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Obstacles to Florida Insurance Bad Faith Claims Makes Legal Representation Essential

If you are a homeowner in Florida, you know that property owners in our state face the risk of perils virtually unknown to people in many states, such as sinkholes, tropical storms and hurricane damage. While people purchase their homeowner’s coverage with the expectation that faithful and timely payment of premiums will garner prompt adjustment and payment of a damage claim, insurance companies have a strong financial motivation to deny or underpay valid claims.

Although insurance companies often deny claims outright without a proper investigation of the claim or without a legitimate justification or delay claims, policyholders have recourse against such tactics in the form of a legal claim for bad faith.  The threat of bad faith liability is an important tool for policyholders in keeping insurance companies honest because liability is not limited to contract damages.  In other words, an insured can recover compensation that exceeds the full value of the claim.  Potential liability for extra-contractual damages provides insurers with a motivation to avoid bad faith tactics when dealing with policyholders.

Florida Supreme Court Weakens Bad Faith Liability against Homeowner’s Insurance Companies

Unfortunately, Florida courts have erected some obstacles that impede the ability of a homeowner to use bad faith claims, which limit the effectiveness of this remedy.  In QBW Insurance Corp. v. Chalfonte Condominium Apartment Assoc., Inc., the Florida Supreme Court made the process of pursuing an insurance bad faith claim much more difficult for Florida homeowners.  The state’s highest court essentially abolished common law bad faith claims, which apply to other contracts, when suing homeowner’s insurance carriers.

The Court ruled that homeowners must pursue a property damage insurance bad faith claim under Fla. Stat. Section 624.155.  This statute imposes the procedural requirement that breach of contract claims and bad faith claims against homeowner’s insurance companies be bifurcated.  Bifurcation of these claims basically means that the insured must first prevail on a breach of contract claim (though this does not necessarily mean a court judgment) before pursuing a claim for insurance bad faith under the statute.

Impact of Bifurcation Requirement on Homeowners

The issues and evidence that must be addressed often are relevant to both the contract claim and the bad faith claim, so imposition of a requirement that an insured pursue two distinct claims results in an insurer incurring delays and increased cost.  Because of the obstacles created by the requirement of bifurcation, many policyholders abandon their right to pursue a bad faith claim even after they are successful in proving an insured breached the insurance contract.  Further, homeowner’s insurers have less reason to weigh the risk of bad faith liability when using sharp practices in dealing with policyholders who have filed valid claims.

The Florida Supreme Court’s decision in Chalfonte presents another obstacle for policyholders who are treated unethically or unfairly by their homeowner’s carrier.  Insurance companies often engage in egregious conduct in adjusting and denying a claim that would likely influence the jury’s perception of the insurer.  Insurers aggressively oppose disclosure of such conduct to the jury in a breach of contract claim based on the contention that it is only relevant to the bad faith claim.  Insurer’s also frequently fight discovery of the insurer’s conduct in handling the claim by contending the information is not relevant to the breach of contract action.  This tactic is used by an insurance company to keep a jury from learning about the insurer’s systematic approach to lowballing and underpaying claims.

Legal representation can have a significant impact on a policyholder’s success in a lawsuit against his or her insurance company.  However, the special challenges involved in pursuing a bad faith claim for property damage against a homeowner’s insurance carrier makes such representation essentially unavoidable.

Greenberg Stone and Urbano:  Seeking Maximum Recovery on behalf of Homeowners against an Insurer’s Wrongful Claim Denial

If your homeowner’s insurance company is engaging in a pattern of insurance bad faith in handling your property damage claim, our Miami Homeowner’s Insurance Lawyers at Greenberg Stone and Urbano will tenaciously pursue the full compensation you deserve.  For over 130 collective years, our firm has assisted accident victims in personal injury and wrongful death actions across South Florida.  We seek to obtain compensation for your tangible and intangible damages, including medical bills, lost wages, pain and suffering, and more.  Our skill and dedication has earned us an AV rating from Martindale Hubbell and recognition as one of South Florida’s top firms by the Miami Herald.   Call us at (888) 499-9700 or (305) 595-2400 or visit our website to schedule your initial consultation.


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