Car Accident Bad Faith Claims

While “bad faith” car accident claims are the exception and not the rule, they can provide a very significant benefit for our clients. Insurance bad faith claims come in two types, “first party” and “third party” cases.

First party car accident bad faith claims arise when an injured person has a claim against his or her auto insurance company for its failure to pay uninsured or underinsured motorist benefits. Uninsured motorist coverage provides benefits if a person is injured by an at-fault driver who has either no bodily injury insurance coverage or who has less coverage than the value of the injury claim.

In order to establish a first party bad faith claim, the injured person must provide his or her own insurer the opportunity to settle the claim within the UM policy limits. It is critical that the insurer be provided sufficient information to demonstrate that the person’s injuries satisfy Florida’s personal injury protection permanency threshold. Simply put, in order to recover uninsured motorist benefits beyond lost wages and unpaid medical bills, by Florida statute, the person has to have suffered some degree of permanent injury. Injuries that fully resolve, regardless of how painful the injuries may have been at first, do not give rise to a significant car accident injury claim.

If the UM insurer fails to pay the policy limit, the claimant must then file and serve a Civil Remedy Notice that spells out how the insurer was unreasonable in failing to settle the claim. The Civil Remedy Notice must also give the insurer sixty days to resolve the claim at, or within, the UM policy limits.

In contrast, third party bad faith claims arise when an auto insurer for an at-fault driver fails to settle a claim when it should have. In so doing, the insurer exposes its customer to a very large judgment when the claim could, and should, have been settled within the policy limits. In order to make a bad faith claim, the injured person must communicate to the insurer it has the opportunity to secure a release of the at-fault driver or owner of the vehicle he or she was driving, for the amount of the bodily injury coverage limit, or less.

From the perspective of the liable party, he or she would want the insurer to settle the case. However, if the insurer fails to do its due diligence to properly evaluate the claim or decides to “roll the dice” to see if a jury comes back with a very conservative verdict, its customer may end up with a very large judgment entered against him or her, which is a judgment that would not have been entered if the insurer had simple done its job to settle the claim.

In this situation, the at-fault party can assign rights to pursue a bad faith claim against the auto insurance company for failing to resolve the case, when, if acting reasonably and fairly towards its insured, it should have done so. Often, bad faith cases resolve for many times the original coverage amount. For example, our Jacksonville car accident bad faith attorneys recently resolved a case against a major insurer for $600,000.00, when its insured only had $25,000.00 in bodily injury coverage.

In order to establish the basis for a first party bad faith claim, the injured person’s attorney must provide the insurer with sufficient basis for it to determine the value of a claim. In doing so, it is best to provide as many records as possible, including records for prior care for the same body parts injured in the subject car accident. This is because it very well may be reasonable for the insurer to deny paying policy limits if there are unanswered questions about whether the client’s current complaints are the result of pre-existing conditions. As such, it pays to hire an experienced attorney. Our Jacksonville car accident bad faith lawyers have handled these types of cases for decades and we know how to provide an insurance company with everything it needs to fully evaluate a claim.