An underpaid property claim: what a contract judgment does and doesn't resolve

Issue

A business that believes its property claim was underpaid has a breach of contract remedy, limited to the policy benefits. A recent Fourth District decision clarifies what happens after that: a contract judgment does not end the question of whether the claim was handled in bad faith.

Overview/Rule

In Healthy Food Experts, LLC v. AmGUARD Insurance Co., No. 4D2025-0181 (Fla. 4th DCA June 10, 2026), a first-party insured obtained a jury verdict against its carrier in a breach of contract action, and the carrier paid the judgment. The insured then brought a bad faith action seeking extra-contractual damages. The circuit court ruled that the verdict in the breach of contract suit fixed the insured’s damages and that the insured could recover nothing beyond what that judgment awarded, relying on Fridman v. Safeco Insurance Co. of Illinois, 185 So. 3d 1214 (Fla. 2016).

The Fourth District reversed. Fridman arose from uninsured and underinsured motorist claims, and the court held that applying it to bar a first-party bad faith claim in this context was error. An insured on a first-party claim may seek extra-contractual damages in a bad faith action that were not recoverable in its breach of contract action. The contract judgment fixes the policy benefits; it does not cap what a bad faith claim may recover.

The principle: extra-contractual damages must be separate from the policy benefits themselves, and they must be caused by the carrier’s alleged bad faith handling of the claim.

Future Outlook

The Fourth District narrowed Fridman in the first-party context, and whether the ruling becomes settled statewide will depend on whether it is appealed. What is clear now is that the breach of contract action and a bad faith action address different things: the first recovers the policy benefits owed, and the second addresses the carrier’s conduct in handling the claim.

Call to Action for Businesses

A breach of contract claim recovers the benefits owed under the policy, up to the policy limits. It does not address how the claim was handled.

Extra-contractual damages are available only through a bad faith claim, only where they are separate from the policy benefits, and only where they were caused by the carrier’s handling of the claim. Florida law imposes specific procedural requirements before such a claim may be brought.

Keep a complete record of the claim: every submission to the carrier, every response, every estimate and every date. If a dispute arises, that record is what the claim will be evaluated on.

HD Law Partners represents Florida businesses in insurance coverage and commercial disputes from Tampa, Orlando, Sarasota and Fort Myers.

HD Law Partners, P.A. was not counsel of record in this matter. This summary is provided for informational purposes only and is not legal advice. Every case is evaluated on its own merits.