Insurance Company’s Golden Rule: Treat Every Claim As If It Were Your Own

When an insurance company issues a policy, it is promising to adjust claims with the same care and diligence it would use if it were their own claim.¹ Florida provides that insurers owe “a duty to their insureds to refrain from acting solely on the basis of their own interest in settlement.”² In essence, the insurance company owe a duty to its insureds to abide by the golden rule; do unto others as you would have others do unto you.

Florida’s bad faith law is “founded upon the obligation of the insurer to pay when all conditions under the policy would require an insurer exercising good faith and fair dealing towards its insured to pay.”³ The insurance company must perform its obligations under an insurance policy in good faith and fair dealings.⁴ The insurance company may deny claims it believes in good faith are not covered in a policy, even if it is later determined that the denial was not proper.⁵ However, throughout the adjustment of a claim, the insurance company has many good-faith duties, including acknowledging and promptly acting on communications from its insureds,⁶ notifying the insured of any additional information required,⁷ and paying, partially paying, or denying the claim within ninety days.⁸

“[Florida’s] [b]ad faith law was designed to protect insureds who have paid their premiums and who have fulfilled their contractual obligations by cooperating fully with the insurance company in the resolution of claims.”⁹ Florida’s bad faith law merely holds the insurance company accountable for failing to fulfill its obligations. When an insurance company is found to have acted in bad faith, it may be held liable to pay the policyholder for the damages caused by the bad faith conduct “together with court costs and reasonable attorney’s fees.”¹⁰ An insurance company may also face punitive damages if the bad faith actions are shown to occur with such frequency as to indicate a general business practice.¹¹

It is expected that an insurance company acts in good faith and fair dealings and treat all insureds equally. In Florida, the work of adjusting insurance claims engages the public trust.¹² Florida’s bad faith law was put in place for that very reason: to ensure insurance companies are held to the high level of care every policyholder expects.
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¹ Boston Old Colony v. Gutierrez, 386 So.2d 783, 785 (Fla. 1980)
² State Farm Mut. Auto Ins. Co. v. Laforet, 658 So.2d 55, 58 (Fla. 1995)
³ Vest v. Travelers Ins. Co., 753 So.2d 1270, 1275 (Fla. 2000)
⁴ QBE Ins. Corp. v. Chalfonte Condo. Apartment Ass’n, Inc., 94 So.3d 541, 548 (Fla. 2012)
⁵ Bryant v. GeoVera Specialty Ins. Co., 271 So. 3d 1013, 1022 (Fla. 4th DCA 2019)
⁶ Fla. Stat. § 626.9541(1)(i)(3)(c)
⁷ Fla. Stat. § 626.9541(1)(i)(3)(g)
⁸ Fla. Stat. § 626.9541(1)(i)(4)
⁹ Berges v. Infinity Ins. Co., 896 So. 2d 665, 682 (Fla. 2004)
¹⁰ Fla. Stat. § 624.155(4)
¹¹ Fla. Stat. § 624.155(5)
¹² Florida Administrative Code Rule 69B-220-201(3)