Florida Court Rules Citizens Property Insurance Corporation is not immune from bad faith claims

Attorney Jason MacriAuthor: Attorney Jason Macri

The cost of property insurance in the State of Florida has steadily been on the rise with the ever-looming risk of hurricane-force winds and dangerous flooding. Every year, thousands of Florida homes are damaged due to our potentially extreme weather patterns. In an effort to control the increasing costs of property insurance, the Florida State legislature created a property insurance company named Citizens, with the goal of providing affordable property insurance to Floridians. Citizens is described in the Florida Statute as “a governmental entity that is an integral part of the state, but is not a private insurance company.” Because it was created by the legislature and operates as an insurance company within the State of Florida, Citizens’ operations, procedures, duties and legal status are governed by Florida law.

Typically, if a Florida insurance carrier does not “attempt in good faith to settle claims when, under all circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests”, that insurance company may be found to be operating in “bad faith.” One may bring a bad faith claim against an insurance company and be awarded damages if it can be shown that the insurance company did not act fairly. Because Citizens is technically an arm of the government, it had been previously argued that Citizens was immune from suit at least to the extent that it would not be liable for bad faith claims. In Florida, governmental entities are considered to be sovereign and are immune from liability to a certain degree. The legislature has imposed a cap on the amount of damages that the governmental entity may be liable for and has prohibited bad faith claims from being brought against governmental entities.

Property owner, Perdido Sun, filed a breach of contract lawsuit against Citizens when his home was damaged by a hurricane and he was not satisfied with the outcome of his claim. Mr. Sun prevailed in his breach of contract claim and subsequently filed a second lawsuit against Citizens alleging that they had acted in bad faith during the handling of his claim. Lawyers for Citizens filed a motion to dismiss the bad faith claim arguing they were immune from such a claim based on the Florida Statute that governed Citizens. The Circuit Court granted Citizens’ motion, agreeing that it was immune from bad faith claims. Mr. Sun appealed this ruling, arguing that the immunity provided to Citizens does not apply to “any willful tort” such as acting in bad faith. The Appeals Court agreed with Sun and entered a ruling that Citizens was not immune from bad faith actions. The Court reasoned that “the law does impose a duty of good faith on Citizens regarding its policy holders” and that Citizens has “a duty to handle claims carefully, timely, diligently and in good faith.”

It is clear that insurance is a big business. Whether the company was created by the State of Florida, such as Citizens, or whether the company is privately held, rest assured the bottom line is to generate a profit. If you are making a claim against your insurance company, remember one thing; insurance companies have teams of lawyers on their side. You need a lawyer on your side to help guarantee that your rights are protected. Contact the Law office of Dell and Schaefer. With over 30 years of experience making claims against insurance companies, our lawyers will fight to protect your rights and get you compensated for every dollar you deserve.

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