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Florida Bad Faith Insurance Explained

Last year, comedian Tracy Morgan was involved in an automobile accident with a Walmart truck driver who caused the crash due to his fatigue. Kevin Roper’s truck struck the limo Morgan was in from the rear and was said to have been 20+ mph over the speed limit of 45mph. The accident ended up killing another comedian James McNair and set off a chain-reaction collision that eventually involved six other vehicles and 21 people. Tracy Morgan was hospitalized and injured as well as some of the other victims.

In May, Walmart settled with Morgan in a lawsuit drafted by the individuals inside of the van and compensated all of them, including Morgan, $90 million. Following the settlement, Morgan’s attorney, Benedict Morelli said, “Walmart took full responsibility for the accidents which we greatly appreciate.”

However, in the new filing in federal court in Newark, the retailing giant said while some of its insurers met their obligations to cover their share of the cost of the settlement, others have not. Those insurers, which it said included Liberty Insurance Underwriters and Ohio Casualty Insurance, have “refused to pay their portions of the settlements under the insurance policies they sold to Wal-Mart in Arkansas.”[1]

The lawsuit contends that these companies have failed to pay their portion of the settlement amount. The insurance companies contend that the amount was unreasonable and was reached prematurely before Walmart’s liability was determined. While the company has been up to date will paid premiums and is insured under an umbrella policy, the point at issue is whether Walmart was too quick to settle before negotiating with the insurance companies or whether the insurance companies are acting in bad faith and breaching the contract.

“This is no different than any individual who holds an insurance policy, makes a claim for a covered loss, and then is told by the insurance company that despite the existence of coverage, they don’t intend to pay,” Walmart said [2].

Florida Bad Faith

Florida law remains constantly focused on the conduct of insurers. It deals with whether they have acted reasonably in the discharge of the fiduciary duty they owe their policy holders. If insurers acted reasonably in the financial duty they owe to their policy holders, there would not be a false notion that claimants and insureds can somehow control the conduct of insurers in adjusting losses, thus “setting up” bad faith claims.

Under a liability policy, the insured’s role is essentially limited to selecting the type and desired level of coverage and paying the corresponding premium. Insurance coverage, supposedly, offers security and peace of mind against unexpected losses. As part of the contract, the insured surrenders to the insurer all control over the negotiations and decision-making as to claims. The insured’s role is transferred to the obligation to cooperate with the insurer’s efforts to adjust the loss. The insurer makes all the decisions with regard to claims handling and thereby has the power to settle and foreclose an insured’s exposure to liability, or to refuse to settle and leave the insured exposed to liability in excess of the policy limits. As a result, “the relationship between the parties arising from the bodily injury liability provisions of the policy is fiduciary in nature, much akin to that of attorney and client,” because the insurer owes a duty to refrain from acting solely on the basis of its own interests in the settlement of claims. Accordingly, and because of this relationship, the insurer owes a duty to the insured to “exercise the utmost good faith and reasonable discretion in evaluating the claim” and negotiating for a settlement within the policy limits. When the insurer fails to act in the best interests of the insured in settling a claim, an injured insured is entitled to hold the insurer accountable for its “bad faith.”[3]

Insurance Bad Faith

A Clearwater Insurance bad faith attorney should be well versed in recent first and third-party coverage decisions in both County Courts and Federal Court. Further, a competent Florida bad faith attorney should have a strong grasp on how adjusters evaluate claims and work to ensure that the insurance carrier is provided all medical records so they may make an articulate decision as to the value of the claim. In contrast, many law firms will simply hide records and avoid sending pre-existing records evidencing an issue that may weaken the claim. However, such conduct is not only ethically frowned upon, it provides the insurance carrier an extremely strong and compelling reason for not paying the policy limits and will serve to undermine the bad faith portion of the case should the attorney be successful in obtaining a verdict well in excess of the policy limits.

An experienced Clearwater insurance bad faith attorney will understand how and when to preserve bad faith insurance claims. As a Florida personal injury law firm, we make it a point to work with the insurance carriers and provide them with all pertinent records and cooperate as much as possible. The insurance carrier will often screw up without you forcing their hand. These are the strongest bad faith claims. If you have been victimized as a result of an insurance carrier’s misconduct, please call Sibley Dolman Gipe Accident Injury Lawyers, PA for a free consultation (727) 451-6900.

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

https://www.dolmanlaw.com/legal-services/insurance-bad-faith/

References:

[1] http://www.nj.com/news/index.ssf/2015/10/wal-mart_insurers_accused_of_bad_faith_in_tracy_mo.html
[2] http://www.insurancebusinessonline.com.au/news/walmart-sues-at-least-3-insurers-over-celebrity-crash-settlement-206690.aspx
[3] http://www.floridabar.org/DIVCOM/JN/JNJournal01.nsf/c0d731e03de9828d852574580042ae7a/4c124737afd6c7de85257845004c3423!OpenDocument