– The Florida Supreme Court outlined an insurer’s good-faith duties in the context of third-party liability claims in the case Boston Old Colony Ins. Co. v. Gutierrez in 1980.
– These duties include advising the insured of settlement opportunities, possible claim outcomes, and the potential for an excess judgment. The insurer must also fully investigate the facts, consider reasonable settlement offers, and settle if a reasonably prudent person would do so faced with the prospect of paying the total recovery.
– In 1982, the Florida Legislature created a statutory cause of action for bad faith, applying to both first- and third-party claims. Bad faith could occur if the insurer did not attempt in good faith to settle a claim when it could and should have done so, acting fairly and honestly towards the insured and with due regard for their interests. – Claims handlers should thoroughly analyze each claim based on its unique facts and document their claims files.
– HB 837 provides insurers with 90 days to make a claim determination and states that mere negligence alone is insufficient to constitute bad faith.
– The new law also addresses time limit demands by providing a timeframe for insurers to tender the policy limits after receiving notice of a claim. – Courts can now consider the actions of insureds, claimants, and their representatives in the adjustment of a claim.
– HB 837 establishes a procedure for insurers to pay a claim when multiple claimants will exhaust a policy’s limits.
– The bill will be helpful to insurers in defending against bad-faith claims, but insurers and claims handlers must still handle claims prudently and with regard for the insureds’ interests.
https://www.rumberger.com/insights/breaking-it-down-what-florida-insurers-need-to-know-about-bad-faith-after-tort-reform/
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