FAQs on Insurance Coverage Disputes, Claims, Company Fraud & Bad Faith Laws in Fort Lauderdale

1. What is "no-fault" insurance?
2. What is "property damage liability" insurance?
3. What is a "bad faith" lawsuit?
4. What are first- and third-party bad faith claims?
5. When is underinsured motorist coverage triggered?
6. Under what circumstances may a claim for disability insurance be denied?
7. What are bodily injury liability policies?
8. When is personal injury protection (PIP) coverage required in Florida?
9. What is the importance of being earnest when applying for insurance?
10. What are the primary precautions and documentation that an insurance applicant should maintain?

1. What is "no-fault" insurance?

   In states with no-fault automobile insurance systems, liability does not depend on which participant causes an accident. Each participant's insurance company pays for the property damage and medical expenses of its policyholders according to the terms of the policy. The no-fault system may not apply in cases where the property damage or medical injury is serious and expensive. In that situation, fault must be determined in order to identify the insurance company responsible for the loss.

   Under no-fault insurance, all recovery for injury must be obtained through one's own insurer, with no determination of the relative liability of the parties. The first-party policies require payment upon proof of loss. The issuer's duty of good faith and fair dealing applies to processing claims by the insurer's policyholder. As a no-fault state, Florida requires that drivers carry a certain amount of insurance.

   Back To Top

2. What is "property damage liability" insurance?

   Property damage liability coverage pays for damage you (or someone driving your car with your permission) may cause to someone else's property, up to the policy limit. Usually, this means damage to another person's car, but it also includes damage to stationery structures. It also may cover the contents of another's automobile.

   Back To Top

3. What is a "bad faith" lawsuit?

   In the insurance context, "bad faith" means the insurer's breach of its duty to deal fairly and in good faith with its policyholders, usually in the context of claim payment. To be liable for the bad faith refusal to provide coverage, an insurer must have breached the insurance contract by failing to pay all that the insurer owed the insured under the terms of that contract. This includes unreasonably withholding benefits, unreasonably delaying payment, and failing to investigate a claim adequately. Bad faith also can occur when a liability insurer wrongfully refuses to defend the insured against a third party's claim.

   Under Florida's bad faith statute, the aggrieved party is required to file a notice with the State Insurance Commissioner, which allows the insurer 60 days in which to "cure" the offending conduct. Payment of policy limits within this 60-day period bars any subsequent statutory bad faith claim.

   Back To Top

4. What are first- and third-party bad faith claims?

   Bad faith claims typically are classified as being either "first-party" or "third-party" bad faith. In either instance, they arise from the insurer's obligation to act in good faith and deal with its insured fairly.

   A "first-party" bad faith claim is a claim that the insurer failed to perform without proper cause. A "third-party" bad faith claim is a claim that (1) an insurer unreasonably refused to settle or pay a liability claim against its insured; and (2) the insurer's failure to perform led to a judgment against the insured that was greater than the plaintiff's settlement offer.

   Back To Top

5. When is underinsured motorist coverage triggered?

   Underinsured motorist coverage is triggered when the insured's damages are more than the liability limits of the tortfeasor (more than the tortfeasor's policy will pay). The coverage also may be triggered when the insured victim's underinsured motorist coverage limit is greater than the tortfeasor's liability insurance limits.

   Back To Top

6. Under what circumstances may a claim for disability insurance be denied?

   What constitutes "disability" can be a gray area, depending on the opinions of the insurance company's doctors versus those of the policyholder's own physicians. Bases for denial of claims include:

   1. Pre-existing condition issues;
   2. Non-coverage issues based on the date the claim is filed;
   3. Improper claim filing;
   4. Failure to supply objective or subjective evidence and support of the claimant's disability;
   5. Debates over appropriate physician care;
   6. Claims of deceit based on review of surveillance material; and
   7. Findings by insurers' hired medical reviewers, functional capacity evaluators, and independent medical examiners that the claimant is not disabled.

   Back To Top

7. What are bodily injury liability policies?

   Bodily injury liability policies cover occurrences resulting in "bodily injury," a defined term that usually includes personal injury, sickness, or disease during the policy period, including death resulting from those conditions. The cause of the bodily injury usually need not be sudden, so sickness caused by repeated exposure to harmful conditions usually is included.

   Back To Top

8. When is personal injury protection (PIP) coverage required in Florida?

   Under Florida law, every owner or registrant of a "motor vehicle" (other than a motor vehicle used as a taxicab, school bus, or limousine) that is required to be registered and licensed in Florida must maintain "security."

   Every nonresident owner or registrant of a motor vehicle that has been physically present in Florida for more than 90 days during the preceding 365 days must maintain the required security. That coverage must be in effect continuously while the motor vehicle is in Florida.

   Back To Top

9. What is the importance of being earnest when applying for insurance?

   When you apply for insurance, you should always give honest answers to the questions on the insurance application. Once again, your mother’s advice when you were a child was correct: "Honesty is the best policy."

   Sometimes, people deliberately conceal information requested on an insurance application because they are afraid the policy will not be issued if they tell the truth. People who follow this strategy often wind up only fooling themselves. Eventually, the insurance company may discover the truth and cancel the insurance policy. You are better off if the insurance company refuses to issue a policy to you, then thinking you have protection that really does not exist because the insurance company could deny, for fraud or misrepresentation, any claim you make after the policy is issued.

   If you tell the truth on an application and the insurance company refuses to insure you, you can always apply to another company. Eventually, you may be able to find a company that will insure you. Even if you are unable to find a company to insure you, you are better off knowing where you stand than having false hope. Take the example of a man who lies on his life insurance application, only to have the insurance company deny coverage to his wife and children after he dies. His family would have been better off if he told the truth and tried to get coverage with another insurance company or made other arrangements to protect his family.

   Individuals must be very careful because even if they tell the truth to the insurance agent filling out the application, the agent may not record a truthful answer. He may try to convince you that the information you have provided him is unimportant and does not need to be included in the application. You are always better off over-disclosing than underdisclosing.

   Back To Top

10. What are the primary precautions and documentation that an insurance applicant should maintain?

    The above insurance claim suggestions imply:

    1. NEVER sign a blank application or an application that has not been completely filled out.
    2. NEVER sign an application before reading it carefully.
    3. MAKE SURE you receive a copy of anything you sign and keep the copy for your records.
    4. WHEN YOUR POLICY IS ISSUED, check to see if your application is attached to it. If it is attached, read it carefully. If changes were made to the application after you signed it or you realize that a mistake was made, contact your agent to correct the application. Send a confirming letter to the agent, with a copy to the insurance company to protect yourself.

    Back To Top