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What Constitutes Bad Faith On The Part Of An Insurance Company Under Florida Law?

Typically, when a person is injured in a car accident, the insurance company of the at-fault party will step in and attempt to settle the dispute on behalf of its insured. Sometimes, however, the insurance company is unable or unwilling to settle the claim, forcing the injured party to sue. The injured party may later receive a judgment against the insured party that exceeds the amount of the insured’s coverage, leaving him or her on the hook to the injured person for the full amount of the award less what was covered by under the insurance policy.

Under Florida law, bad faith claims allow the insured to sue his or her insurance company to recover the difference between the limit of coverage and the amount of the judgment if the insurance company acted in “bad faith” in attempting to settle the injured party’s claims. Last month, the United States District Court for the Middle District of Florida, issued an opinion in the case of Markel American Insurance Company v. Flugga discussing the elements of a bad faith claim and the elements necessary to establish such a cause of action.

In Flugga, Mark Flugga was found to be at fault for a 2010 motor vehicle accident in which he, his passenger, and two individuals in another vehicle were injured. Flugga’s insurance company, Markel American Insurance Company, was notified of the accident four days after it occurred.

At the request of the attorney for Flugga’s passenger, Markel provided information concerning Flugga’s coverage in April of 2010. Later, Markel requested information regarding the passenger’s injuries, after which the passenger’s attorney notified Markel that there was a publicly recorded hospital lien for more than $72,000 for hospital bills related to treatment for the passenger’s injuries. The passenger’s attorney also informed Markel that the passenger had filed a lawsuit against Flugga for negligence.

Markel tendered a check to the passenger’s attorney for $10,000, which was the limit of coverage under Flugga’s policy. The check was returned and no further discussion was had regarding settlement. On the day before trial was to commence on the negligence lawsuit against Flugga, Markel filed an action in Federal District Court asking the court to declare that Markel had not acted in “bad faith” in the handling of the passenger’s claim.

The District Court held that, generally, the lack of a settlement offer by itself is not sufficient to prove that an insurer acted in bad faith in handling a claim. The Court further opined that an insurer has an obligation to attempt to negotiate a settlement when liability is clear and the known injuries are sufficiently serious that a judgment would likely exceed the insured’s policy limits.

In applying its analysis to Flugga’s case, the Court concluded , “[G]iven the minimal coverage of $10,000 as compared to the known injuries suffered*** coupled with [the] retention of a lawyer to press [the] claim and the time that elapsed from the date of the accident to the tender of the policy limits, there is a genuine issue of fact as to whether***Markel American acted in bad faith.” The Court then dismissed the action, maintaining that the bad faith issue could properly be litigated in the state court action.

In a car accident where the liability is obvious and the damages are in excess of the policy and if the insurance company fails to settle the case for less than case value, you too may have a a bad faith claim under Florida law. The Miami, Florida personal injury attorneys of Gerson & Schwartz, P.A. have extensive experience representing individuals who have been injured in car accidents and are forced to deal with insurance companies. If you or someone you know feel your insurance company is not acting in good faith to resolve a claim, contact the attorneys of Gerson & Schwartz, P.A. today for a free consultation.

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