Archive: March 2022

The Difference Between an Insurer’s Contractual and Statutory Duties Under Florida Law

Insurance companies have two independent duties when it comes to paying a claim filed by a policyholder. The first duty is contractual, i.e., the insurer’s responsibilities under the policy itself. This contractual duty extends to any requirements regarding the evaluation and payment of benefits.

The second legal duty is that imposed by statute, i.e., by the Florida legislature. State law requires all insurers to “act reasonably and in good faith” when evaluating a policyholder’s claim. Even if the insurer ultimately pays the claim–that is, fulfills its contractual duty–it can still be held liable for acting in bad faith with respect to its statutory duty.

Insurer Still Faces Bad Faith Claim Despite Paying Appraisal Award to Homeowner

The Florida Second District Court of Appeals recently addressed the interaction of these two duties in a first-party bad faith insurance lawsuit. In Williams v. State Farm Florida Insurance Company, a homeowner filed a claim with his insurer over lightning damage to his property.

If you own a car in Florida, you should know that you are required to carry a certain minimum amount of auto insurance. Florida is a “no-fault” state, your insurance is expected to pay for any personal injury that you sustain in an accident. But this personal injury protection (PIP) coverage is often insufficient to fully cover your medical expenses and other accident-related losses. PIP coverage does not address situations where your accident was caused by the negligence of another driver.

This brings up another issue. Even when you can prove that the other driver was responsible for the accident, they may have little (if any) insurance coverage of their own. So what do you do then? In many cases, your own insurance company may still be responsible assuming you purchased uninsured motorist (UM) coverage as part of your auto policy.

How UM Coverage Works And Why You Need It

UM coverage kicks in when you, or someone else covered by your policy, is injured by a driver with either no insurance or insufficient insurance to fully compensate the injured party for their legal damages. Keep in mind, an uninsured driver can also include an unknown party, such as a hit-and-run driver who flees the scene of an accident and is never identified by the police.