How Insurance Companies Act in Bad Faith

April 9, 2018 | Attorney, Matthew Dolman
How Insurance Companies Act in Bad Faith

Insurance companies have a fiduciary obligation to engage in good faith when settling personal injury cases. Specifically, every insurance contract contains an implied covenant of good faith and fair dealing. When an individual signs up for automobile insurance, homeowner's insurance, or some other type of insurance, he or she depends upon the fact that the insurer will provide the necessary coverage when the unexpected happens—up to and including the policy limits of coverage.

Insurance companies refuse to pay and defend insurance claims for a variety of reasons. In some cases, insurers may drag their feet and unduly delay the settlement process. In other cases, the insurance company may renege on a settlement offer and take it off the table before the injured accident victim has the opportunity to accept it. If any of these situations occur in your personal injury case, you may be able to file a bad faith insurance claim under the law. This may even be true if the ultimate value of your claim exceeds the insurance policy limits of coverage.

To understand why insurance companies sometimes refuse to pay or settle claims, you must understand how insurance companies work. First of all, insurance companies, like any business, are in it to make money. The less money that insurance companies pay out in satisfaction of personal injury claims, the more money they are able to keep in-house. Consequently, insurance companies and their adjusters will do everything in their power to delay the settlement process and limit their liability exposure.

If you believe that you may have a claim for bad faith against your insurance company stemming from a motor vehicle or other accident, the Clearwater bad faith insurance claim lawyers at Dolman Law Group Accident Injury Lawyers, PA are ready and willing to help. Our attorneys deal with insurance companies and their adjusters on a daily basis and know full well the arguments that they advance in an attempt to avoid paying out money. Our attorneys can review a claims decision in your case and may be able to file a bad faith insurance on your behalf.

Holding True to the Insurance Policy's Language

The insurance company has a duty to hold true to its policy's language and intent. Every insurance policy contains an implied covenant of good faith and fair dealing which requires the insurance company to:

  • Evaluate every claim fairly, honestly, and impartially
  • Settle any claims that have been filed against the covered individual if this can be done within the available policy limits

How Insurance Companies Commit Bad Faith

Insurance company bad faith claims can take a variety of forms. In some cases, the insurance company may flat-out deny a personal injury claim that falls within the insurance company's limits of coverage—but without articulating a good reason. In other instances, the insurance company may drag its feet by failing to properly investigate a claim or make a bona fide offer to settle the claim. This includes failing to make an offer that covers the accident victim's special damages (i.e. the accident victim's medical bills and lost wages sustained as a result of the accident).

Sometimes, the insurance fraud is more willful, and the adjuster may intentionally misrepresent the terms of the insurance coverage—such as the amount of the policy limits—solely to deny the insurance claim.

Filing a Bad Faith Claim against the Insurance Company

bad faith insurance claim centers around breach of contract—specifically, that the insurance company breached the implied covenant of good faith and fair dealing in the contract. The Florida statutes also provide a legal remedy for fighting back against bad faith insurance claims. A bad faith insurance claim may involve a third-party claim or a first-party claim.

If an injured accident victim files a claim or lawsuit against you, and your insurance company refuses to provide you with a valid legal defense, then you may be able to raise a third-party bad faith insurance claim against your insurance company. In this case, the covered individual is the “third party.”

A first-party bad faith claim is usually brought by an injured accident victim against his or her own insurance company. These first-party bad faith claims usually arise in the underinsured or uninsured motorist contexts. All Florida motor vehicle drivers are required to maintain insurance. Generally speaking, motor vehicle insurance follows the vehicle—not the driver or the owner.

Inexplicably, however, some individuals do not maintain motor vehicle insurance coverage – or they do not maintain enough coverage. When these drivers cause an accident and the accident victim's damages exceed the at-fault driver's limits of coverage, the accident victim may turn to his or her own insurance company to make up the difference. If the at-fault driver is underinsured, this type of claim is called an underinsured motorist claim. If the at-fault driver is completely uninsured, this is called an uninsured motorist claim.

In order to be eligible to make a claim against your own insurance company for uninsured motorist coverage (UM) or underinsured motorist coverage (UIM), all other available policies of insurance must first be exhausted.

If your own insurance coverage refuses to step into the shoes of the at-fault driver and provide you with the additional coverage, you may be able to assert a first-party bad faith claim against your own automobile insurance company.

Call a Clearwater, Florida Personal Injury Lawyer Today to See if You are Eligible to File a Bad Faith Insurance Claim

Bad faith insurance claims in Florida can be very technical and complicated. If you do decide to file one of these claims, you need an experienced personal injury lawyer on your side who can guide you through the process.

The Clearwater personal injury lawyers at Dolman Law Group Accident Injury Lawyers, PA can explain all of your legal options with you. If you and your attorney decide that it is appropriate to file a bad faith insurance claim, your attorney can file the necessary documentation on your behalf.

To schedule a free consultation and case evaluation with a Clearwater bad faith insurance claims lawyer, please call us at 727-451-6500 or contact us online.

Dolman Law Group Accident Injury Lawyers, PA 800 North Belcher Road Clearwater, Florida 33765 727-451-6900


Matthew Dolman

Personal Injury Lawyer

This article was written and reviewed by Matthew Dolman. Matt has been a practicing civil trial, personal injury, products liability, and mass tort lawyer since 2004. He has successfully fought for more than 11,000 injured clients and acted as lead counsel in more than 1,000 lawsuits. Always on the cutting edge of personal injury law, Matt is actively engaged in complex legal matters, including Suboxone, AFFF, and Ozempic lawsuits.  Matt is a lifetime member of the Million Dollar Advocates Forum and Multi-Million Dollar Advocates Forum for resolving individual cases in excess of $1 million and $2 million, respectively. He has also been selected by his colleagues as a Florida Superlawyer and as a member of Florida’s Legal Elite on multiple occasions. Further, Matt has been quoted in the media numerous times and is a sought-after speaker on a variety of legal issues and topics.

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