Insurer’s Contractual Vs. Statutory Duties
The Difference Between an Insurer’s Contractual and Statutory Duties Under Florida Law Insurance companies have two independent duties when it comes to paying a claim filed by a policyholder. The first duty is contractual, i.e., the insurer’s responsibilities under the policy itself. This contractual duty extends to any requirements regarding the evaluation and payment of benefits. The second legal duty is that imposed by statute, i.e., by the Florida legislature. State law requires all insurers to “act reasonably and in good faith” when evaluating a policyholder’s claim. Even if the insurer ultimately pays the claim–that is, fulfills its contractual duty–it can still be held liable for acting in bad faith with respect to its statutory duty. Insurer Still Faces Bad Faith Claim Despite Paying Appraisal Award to Homeowner The Florida Second District Court of Appeals recently addressed the interaction of these two duties in a first-party bad faith insurance lawsuit. In Williams v. State Farm Florida Insurance Company, a homeowner filed a claim with his insurer over lightning damage to his property. The insurer acknowledged coverage and made payments to the homeowner over a period of several years. But the homeowner eventually disputed the amount of the loss. This prompted the insurer to invoke an appraisal clause in the insurance policy. While the appraisal was pending, the homeowner filed a Civil Remedy Notice (CRN), which is a necessary precondition to filing a bad faith lawsuit under Florida law. The homeowner ultimately filed such a lawsuit. Before he did, however, but after it received the CRN, the appraiser issued an award and the insurer paid the full amount of that award. Nevertheless, the homeowner still pursued his bad faith lawsuit. A dispute arose before the trial court over whether or not the insurer’s payment of the final appraisal award actually “cured” the CRN. In other words, did the fact that the insurer paid the award after it received the CRN justify dismissing the homeowner’s lawsuit? The trial court said “yes.” The Second District said “no.” The appellate court explained that both the insurer and the trial court had conflated contractual and statutory duties. The appraisal award addressed contractual duty. But under Florida’s bad faith insurance statute, once the homeowner filed his CRN, the insurer had 60 days to respond–i.e., to cure the notice by fulfilling its obligations. But the insurer waited past the 60 days until the arbitration process was completed. The insurer argued that the 60-day period should have been “tolled” until the date of the arbitration award. The Second District disagreed. Again, whether or not the insurer met its contractual duty was a separate question of whether it met its statutory duty. As such, the homeowner could proceed with his bad faith claim. Contact Us to Help You Today Insurance companies and policyholders alike need to be aware of how different aspects of Florida law may affect their rights in the event of a dispute. An experienced Tampa bad faith insurance attorney can provide guidance and legal representation. Contact HD Law Partners today to schedule a consultation. Source: scholar.google.com/scholar_case?case=813-253-5333345514889 Posted in Insurance Bad Faith | No Comments » Connect with us Archives May 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 September 2025 July 2025 June 2025 January 2025 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 May 2022 April 2022 March 2022 November 2021 October 2021 September 2021 August 2021 July 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 November 13 Categories Alimony Appellate Arbitration Auto Accidents Auto Insurance Business Corporate Business Insurance Law Child Custody Child Support Criminal Law Divorce Family Law FEMA Insurance Payments Florida’s Mandatory 2‑Hour Legal Professionalism CLE: Foreclosure Defense Fort Myers Hurricane Insurance Attorney General Guardianship HD Law Partners Service HOA/Property Management Homeowners Association Homeowners Insurance Hurricane Claims Hurricane Insurance Insurance Bad Faith Insurance Claims Insurance Defense Insurance Litigation Landlord Tenant Law Enforcement Liability Loan Modifications Mold Water Damage Parental Rights Paternity Personal Injury Premises Liability Law Prenuptial Agreements Private Security Property Distribution Property Owner Law Sarasota Insurance Litigation Attorney Slip Fall Tampa Business and Corporate Attorneys tampa family attorney Tampa Insurance Attorneys Timeshare Timesharing Uncategorized HD Law Partners is proud to be your trusted full-service law firm Quick Links Property & Casualty Business & Corporate Litigation Family Law Contact Us Careers Get In Touch 2002 North Lois Avenue Suite 510 Tampa, FL 33607 813-253-5333 Contact Us