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How to Sue Your Long Term Disability Insurance Company for First Party Bad Faith

Tucker Law Group
November 11, 2019

When you file a long term disability claim after you suffer an illness or injury you expect your insurance provider to handle your claim promptly and thoroughly. After all, it is when you have suffered a debilitating illness or injury that you need your disability insurance provider to conduct their investigation and provide the benefits you need.

Unfortunately, this process is not always handled in a timely manner. Also, you may not receive fair pay for your disability insurance claim. If this happens, you may have a bad faith insurance claim against the insurance company.

What Is “First Party” Bad Faith?

“First party” bad faith is when your own insurance company does not act in good faith toward you when paying or settling a claim. Disability insurance companies engage in bad faith in many different ways, including:

  • Unreasonable delay in payment of insurance benefits
  • An improper interpretation of a policy term that unreasonably favors the insurer
  • Failing to investigate the claim properly or promptly
  • Denying a claim through the use of unwarranted standards
  • Offering significantly less for the claim than what is fair to receive

How to Sue Your Insurance Provider for First Party Bad Faith

Statutes exist in many states to protect insureds from bad faith disability denials. These statutes vary by state, but they exist to regulate insurance companies. Though insurance companies must act in good faith, they do not always handle a claim fairly or according to their own policy.

Take Florida as an example. In Florida, the law did not allow you to sue your own insurance company for bad faith until 1982 when the Florida Legislature enacted Section 624.155. This law extended the duty of an insurer to act in good faith in handling claims to its own insureds. It also created consequences for an insurer acting in bad faith in the first party situation.

Civil Remedy Notice

Before you can sue your own insurance company for bad faith in Florida, you must first give the Florida Department of Financial Services and the authorized insurer 60 days written notice of the violation of the Civil Remedy statute. This notice is often referred to as the “Civil Remedy Notice” or CRN. It is filed online with the Department of Financial Services. Filing this Notice is one of the services we handle as bad faith attorneys.

The statute outlines that no further action will be warranted if, within 60 days after filing notice, the damages are paid or the circumstances giving rise to the violation are corrected. This means the insurance company has 60 days to pay the claim. The Florida Supreme Court has described this as one final opportunity to abide by their own policies when a good-faith decision by the insurer would indicate that contractual benefits are owed.

When the Insurance Company Fails to Respond

If the insurance company fails to respond to a civil remedy notice within 60 days or fails to pay the claim, there is a presumption that they have engaged in bad faith. You may then file a lawsuit against the insurer for two things:

  • An action for the benefits owed to you
  • An action for bad faith

Your bad faith case will be put on hold until you win your case for the benefits owed. In other words, you have to win your case for the benefits before the law allows you to proceed with the bad faith case. In the bad faith case, the insurance company has the burden to prove why it did not respond. This means the insurer must show how it acted in good faith on your claim.

If you win a case for bad faith in Florida, you may recover:

  • Interest on unpaid benefits,
  • Reasonable attorney’s fees and costs
  • Any damages caused by violations of a law of this state

Questions About a Bad Faith Claim? Contact Our Disability Insurance Attorneys

The attorneys of Tucker Law Group are licensed in Florida, but we often counsel clients in conjunction with local counsel on cases nationwide. If you have questions about whether you have a bad faith claim for an unpaid insurance loss, contact our firm today by calling (866) 233-5044 or by submitting an online contact form.