case, which needs to be addressed properly to avoid problems.

Never Self-Represent

If you have been accused of acting in bad faith in any case, it is important that you act quickly to get your defense in place. There are a variety of deadlines that must be met when preparing a bad faith defense, so the sooner you contact an attorney, the better your chances of winning the case. The Law Office of Ray Garcia, P.A. is available to review your case and help prepare an effective defense so please contact us to set up a consultation and see how we can help.