Bad Faith Insurance Law Protects Floridians

Thanks to thoughtful and well-reasoned legislation and court decisions, Floridians can have a reasonable expectation that their own liability insurance companies will act in their best interests. That may soon be changing.

When handling claims, Insurance companies have a duty to act in the best interests of their insureds. This is especially so when insureds are at risk on claims in which the value of the claim (i.e., exposure) exceeds the limits of coverage under the policy of insurance. In those instances, insurance companies are required to do everything within reason to resolve claims within coverage limits. Failing to do so may expose insureds to judgments in excess of policy coverage limits. When this is the result of insurance company indifference or neglect, the carrier may be responsible for paying the excess judgment. This is known as bad faith law and it has been the driving force for more than 30 years in Florida behind insurance companies honoring their duty to handle claims in good faith.

Insurance companies do not like the law, and they are marshalling their forces to do something about it. With large and powerful Republican majorities in the Florida legislature, bad faith law is under siege in the upcoming 2010 Florida legislative session beginning in March. If bad faith law is eliminated in Florida, insurance companies will no longer have the proverbial stick forcing them to handle claims in good faith. This will lead to fewer claims being resolved amicably and greater exposure of their insureds to excess judgments. Hard to believe, but such is politics in Florida, where the concerns of powerful special interests trump the best interests of “We, the People”.

Notify your legislators today that you favor meaningful and effective bad faith insurance laws.