Bad Faith Litigation and Its Future

When you have a claim being made against  you, you expect your insurance company to do the right thing.  As an insured, you  expect the insurance company to protect your interests.  Unless you are living under a rock, you know many times insurance companies place their interests before that of the insured. Insurance companies deny legitimate claims, exposing their insured to a verdict, many times in excess of the  available policy limits.  This is why bad faith litigation exists, and it is meant to make things contractually fair between you and your insurance company.

What is bad faith litigation?

Bad faith litigation happens when an insured sues an insurance company for not adhering to the duties in their contract. Examples of this can be blanket denials of legitimate claims, misrepresentation of coverage, and not paying the entire policy limits, when tendering the policy limits could have resolved the claim being made against the  insured. Another common reason for bad faith claims is when the insurance  company delays the claim, which can have harmful effects on the insured. Many times, an insured is facing immediate medical bills and needs insurance to compensate them as soon as possible in order to avoid negatively impacting their credit. Insurance companies do great harm to their insured customers when they engage in actions that result in bad faith claims.

What are the effects of bad faith litigation?

Implied in every insurance contract is a promise of “good faith and fair dealing,” which means that the insurer must not harm the insured’s rights to receive benefits under the policy.  Bad faith claims level the playing field between the insurer and insured. Bad faith claims make sure the insurance company is taking into account what is in the best interest of its insured.

If Bad Faith claims did  not exist, insurance companies would  stop taking into account what is in the insured’s best interest.  The insurance company’s only interest would be protecting its own bottom line.  Many times, people like you and I  would be exposed to needless litigation, or verdicts in excess of the available policy limits. In other words we would be personally liable for many claims which the insurance company can and should have resolved within the available policy limits.  We would be left financially crippled, while the insurance company would go on making millions and billions in profits.

Mold Bad Faith Cases

One common type of bad faith case is toxic mold in a home. Homeowners often file claims because of the discovery of toxic mold. If the claim is denied without any inquiry by the insurance company, there may be a bad faith claim.

PIP and Bad Faith Litigation

Another type of bad faith litigation that is common in Florida concerns Person Injury Protection (PIP) coverage. Florida is a no-fault state when it comes to auto accidents. This means your insurance pays under the PIP portion of the policy, regardless of who was at fault in the accident.

The ease of which these funds are released has decreased personal injury litigation across the state. People are able to pay minor medical bills under the PIP policy, and they go on with their lives without incident. However, the ease at which PIP claims have been paid has also attracted fraud. Physicians have falsely inflated bills to get PIP payouts. Two- and 3-party schemes between lawyers, physicians, and motorists have occurred to get fraudulent payouts. Additionally, many times insurance companies will place road blocks, or deny payments which should be automatic.

Given  the  costs associated with PIP coverage and the little benefit it provides to the average Floridian, we believe PIP should be abolished and replaced with mandatory bodily injury coverage.

Bad Faith Is Still There for Floridians

Bad faith claims are essential to making sure the insurance company takes its insured’s interest into account. This is a good thing because many times Floridians have no alternative course of action to get justice. They currently need the availability of these lawsuits to ensure their insurance claim is handled properly and fairly. If you need to file a bad faith claim, make sure you hire a lawyer from an experienced law firm, who has experience with bad faith claims.

New Bill Proposed

The Florida government is proposing House Bill 895 to limit some of the fraud in PIP claims. It proposes that emergency rooms not be allowed to charge more than 200% of Medicare prices when being paid through PIP. This would leave more PIP available for insureds to use at follow up appointments (in some cases) and could further reduce insurance claims.

While House Bill 895 makes some sense.  It would be better to completely get rid of PIP and replace it with mandatory bodily injury coverage. That way, if someone crashes into you, the at fault persons insurance company is responsible for the medical bills, beginning at dollar one.

Does Regulation Already Keep Insurance Companies in Check?

No.  Some people believe that insurance companies are regulated efficiently now, and bad faith litigation is outdated and costly to everyone. While it is true that insurance companies are fined by regulatory agencies when engaging in bad faith misconduct, this doesn’t always amount to adequate compensation to the insured.  Also, many times the fines are trivial compared to the profits insurance companies make by not taking their insured’s best interest into account.

The Future of Bad Faith Litigation

Mold lawsuits and PIP claims are just the tip of the iceberg when it comes to bad faith litigation.

If your insurance company has wronged you, a bad faith lawsuit may be the perfect remedy to your problem. You should not seek it out purely to gain a windfall of money that you did not lose, but if the insurance company acted in bad faith, they do owe you justice.


Should Bad Faith Litigation Exist?

Yes.  Bad faith litigation is present in order to protect the consumer from large insurance companies. Without it, some insurance companies would be free to deny claims while collecting premiums, and they would not suffer as a result.    Without bad faith litigation insurance companies would needlessly expose their insured to verdicts in excess of the policy limits, leaving their insured financially crippled.


Should You File a Bad Faith Claim?

The choice is yours about whether or not you should file a bad faith claim. If your insurance company did not uphold their side of the contract, this is one way to remedy the circumstance.

Considering any type of personal injury claim requires expert opinion. Contact The Law Offices of Kirshner, Groff, and Diaz, and you’ll get to speak to an actual lawyer right away to go over your claim.

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