In Hunt v. State Farm Florida Insurance Company, 38 Fla. L. Weekly D774a (Fla. 2DCA 2013), the Florida Second District Court of Appeal held that an appraisal award in favor of a homeowner satisfied the requirements to bring a bad faith claim against the insurance company for claim delay. In this Florida insurance law case, the trial court dismissed the homeowner’s bad faith lawsuit because the homeowner did not obtain a judgment against the insurance company for breach of contract.
Florida Insurance Bad Faith Claims
A Florida insured, claimant or homeowner may file a separate lawsuit against his or her insurance company for additional damages for bad faith claims handling. By law, a Florida insurance company must act in good faith with Florida homeowners when investigating and adjusting insurance claims. This typically means that an insurance company cannot make representations to the insured or homeowner that are false or engage in tactics to delay or otherwise exhaust a claimant so they give up or agree to settle for less than what they are owed. Before an insured or homeowner can bring a bad faith claim he or she must first obtain a resolution in their favor against the insurance company for benefits owed. Only after the homeowner has received a resolution in his or her favor can he or she then file a separate lawsuit for bad faith damages.
Florida Appraisal Awards
In this case, the Florida homeowner had a sinkhole claim and filed a breach of contract lawsuit against the insurance company when he disagreed with the repair estimate. During the lawsuit, the homeowner also filed a civil remedy notice with the Florida Department of Financial Services that claimed the insurance company was acting in bad faith and delaying his claim. In response, the insurance company moved to dismiss the breach of contract lawsuit and to compel appraisal of the claim. The trial court put the breach of contract case on hold and required that the parties use appraisal to set the amount of loss for the claimed damages.
The Florida appraisal process is a limited procedure whose sole purpose is to determine the amount of damages. Afterwards a trial can then be requested to determine if the insurance company is in fact liable for the claim. During the appraisal process, the insurance company may agree to settle the case if it is pleased with the amount of the appraisal award.
In this particular case, the homeowner was given an appraisal award that set the amount of damages and the insurance company elected to pay it. The payment of the appraisal award essentially ended the breach of contract case. In response, the homeowner dismissed his breach of contract case but then filed a separate lawsuit for bad faith against the insurance company. The insurance company argued that the homeowner could not proceed with a bad faith claim since he dismissed his breach of contract case and never received a final judgment. The trial court agreed with the insurance company and entered summary judgment against the homeowner finding that he failed to satisfy the requirements for bringing a Florida bad faith action.
Appraisal Award is a Resolution Against the Insurance Company
The Florida Second District Court of Appeal reversed the trial court holding that an appraisal award is a resolution against the insurance company. The appellate court recognized that the common resolution obtained against an insurance company prior to bad faith is a final judgment but that is not the only way. For instance, previous Florida case law has established that an arbitration award against an insurance company establishes the validity of the claim and is sufficient for the purposes of making a bad faith claim. An appraisal award operates the same way in that it after payment establishes the validity of the claim and therefore is also sufficient for the purposes of making a bad faith claim.
Lessons Learned
To pursue a bad faith claim against an insurance company, a Florida homeowner will need to either obtain (1) a final judgment against the insurance company for breach of contract; (2) an arbitration award; or (3) an appraisal award that is paid by the insurance company. In this case, substance prevailed over format.
Related Topics: Florida insurance lawyer, Miami insurance lawyer, Florida insurance claim, Florida insurance claim denial, Florida Bad Faith claims, Florida Appraisal Process, Florida Appraisal Awards
