Florida Federal Court Decision Discusses Basis For Bad Faith Claims Against Insurers

Last month, our Miami personal injury attorneys saw that the U.S. District Court for the Middle District of Florida issued a decision in the case of Cabrera v. MGA, discussing legal and factual basis upon which an insured can establish a claim against his or her insurer for a claim of bad faith.

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A claim that an insurance company acted in “bad faith” is based upon the legal premise that an insurance policy constitutes a contract between the insured and insurance company, which includes an implied covenant of good faith and fair dealing. This means that the insurer must deal with the insured party honestly, fairly, and in good faith, to ensure that the insured receives the benefits of the contract to which he or she is legally entitled.

An insurance is considered to have acted in “bad faith” when it unreasonably withholds the benefits of the policy from the insured. The most common ways in which insurance companies act in bad faith are: intentionally delaying payment on a claim; denying benefits to a claim without reason; failing to investigate a claim; refusing to settle a claim; and/or refusing to fully compensate an insured for his or her losses.

In Cabrera, the plaintiffs were injured in a 2003 car accident with Helena Jimmie, and subsequently filed a claim with MGA, Jimmie’s insurance company. MGA denied the claim, stating that Jimmie’s auto insurance policy was void because she provided false information in her application. The plaintiffs sued Jimmie and were awarded over $500,000 in damages. Jimmie assigned her rights under the insurance policy to the plaintiffs, who then sued MGA, claiming that MGA had acted in bad faith by denying the claim.

The Middle District Court dismissed the plaintiffs’ complaint, finding that they had failed to allege sufficient facts to demonstrate that they were entitled to recovery against MGA. In so holding, the Court opined that, under Florida law, before it could make a decision as to the bad faith claim, it was first required to determine whether the plaintiffs would have been entitled to coverage under Jimmie’s policy.

However, because the plaintiffs did not first ask the Court to make such a conclusion in their complaint, the Court could not determine whether MGA had acted in bad faith. The Court concluded, “the amended complaint is not sufficient to survive a motion to dismiss regarding the issue of bad faith because the case law is clear that coverage disputes must be resolved before a bad faith action accrues.”

Unfortunately, there are a number of ways in which insurance companies attempt to avoid extending coverage to their insured. Further, as demonstrated by the Cabrera case, these efforts often are successful, leaving injured individuals under or uncompensated.

The Miami personal injury lawyers of Gerson & Schwartz, P.A. have extensive experience representing individuals who have been injured in car accidents and are forced to deal with insurance companies. If you or someone you know feel your insurance company is not acting in good faith to resolve a claim, contact the Miami car accident attorneys of Gerson & Schwartz, PA today for a free consultation.

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