What is a bad faith insurance claim?
Bad faith addresses an insurer's failure to act fairly and honestly toward its insured, including failing to settle within limits when it could and should have.
Why it matters to an injured person. Where an insurer refuses a reasonable within-limits demand and a judgment later exceeds the limits, bad faith can make the insurer responsible for the excess. That's frequently the only route to meaningful recovery against a driver with low limits.
What changed in 2023.
A safe harbor. An insurer that tenders the lesser of the policy limits or the amount demanded within 90 days of receiving actual notice of a claim supported by sufficient evidence is not liable for bad faith.
Negligence isn't enough. The law now provides that mere negligence alone is insufficient to constitute bad faith.
Claimants owe a duty too — addressed next.
The practical effect is that bad faith claims are harder to establish than before, and the way a demand is made matters more.
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