Q: Is this an accurate interpretation of Florida's third-party bad faith law?
Question for Attorneys: Bad Faith Law in Florida and Potential Misrepresentation
Is the following interpretation of bad faith law in Florida correct?
In most jurisdictions, including Florida, an insured party must first attempt to settle their underlying insurance claim before filing a bad faith lawsuit. This means the initial dispute over coverage and claim amount must be resolved—either by final judgment or settlement—before pursuing a bad faith claim against the insurer for wrongful handling of the claim.
If this is correct, why would an attorney claim that a bad faith lawsuit cannot be filed if the case has settled? Attorneys are expected to provide competent legal advice and cannot contradict established statutes or case law.
Could this constitute fraudulent misrepresentation if an attorney knowingly provides incorrect information that discourages a valid legal claim?
A: My opinion: The jury decision in the underlying lawsuit is what determines if bad faith existed in pre-suit negotiations compared to the amount of the jury verdict. Example: If the carrier was given the opportunity to settle the case for policy limits and failed to do so timely (90 days pursuant to HB 837 enacted on March 24, 2023), then bad faith would need to be determined in a subsequent trial. However, whether it is financially practical to proceed with the bad faith trial will depend on the amount of the jury verdict compared to the pre-suit offer. If the parties agree to settle, then where is the bad faith? In a first party action (uninsured/underinsured motorist claim), you can also avail yourself to any violations of the Civil Remedies Act which has a 60-day cure period.
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