We all know negotiating with auto insurance firms following a serious car accident can be maddening at times. But when does it cross the line and become bad faith?
Florida’s bad faith civil litigation law, F.S. 624.155(1)(b)(1), holds that an insurer commits bad faith when it fails to act fairly and honestly toward its insured and with due regard for his or her interests, even though it could have done so given the circumstances.
Of course, that definition leaves a lot to interpretation, which is why we often have to rely heavily on case law. Some examples of bad faith insurance might include:
- An insurer delaying, discounting or denying payment without reasonable basis;
- Failure to acknowledge or reply promptly once receiving notice of a covered claim;
- Failure to affirm or deny coverage in a reasonable time;
- Failure to conduct a prompt, thorough and proper investigation.
Claims of bad faith insurance following Florida car accidents should only be handled by a legal team with extensive experience. They are often complex and challenging – but the payoff can be substantial (three times the original damage award).
In the recent case of Enrique v. State Farm, it was alleged the auto insurer had engaged in bad faith by refusing to render the full $100,000 of its uninsured motorist (UM) coverage limits to its insured after she was struck and seriously injured by a driver with no insurance. At issue was whether the insurer acted reasonably in refusing to pay the claim, as it argued plaintiff’s knee injuries were actually caused by a pre-existing condition and not the crash.
According to Delaware Supreme Court records, an uninsured driver in 2005 smashed into plaintiff’s car by improperly turning into her lane. Plaintiff suffered a fractured rib, soft tissue injuries abrasions and trauma to her left knee, which rendered her a candidate for arthroscopic surgery.
Plaintiff, a cafeteria worker, could not go back to work for nine months after the accident. Even when she returned to work, she was on light duty for several months.
After exhausting her personal injury protection benefits, plaintiff sought recovery for her losses and injuries through her UM policy, the limits of which were $100,000. Due to high claims volumes, the claim had to be reassigned and the new adjuster consulted a number of other employees on the claim. The supervisor ultimately authorized the adjuster to settle for between $17,500 to $22,500. The adjuster had the claim valued at between $25,000 and $30,000. He offered her $17,500, which she rejected.
The adjuster reportedly had reservations about the value because plaintiff apparently had pre-existing knee problems. Adjuster made another offer to settle for $19,000, which plaintiff again rejected.
Throughout these negotiation processes, there were numerous concerned raised by defendant of plaintiff’s pre-existing knee injury and questions of causation. Adjuster at one point noted it wasn’t clear to what extent the accident was the cause, but after receiving an updated medical history, adjuster put the claim at between $35,000 and $50,000.
There were then significant lapses in the time during settlement negotiations. Plaintiff asked for $165,000. An attorney for defendant told adjuster at that point the claim could be worth as much as $50,000 if the accident caused her knee injuries. The insurer then offered her $25,000. She rejected that offer and continued to demand the original amount, $65,000 in excess of the policy limit.
Insurer’s final offer was $45,000, while plaintiff was willing to settle for $90,000. They still could not agree. The case went to trial and plaintiff was awarded $260,000. Once the state supreme court affirmed, defendant paid the full $100,000 policy limit. But then plaintiff pursued her bad faith claim, seeking recovery of the additional $160,000 on that judgment, plus interest and punitive damages.
However, the trial court granted summary judgment to defendant, a decision later affirmed by the supreme court on the basis plaintiff had not proven the insurer displayed reckless indifference in handling the claim because of the questions of causation that arose due to her preexisting knee condition.
If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.
Enrique v. State Farm, June 14, 2016, Delaware Supreme Court
More Blog Entries:
Lik v. L.A. Fitness – Gym Injury Lawsuit to Proceed, June 9, 2016, Miami Car Accident Lawyer Blog