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A Look at Commercial General Liability Insurance and Bad Faith Issues

Wed Feb 28th, 2018 on     Bad Faith Insurance,    

As a business owner, CGL insurance coverage is fundamental to effectively running your business in a highly-litigious society.  When a improperly mopped floor can result in hundreds of thousands of dollars, or even millions, in potential liability to injured third-parties, the value of CGL insurance skyrockets — CGL insurance provides the “peace of mind” necessary for a business to successfully operate.

This reliance on CGL insurance can lead to challenging situations when the insurer wrongfully denies a legitimate insurance claim, or otherwise fails to step in and adhere to their duties under the contract.  Businesses facing millions in potential liability are put in an exceedingly vulnerable position, and insurers often take advantage of this power dynamic to undervalue claims and deny coverage.  Fortunately, Florida law entitles CGL policyholders to sue and recover damages on the basis of bad faith.

Consider the following.

Wrongful Denial

In Florida, bad faith requires that insurers conduct a reasonable investigation of the facts surrounding the insurance claim at-issue, that the insurer not misrepresent the extent and nature of coverage, and that the insurer not wrongfully deny a legitimate insurance claim (i.e., without reasonable justification for such denial).  If your CGL insurance claim has been wrongfully denied, and you can prove that the defendant-insurer did not have reasonable justification for the denial, you could potentially recover damages for bad faith.

Failure to Defend

CGL insurance requires that the insurer step in and defend you in the event that an injured third-party makes a claim against you that is covered under the policy.  If the insurer violates this “duty to defend,” they could be found liable for bad faith.  Keep in mind that failure to step in and defend the policyholder puts the policyholder in an unenviable and extremely vulnerable position, as the business must utilize their own funds to pay for their defense.

Failure to Reach Settlement

In Florida, an insurer acts in bad faith if it fails to settle a claim brought against its policyholder within the policy limits (thus exposing the policyholder to substantial, excess liability).  Insurers must attempt to reach a settlement within the policy limits when — given the circumstances — it could have effectively done so.  The insurer must act fairly and honestly towards its policyholders, and with due regard for their interests.  If the insurer acts in such a way that it prioritizes its own interests, they may be held liable for bad faith.

Schedule a Free Consultation with a Miami Insurance Coverage Lawyer

Ver Ploeg & Lumpkin is a Florida insurance litigation firm that has successfully represented numerous policyholder clients — both commercial and non-commercial — in litigation against insurers for wrongful denial and bad faith.  We are committed to proactive, personalized representation.  To that end, we work closely with clients to better understand their businesses and their strategic objectives, and we believe that this approach has served as the foundation of our success.  Our firm has been rated as among the Best Insurance Law Firms in America, and our attorneys have been variously rated as Super Lawyers and among the Best Lawyers in America by nationally-recognized publications.

Call (305) 577-3996 to get in touch with an experienced Miami insurance coverage lawyer here at Ver Ploeg & Lumpkin.  During your free initial consultation, we will evaluate your CGL insurance policy and your claims, and help you map out a path to recovery.

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