This legal framework in Florida governs the conduct of insurance companies in handling claims. It establishes a standard of care requiring insurers to act in good faith towards their policyholders. A breach of this duty can occur when an insurer fails to properly investigate a claim, unreasonably delays payment, or denies a legitimate claim without a reasonable basis. For example, if an insurance company offers a settlement significantly below the reasonable value of a claim and refuses to negotiate further, it could be considered a violation of this statute.
The significance of this legislation lies in its protection of insured individuals and entities. It levels the playing field by holding insurance companies accountable for their actions and ensuring they fulfill their contractual obligations. Historically, this legislation arose from concerns about insurance companies prioritizing their own financial interests over the legitimate claims of their policyholders. Its existence deters unfair claims practices and promotes the prompt and fair resolution of disputes. Ultimately, it safeguards the financial well-being of Floridians who rely on insurance coverage to protect themselves from unforeseen losses.
