In Florida, a cause of action arises when an insurance company fails to act fairly and honestly toward its insured with due regard for the insureds interests. This typically involves an insurer’s refusal to settle a covered claim within policy limits when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured with due regard for the insureds interests. For example, if a homeowner suffers damage from a hurricane and the insurance company unreasonably delays or denies the claim, despite clear evidence of coverage and damage within policy limits, this could constitute a actionable offense.
The legal concept protects policyholders from unscrupulous practices by insurance providers. Successfully pursuing such actions can provide financial compensation to insured parties beyond the original policy limits, effectively holding insurance companies accountable for their contractual obligations and ethical conduct. Historically, these legal avenues have evolved to balance the power dynamic between large insurance corporations and individual policyholders, encouraging timely and equitable claim settlements.
