Insurance bad faith occurs when an individual’s insurance company does not live up to the promises indicated by his or her policy coverage. In cases of bad faith, the policyholder can take legal action against the insurer.

If you think your insurance company may have acted in bad faith after you filed a personal injury claim, read on for answers to common questions about bad faith lawsuits.

What type of actions fall under bad faith?

When an insurance company is acting in bad faith, their actions could include failure to investigate a claim promptly or refusal to pay a reasonable and proven claim. The insurer may delay by requiring you to complete unnecessary paperwork, ignore your inquiries and communications and/or deny your claim without providing justification for the denial.

What steps should I take when my insurer acts in bad faith?

Under Florida law, the policyholder must file a complaint with the insurance company. Once the adjuster receives this complaint, he or she has 60 days to resolve the company’s bad faith actions.

If the insurance company does not satisfy your claim within that time frame, you can file a lawsuit for bad faith. You can also report the insurance company to the Florida Office of Insurance Regulation.

How does the court determine whether the insurer acted in bad faith?

The Florida statute indicates that an insurance company must exercise the same judgment when settling a client claim as used when conducting business in its own interest. Generally, the insured party must prove in court that he or she had a valid insurance claim that the insurer denied without reason.

What damages can the court award for bad faith?

In Florida, the insured party can receive both consequential and punitive damages. Consequential damages cover costs accrued by the individual as a result of the bad faith actions.

Punitive damages can equal the greater of three times consequential damages or $500,000. However, the court only awards punitive damages when the insurance company acts in bad faith as a general business practice with actions including malicious, wanton and willful disregard of the policyholder’s rights.

Florida is one of the states with the broadest definition of bad faith. These laws protect the rights of insured individuals and businesses.