Insurance & Bad Faith Litigation

Sky Law Firm, P.A., has efficiently represented clients who were victims of their insurance company or the third-party insurance company which insures the responsible party for causing our clients’ injuries.

The federal government currently has no bad faith law or set of specific requirements that insurance companies must fulfill to ensure that they act in good faith and fair dealings. This is because the insurance companies have a lot of influence over the government due to which no federal laws are implemented on the insurance companies. This industry wields significant influence over government bad faith law legislation, which some argue is the reason that no federal bad faith law exists today. The insurance industry is regulated by bad faith law provisions created by individual states.

There are two types of bad faith litigation:

First Party Bad Faith; this is related to the obligations that an insurance company has to the policyholder. When a claim is filed with an insurance company, that insurer has a duty to settle the claim in a reasonable amount of time, for an amount that a reasonable person would believe they were entitled.

Third Party Bad Faith; third party bad faith relates to insurance claims made against someone else’s insurance policy. For example, if you are injured in an accident where someone else is clearly at fault, their insurance company, the third party insurer, is responsible for compensating you for your injuries.

It is the duty of the insurance company to defend the claim of the insurer even if the insurance policy does not cover the lawsuit. It also has an obligation to pay a judgment against the policyholder, up to the limit of coverage, but only if the judgment is for a covered act or omission.

Bad Faith occurs in following situations:

Undue delay in handling claims
Inadequate investigation
Refusal to defend a lawsuit
Threats against an insured
Refusing to make a reasonable settlement offer
Making unreasonable interpretations of an insurance policy
Although there is no federal law related to bad faith but each state has a bad faith law that protects the rights of policyholders if an insurance company acts in bad faith.

Each state has a unique set of rules, but there are some common aspects on which all countries agree are:

“Bad faith” is defined on behalf of insurance companies as delaying, withholding, or denying policyholder benefits that are based on legitimate claims filed under adequate insurance policies.

Insurance companies have a fiduciary relationship with policyholders.
A fiduciary relationship requires that an individual or organization in a special relationship of trust act in good faith and uphold the obligations required of their role.

In Florida, bad faith law requires that insurance companies act in the best interests of their policyholders. When the insurer files a case, it is obligatory for the insurance company to look for coverage rather than finding ways to deny it. Under bad faith law, there are many other responsibilities that insurance companies must fulfill in agreement with good faith and fair dealings principles.

According to the bad faith law, insurance companies are required to adjust a claim that denies it or pay it within a reasonable period. Unusual and unnecessary delays are considered wrong. It is also important that the insurer co-operates with the insurance company and provide them with all the detail information which they seek. The bad faith law states that if an insurer is denying a claim, they should give an official reason to the insurer. The insurance company has the responsibility to act with prudence, honesty, and fairness promptly regarding all policyholder affairs.

If an insurance company acts in bad faith, the bad faith law allows the policyholder who has suffered damages at the hands of their insurance company to seek relief through a tort, or personal injury, lawsuit.

The Law allows the insurer to ask for compensation from the insurance company. Under some bad faith law, there may be circumstances under which an insurance company may be required to pay punitive damages to deter them from future acts of bad faith. Under bad faith law, the statute of limitations that limits the time in which a policyholder can file a legal claim varies depending on the specific state law, and the theory applied to the case, and the particular policy and application in question.

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