Insurance, Bad Faith and Vampires
Many people don’t realize that purchasing insurance from an insurance carrier is not like the typical consumer transaction. Sections 624.155 and 627.727 of Florida law, together with applicable sections of Florida’s Insurance Code, establish a fiduciary duty between the insurance company selling the insurance and the consumer buying the insurance and paying insurance premiums every month for those coverages. At the Trial Professionals we frequently have this issue arise within the context of personal injury claims arising from automobile crashes.
As an example, assume you are insured in a car crash caused by a driver who had no automobile insurance coverages covering their own negligence. As discussed in an earlier blog (Do You Have The Right Kind of Insurance?) if you had the foresight to purchase so called “UM Insurance” to protect yourself and family in this unfortunate scenario, you now have a personal injury claims against you own auto insurance carrier for UM benefits. Let’s assume you purchased and paid for UM insurance benefits with limits of $100,000. Further assume that your injuries were severe enough to cause you to need significant medical treatment, including maybe even a back surgery. As a result your medical bills from this crash total $120,000. Taken together with your other damages allowed by Florida law (i.e. pain and suffering, lost wages, ect) the total value of your personal injury claim easily exceeds the $100,000 in UM insurance limits that you purchased. Frequently, auto insurance companies refuse to pay the entire $100,000 limits in this scenario. The reasons they refuse are numerous. As a result, injured persons are forced to file a lawsuit against their own insurance company for UM benefits. This is called a “UM Lawsuit”.
What many people don’t realize is that if that lawsuit goes to trial and a jury awards an amount of damages in their verdict that exceeds the UM limits (in our scenario $100,000), then the injured person may have grounds for filing a second lawsuit after that jury award for what is called “Bad Faith”. This second lawsuit is a legal claim against the insurance company, but the issues are no longer who was at fault for the crash, were you actually injured in the crash, and what are the total amount of your damages? In this second bad faith lawsuit, the issues for a jury to decide are, did the insurance company adjusting you UM claim violate the sections of Florida law require that they treat you-the insured-with good faith? There are a number of complicated legal pre conditions that have to be satisfied in order be legally allowed to file a second bad faith lawsuit, one of which is the verdict in the first lawsuit must exceed the UM limits under your own policy. But if those pre conditions have been satisfied, your bad faith lawsuit is a lawsuit for what are called “extra contractual damages”, meaning you are now seeking, and may obtain if awarded by a jury, damages more than the mere limits of your UM policy coverages (i.e. the $100,000).
With all that said, obviously, obtaining extra contractual damages over and above the UM limits purchased by an insured is typically a process taking more than a year, if not longer. Further, any second lawsuit for Bad Faith runs the same risks of a potentially adverse verdict as that of the first lawsuit. But I can tell you from having practiced on the insurance defense side for 20 years before coming to the Trial Professionals that the words “Bad Faith” are to an auto insurance company what holy water is to a vampire. It is their worst outcome. Every personal injury attorney at the Trial Professionals is prepared to discuss the potential for Bad Faith claims with our clients. And every person injured in an automobile crash should be aware that there exists scenarios in which the UM limits of liability for their auto insurance company may be exceeded, and a full and just compensation for those injuries may be obtained.