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Florida Alert: Can a Liability Carrier be Sued for Bad Faith when Its Insured Was Not Exposed to Liability In Excess of the Policy Limits?

The Third District Court of Appeals finding recently held that in certain circumstances, a third party can maintain a bad faith claim against an insurer even if the insured is not exposed to liability in excess of the policy limits.  The insurer, claiming that the decision is in direct contradiction to established Florida Supreme Court precedent and other precedential decisions, petitioned the Florida Supreme Court to review the decision.  See Infinity Indemnity Insurance Company v. Delia Reyes, et al., Case No. SC17-659 (Florida, April 26, 2017). The bad faith lawsuit arose out of an auto accident case.  Delia Reyes was involved in a car accident with Jorge Arroyo, Jr., who is now deceased.  Reyes filed a personal injury lawsuit against

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Florida Regulators Approve Policy Language Aimed at Limiting “Assignments of Benefits” Claim Practice

Insurance companies that write property risks in Florida are getting in line to request approval from the Office of Insurance Regulation (OIR) for two key policy revisions intended to control losses from a water damage property claim practice called “assignment of benefits.” Many insurers have attributed the rising costs of water claims in Florida to an increase in the use of assignments of benefits (AOBs).  This practice occurs primarily in the residential homeowners’ context and involves a situation where, following a water damage event, the insured assigns its rights and benefits under its insurance policy to a third-party contractor or water mitigation company.  The water remediation contractor then bills the insurance company directly with rates that often substantially exceed the

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Posted in Bad Faith

Florida High Court – UM Insured Entitled to Liability/Damages Determination Before Filing Bad Faith Action

Petitioner Adrian Fridman (“Fridman”) was injured in an automobile accident involving an underinsured motorist. Fridman filed a claim with his uninsured/underinsured (UM) insurance carrier (Insurer) for the $50,000 limits of his UM policy.  After the Insurer refused to pay the policy limits, Fridman filed a complaint against the Insurer to determine liability under the UM policy and the full extent of his damages.  One month before trial, the Insurer tendered a check to Fridman for $50,000 and filed a confession of judgment for that amount seeking entry of the confessed judgment and a dismissal.  Fridman opposed the entry of a confessed judgment, arguing that a jury verdict would determine the upper limits of Insurer’s potential liability under a future bad

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Posted in Bad Faith

Eleventh Circuit Finds No Bad Faith in Multiple-Claimant Claims-Handing Situation

In a new decision, Mesa v. Clarendon National Ins. Co., 2015 WL 5059496, 2015 U.S. App. LEXIS 15203 (11th Cir., Aug. 28, 2015), the Court of Appeals found that the insurer’s claims-handling of multiple claimants did not rise to the level of bad faith under Florida law.   The decision affirmed the district court’s ruling granting summary judgment in favor of the carrier, and it provides valuable lessons to insurers handling sometimes difficult multiple-claimant scenarios. Mesa was one of four parties injured in an April 3, 2006 automobile accident caused by Cesar A. Vega Zelaya.  The bodily injury liability limits under the policy were $10,000 per person and $20,000 per accident.  The carrier received notice of the accident on April 24th

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Florida’s Claims Administration Statute – Use It or Lose Your “Coverage Defense”

  Any Insurer issuing liability policies in Florida should be aware of the requirement of Florida’s Claims Administration Statute, § 627.426, or risk waiving viable “coverage defenses.”  The definition of “coverage defense” under the statute has been the subject of considerable litigation in Florida for many years.  Under current Florida law, however, “coverage defense” refers to an insurer’s reliance upon a insured’s alleged breach of a policy condition in a third-party liability policy.  In most instances, “coverage defense” indicates: late notice of a claim; failure to cooperate; refusal to submit to an examination under oath; or a settlement without the consent of the insurer. The first section of Florida’s Claims Administration Statute permits an insurer to take certain actions without

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Florida Appellate Court: “Coverage Liability” Can Be Basis for Bad Faith in Suit Involving First Party Appraisal

On Wednesday, Florida’s Fourth District Court of Appeal issued an opinion concerning the prerequisites for bringing bad faith claims in Florida.  In an en banc ruling, the Court held in Cammarata v. State Farm Florida Ins. Co., 2014 WL 4327948 (Fla.Dist.Ct.App., Sept. 3, 2014) that once coverage liability and the extent of damages under an insurance policy have been determined, a bad faith action has accrued even if there has yet to be any finding of breach of contract liability. The case arose from a claim dispute between Joseph and Judy Cammarata and their property insurer regarding coverage for repairs for Hurricane Wilma damages their home.  After the claim was initially denied, the parties agreed to proceed with an appraisal of

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Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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