In general, insurance companies owe their policyholders the duties to defend and to indemnify, meaning the obligation to provide a legal defense against claims filed by third parties that fall within the scope of the policy and the obligation to make payments to their customers for valid claims, respectively.
While it can undoubtedly be painful to write out a check once a month, once every six months or once a year to cover an insurance premium, it can nevertheless grant you, the policyholder, much-needed peace of mind. Indeed, you might feel secure knowing that should the unexpected and the unfortunate occur, your best interests will be protected — at least from a financial perspective.
Florida is a study in contradictions when it comes to insurance law. The state has led the nation in consumer protection actions, like the national mortgage settlement and, for that matter, established Citizens Property Insurance Co. to provide coverage to residents who would otherwise go without.
An insurer has a legal duty to act with good faith and fair dealing in every insurance contract. When that duty is breached, a tort and breach of contract action for bad faith insurance may be allowed, depending upon the facts of the case. As a general rule in Florida and elsewhere, the insurer will incur liability to the insured if it recklessly or in bad faith exposes the insured to liability in derogation of its contract of insurance.
Insurance carriers would like us all to believe that they are our partners in adversity. Tree fell on your house? The calm insurance professional is right there to help you with your claim. Attacked by lions? Your insurance agent will teleport you to safety. Aliens destroyed your vacation home? Don’t worry, you’re covered!
We are finishing up our discussion of the recent Florida Supreme Court decision regarding bad faith claims against state-backed Citizens Property Insurance Corp. Again, an insurance company that puts its own interests first — ahead of a policyholder’s interest — is acting in bad faith. The rule only holds for private insurers, though, and Citizens is a government entity. Under the doctrine of sovereign immunity, as well as state law, Citizens cannot be sued.
We are talking about a Florida Supreme Court decision about Citizens Property Insurance Corp. and its duty to its policyholders. Unlike private insurance companies that act in their own interests and not in the interests of their policyholders, Citizens cannot be sued for bad faith.
The Florida Supreme Court handed down a ruling on May 14, 2015, that has shaken up the state’s insurance industry. The court has found that state law bars policyholders from suing Citizens Property Insurance Corp. for bad faith.
We find ourselves making reference to television ads and F. Scott Fitzgerald today. The first appears in the title of the post, which, of course, refers to the Geico ads in which the adorably charming Geico Gecko cheerfully informs us that 15 minutes will save us 15 percent on our auto insurance. The second comes in the form of an observation we are certain others share: California is different from you and me … and Florida.
Insurance is big business, and insurance companies have significant resources to fight back against claims of bad faith. These are claims that the insurance company put its own profit concerns above the interests of policyholders.
