“But my insurance company did not treat me fairly.  My claim lingered on for months with no repairs being done and no word from the adjuster.  Can't I recover for that mental stress and anguish?”  We get questions like this from clients in most of the insurance dispute cases we handle, particularly in hurricane cases where families are displaced and distraught.  Yet, the insurance company doesn't seem to care.  Or worse, they look for reasons to delay, deny, or pay less on the claim, while you or your family are perhaps living in a damaged home (or a camper) and you're stressed, anxious, and afraid.  In situations like this, clients feel they should be able to recover for the other damages, over and above what is owed on the policy, that the insurance company caused them.  We understand.  And, the good news is, you can sometimes recover certain types of damages over and above what is owed on the policy.  But, it is a complicated, time-consuming process for which you need patience and an experienced attorney to ensure you don't lose the right to recover those amounts.  First, you need to understand the difference between your breach of contract claim against your insurance company, and a claim for what is known as “bad faith.”

Understand a Claim for Bad Faith

In an insurance dispute, where your insurance company is wrongfully withholding or delaying payment, or even denying all or a portion of your claim, one of your first courses of action will be to bring in an experienced insurance attorney to file a lawsuit against your insurance company.  Although this does not guarantee you will be paid in full, it is the first step in protecting your rights and enforcing the insurance policy.  The claim you will be pursuing initially is called a “breach of contract” claim, which basically means a claim that your insurance company broke one or more of the promises it made to you in the policy and did not abide by the policy when adjusting your claim. 

Know When You Can File a Lawsuit for Bad Faith

There are several steps you have to take, first, to protect your right to pursue a bad faith claim against your insurance company.  First, you must file a Civil Remedy Notice that meets all of the necessary statutory requirements, which are precise and mandatory.  This Notice starts a clock.  It gives your insurance company sixty days to “cure,” which means right their wrongs and pay you the full amount you are owed under the policy.  If they do that, you cannot pursue a claim for bad faith.  However, if the insurance company does not cure within sixty days, which is common, your right to pursue a bad faith claim is preserved. 

Second, you have to win on your breach of contract claim.  Think of it as having to get a ticket before you can walk up to the gate to be admitted.  In order to file a claim for bad faith, you must have a properly-filed Civil Remedy Notice that was not cured and a judgment against your insurance company on your breach of contract claim.  Then, and only then, can you file a claim for bad faith.  So, what does “bad faith” really mean?

A claim for bad faith can arise from many actions or inactions by your insurance company.  The basic foundation of a bad faith claim is that your insurance company intentionally treated you unfairly in handling your claim.  This may include, but is not limited to, an allegation that your insurance company misrepresented policy provisions to you, intentionally interpreted policy provisions in a manner that allowed them to pay less on the claim, or made false or unsupported accusations that you failed to fulfill your obligations under the policy so they could avoid their duties under the policy.  If your insurance did any of these things, or you or your attorney believe it acted willfully or wrongfully in delaying or denying your claim, you may want to proceed beyond the breach of contract action to a bad faith action.  In which case you should understand what types of damages you can recover in a bad faith action.

Know the Damages You Can Recover in a Bad Faith Action

During the first round, the breach of contract claim, you can only recover the amount owed under your policy along with attorney's fees, taxable costs, and interest as provided by law, no more.  However, in the second round, the bad faith action, you can recover all of the damages that were reasonably foreseeable as a result of the insurance company's wrongful conduct, i.e., the damages most clients ask us about that exist over and above what is owed on the claim.  This includes loss of opportunities, loss of income, lost rent, other liabilities, expenses, or debts you had to incur because of the insurance company's wrongful conduct, or perhaps even payment for medical conditions if you can prove they were caused or exacerbated by the insurance company's conduct.  These are called “extra-contractual damages” because they are over and above the amounts the insurance company agreed to pay you in the policy, which is your contract. 

The Florida Supreme Court's Recent Ruling on Bad Faith Damages

In Citizens Prop. Ins. Co. v. Manor House, LLC, 2021 WL 208455 (Fla. 2021), the Supreme Court of Florida recently heard an appeal from the Fifth District of Florida, where the Fifth District had overturned the trial court's denial of extra-contractual damages and entered an award against the insurance company, Citizens, for lost rent, which was an extra-contractual, bad-faith type of damage.  Rent was not owed under the policy.  Manor House, 2021 WL 208455 at *3.  Although it was a damage that was caused by the insurance company's conduct, it was an amount over and above the policy.  Id.  As such, this loss of rent should have been pursued as a bad faith damage.  However, the policyholder characterized the lost rent as a “reasonably foreseeable” damage in the breach of contract case, likely because it knew the Florida Supreme had previously ruled that Citizens is immune from extra-contractual, bad-faith type damages.  Id.

This is because Citizens is not a private insurance company.  Id.  It is a government entity, which courts have found make it critical to government function.  Id.  As such, Citizens is immune from some types of damages which private insurance companies are not, like the lost rent here.  Id. The Florida Supreme Court saw the lost rent for what it was—a damage over and above the policy which is considered a bad-faith type of damage—and it ruled Citizens, as a government entity, was immune from such damages.  Id. Unfortunately, this is a huge loss to Citizens policyholders who cannot recover damages over and above the contract, even if they were caused by Citizens's wrongful conduct. 

However, the good news is that the Florida Supreme Court did reaffirm that extra-contractual damages—like the lost rent, lost opportunities, extra expenses or debts, etc. discussed above—are recoverable in a bad action against a private insurance company, which most insurance companies are, under Fla. Stat. § 624.155 as long as the necessary statutory steps are taken to preserve that right.

Steps You Need to Take to Preserve a Claim for Bad Faith

The steps for preserving a claim for bad faith are outlined in Fla. Stat. § 624.155(3) and require the filing of a timely and statutorily adequate Civil Remedy Notice that meets all of the requirements on Form DFS-10-363 and the statutory requirements of Pin-Pon Corp. v. Landmark Am. Ins. Co., 2020 WL 3038576 (11th Cir. 2020) and Julien v. United Property and Cas. Co., 2020 WL 5652364 (4th DCA 2020).  Do you know what these steps are?  Do you know how or when to file a proper Civil Remedy Notice?  Are you confident your attorney does?  Has your attorney ever handled a bad faith claim?  When a simple misstep can cause you to lose your right to recover extensive damages, i.e., perhaps a substantial sum of money, it is imperative that your attorney knows the right steps to take. 

If you want the peace of mind that comes with knowing you have professionals making sure your rights are protected and your best interests are being treated as a priority, contact our experienced team and learn what it feels like to be valued as a client.  We never charge any fee or cost for an initial insurance claim review to explain to you, in a way you understand, what is happening with your case and answer any questions you may have.