Bad faith actions against insurance companies are fairly common in Florida, but many people may not even be aware of this avenue for seeking damages from an insurer that fails to hold up its end of the bargain. The U.S. District Court explains the bad faith cause of action in Markel American Insurance Company v. Flugga.

Mr. Flugga was injured in an April 2010 accident on Country Road 44 when his motorcycle collided with a car carrying two people. Flugga was at fault for the accident in which he and his passenger – Ms. Baker – were seriously injured. Flugga’s sister informed his insurer, Markel American Insurance Company, of the accident four days later.

In response to a request from Baker’s lawyer, Markel sent the attorney information concerning Flugga’s coverage on April 27, 2010. After the insurance company requested information about Baker’s injuries in June 2010, her attorney informed the company a month later that there was a publicly recorded hospital lien for more than $72,000 related to Baker’s treatment for her injuries. The lawyer also noted that Baker had sued Flugga for negligence in state court.

Markel located the lein through an online search in August 2010 and tendered a check to Baker for $10,000, the maximum amount of coverage under the plan. The check was returned, uncashed, a little more than one month later. Neither party demanded nor offered a settlement during this time.

On the day before trial was set to begin in Baker’s negligence suit, Markel filed an action in the Middle District, a federal district court, seeking a declaratory judgment ruling that the company was not liable for “bad faith” with respect to its handling of Baker’s claim.

As the court explained, Florida law allows an insured person to sue his or her insurance company when the insurer acts in bad faith in attempting to settle claims against the person and a judgment is later entered against the insured that exceeds his or her coverage. This claim can be brought to recover the difference between the judgment amount and the individual’s coverage.

Markel later filed a motion for summary judgment, arguing that there were no issues of material fact outstanding and that the company was entitled to judgment ruling that it did not act in bad faith. According to the company, it did not attempt to settle the matter with Baker because she didn’t demand settlement and Markel was under a duty to investigate the matter before making a payment to her.

The court ruled that the absence of a settlement demand or offer, standing alone, is generally not enough to show that an insurer acted in bad faith. However, an insurer is obligated to initiate settlement proceedings where liability is clear and the injuries it knows of are sufficiently serious that a judgment is likely to exceed policy limits, according to the court.

“In this case, given the minimal coverage of $10,000 as compared to the known injuries suffered by [Ms.] Baker, coupled with her retention of a lawyer to press her claim and the time that elapsed from the date of the accident to the tender of the policy limits, there is a genuine issue of fact as to whether, on the basis of the totality of the circumstances, Markel American acted in bad faith,” the court held. As a result, the company was not entitled to summary judgment.

While the court ultimately dismissed the action on other grounds (finding that the matter should be pursued in state court), its ruling gives a good overview of Florida law as it concerns bad faith insurance claims, including those arising from auto and motorcycle accidents.

At Anidjar & Levine, our South Florida motorcycle accident attorneys have vast experience representing clients throughout the region, including in Hialeah, Coral Springs and Pompano Beach, in bad faith insurance claims and a wide variety of actions related to bike and car crashes. Call us toll-free at 800-747-3733 or fill out and submit an online Contact Us form to schedule a free consultation.

Related blog posts:

Court Rejects Bad Faith Claim Against Insurance Company in Fatal Car Crash – Novoa v. Geico

Court Allows Bad Faith Claim Against Car Insurance Company to Go Forward on Failure to Investigate – King v. Geico

Court Reverses Florida Motorcycle Accident Ruling on Comparative Negligence Grounds – Diaz v. FedEx