In Universal Property & Casualty Insurance Co. v. Naze, No. 4D2024-0098 (Fla. 4th DCA June 4, 2025), the Fourth District Court of Appeal reversed a jury verdict in favor of the insured, holding that the trial court improperly admitted irrelevant and unduly prejudicial evidence of claims handling in a breach-of-contract-only action. The decision reinforces the evidentiary boundaries governing insurance litigation in Florida and confirms that bad faith themes cannot be introduced unless and until a bad faith claim is properly pled and ripe.
Factual Background
The lawsuit arose from a water damage insurance claim reported by the insured on December 10, 2020. The insurer promptly conducted a site inspection and, on December 18, 2020, sent a letter to the Insured requesting fourteen categories of post-loss documentation. The insured, through their public adjuster, provided partial responses on December 29, 2020, and submitted additional materials in January 2021. On February 19, 2021, the insurer issued a second request following up on the outstanding documents. On March 10, 2021, the public adjuster responded, stating that most documentation had been uploaded and inquiring about the status of the claim.
A claims examiner was formally assigned on April 8, 2021. Less than two weeks later, the insured filed suit asserting a single cause of action for breach of contract. The complaint did not contain any allegations of improper claims handling or bad faith. In response, the insurer denied liability and asserted multiple affirmative defenses based on policy provisions, including the insured’s failure to substantially comply with post-loss obligations—a condition precedent to coverage—and the exclusion for damage caused by repeated seepage or leakage of water. Prior to trial, the insurer filed a motion in limine to preclude any reference to claims handling or bad faith. The trial court did not rule on the motion, and the parties’ joint pretrial stipulation did not include any bad faith allegations.
At trial, the insured’s counsel repeatedly injected claims handling themes into what was pled as a straightforward breach of contract case. During opening statements, insured’s counsel told the jury that the insurer “wasn’t waiting for documents—they were just flailing around.” Defense counsel objected, arguing that the remark improperly implicated claims handling and suggested bad faith. The insured’s counsel argued that he was merely recounting the timeline of events. The court overruled the objection.
The insured’s public adjuster testified at length about the insurer’s alleged inaction. He stated that he submitted documentation but received no meaningful response and that “no desk examiner was assigned to the file until April 2021”—months after the claim was reported. He told the jury that “intake really dropped the ball on this one” and emphasized that “no investigation” took place.
When counsel for the insured asked whether there had been “no movement” between document submissions, defense counsel again objected as the questioning went to claims handling. The trial court overruled the objection, explaining that the testimony related to “the movement of the claim” and the “handling of the claim between [insured] and [insurer],” not evidence of bad faith.
The insurer moved for a mistrial, citing cumulative prejudice due to the insured’s repeated references to claims handling and bad faith allegations. The court denied the motion, finding that the testimony did not rise to the level of bad faith and instead reflected commentary “on how the claim was handled.”. The following day, the court instructed the jury on the applicable law. The insurer renewed its motions, including its motion for mistrial. The trial court denied the motions.
During closing argument, the insured’s counsel returned to the same bad faith themes, telling the jury: “There was no investigation. What investigation are they talking about? There was no investigation.” The jury ultimately returned a verdict in favor of the insured. Following the verdict, the insurer moved for a new trial, arguing that the court erred in admitting irrelevant and prejudicial testimony concerning alleged claim mishandling, which had no bearing on the breach of contract claim and served only to improperly suggest bad faith. The motion emphasized that such evidence violated well-settled Florida law prohibiting parties from litigating claims handling issues in breach of contract-only trials.
In response, the insured contended that the testimony merely established the timeline and was relevant to rebut the insurer’s affirmative defense regarding the insured’s failure to comply with post-loss obligations. The trial court denied the motion, concluding that the testimony reflected “omission and negligence,” not bad faith.
The Fourth DCA’s Reversal
On appeal, the Fourth DCA held that the insurer was deprived of a fair proceeding due to the improper admission of claims handling evidence. The court found that this evidence—offered through testimony and argument—had little to no relevance to the breach of contract claim but carried a high risk of unfair prejudice.
In doing so, the court relied on Section 90.403, Florida Statutes, which bars the admission of even relevant evidence when “its probative value is substantially outweighed by the danger of unfair prejudice, confusion of issues, or misleading the jury.” The court emphasized that references to delay, omission, or incompetence in the handling of a claim—regardless of whether they are labeled as “background” or “timeline”—risk misleading jurors into rendering a verdict based on perceived bad faith rather than the actual policy terms or contractual defenses.
To support its holding, the court cited Citizens Property Insurance Corp. v. Mendoza, 250 So. 3d 716 (Fla. 4th DCA 2018), where it reversed a jury verdict after similar claims handling testimony was admitted in a breach-only case. In Mendoza, the court warned that introducing evidence of an adjuster “not doing a good job” can lead the jury to rule for the insured based on perceived mishandling—rather than whether the loss was covered under the policy.
Finding that “the same error occurred [here],” the court noted that the public adjuster’s remarks that the insurer “dropped the ball” and “did not “take [the claim] seriously,” combined with counsel’s repeated emphasis that “there was no investigation,” improperly invited the jury to view the dispute through a bad faith lens—even though no such claim was pled. Because this theme permeated the trial, the error was not harmless and warranted reversal.
Legal Takeaways for Practitioners
The Fourth DCA’s decision in Naze serves as a reminder of the strict evidentiary limits that govern insurance litigation and serves as a reminder that courts and litigants must remain vigilant in enforcing them. Evidence or argument highlighting delay, omission, or incompetence—hallmarks of a bad faith claim—must be excluded unless a bad faith claim is properly pled and ripe. The appellate court reaffirmed that claims handling evidence, including testimony or commentary critiquing how an insurer processed a claim, is inadmissible in a breach of contract action.
Even when framed as “timeline,” “background,” or “context,” such evidence can be grounds for reversal if it invites the jury to punish the insurer for perceived unfairness rather than deciding the case on the terms of the policy. Failing to draw a clear line between breach of contract and bad faith at trial not only risks jury confusion—it risks reversal on appeal.
