A Primer On Florida’s Unfair Car Insurance Trade Practice Laws
In September, we were proud to present our Free Guide to Car Insurance Coverage in Florida, in which we outlined the different types of coverage available to motorists in the Sunshine State. We wanted to offer this guide because car insurance coverage terms and policies are notoriously verbose and can be confusing to read and accurately comprehend. We feel it is critical to provide consumers with clear and correct information regarding their rights, especially when it comes to managing relationships with auto insurance companies.
Insurance industry laws that prohibit discriminatory, unfair, or deceptive insurance provider practices are on the books in every state. These statutes are meant to outline the correct standard of conduct for the insurance industry regarding all business practices, from sales of policies to policy cancellations.
General Prohibitions in the Florida State Insurance Industry
Here are five tactics that insurance companies are not permitted to employ under any circumstances:
1. Misrepresent Your Policy
Insurance companies are never allowed to purposefully misrepresent material facts or relevant policy provisions concerning a claim. Nor are they permitted to enforce any policy provisions that were modified by them without prior notice to the consumer or without the consumer’s knowledge or consent.
2. Use Multiple Policy Settlements as Leverage
Insurance companies are strictly forbidden from delaying the settlement of a claim, where liability and the amount of the loss are reasonably transparent, under one section of the policy in an attempt to influence the consumer’s behavior or willingness to accept a settlement with regard to a different area of coverage under the insurance policy. For example, if you were injured in a car accident involving an underinsured driver, the insurer can not delay paying your medical bills in effort to force you to settle your pending underinsured motorist claim.
3. Delay Acknowledgement of, Processing of, or Delivery of Necessary Forms Regarding Your Claim
Insurance companies are legally mandated to operate their business processes in a way that provides for prompt acknowledgement and action in response to all communications about consumer claims.
4. Use Legal Appeals as a Means to Force Settlement or Compromise
Insurance companies may not attempt to exploit the legal system of appeals in an effort to force either settlements or a claim compromise. While insurance companies have the right to appeal case verdicts, they can not use appeals as a business practice to reduce claim payouts.
5. Act in “Bad Faith”
Insurance companies are prohibited from the practice of acting fraudulently or in bad faith when defending or settling a claim. In 1982, the Florida State Legislature sought to remedy the power disparity between the insurer and the insured in first-party contracts by enacting F.S. §624.155, which established, among other points, a first-party bad faith cause of action.
Geico Found to Have Acted in Bad Faith in Case of GEICO v. Paton
Recently, the Florida Fourth District Court of Appeals upheld a decision for the plaintiff in the case of GEICO v. Paton, which resulted from two lawsuits concerning a woman’s request for adequate payment from her underinsured motorist coverage and a bad faith insurance action.
The plaintiff had won both cases, but the insurance company still sought to avoid payment by filing an appeal. The District Court upheld both verdicts based, in part, on the state’s bad faith insurance law and the Florida Supreme Court’s viewpoint on first-party bad faith actions.
Despite the legislation protecting consumers, working with insurance companies as a consumer is generally challenging. It’s usually in the consumer’s best interest to obtain legal advice before settling any insurance claim. The legal team at Reed & Reed in Florida is always available to give you more information about how best to work with and manage your claims process with insurance companies. From our office in Brandon, we help clients in Tampa, New Tampa, Plant City, throughout east Hillsborough County and the state of Florida. Contact Reed & Reed for a free consultation.