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Florida Supreme Court Decides 'Bad Faith' Claims Against Citizens Property Insurance Co.

What is the latest in the ongoing litigation involving Citizens Property Insurance Co.

As you may recall from previous blog posts, Citizens Property Insurance Company ("Citizens") has endured a string of lawsuits over the past several years within the state of Florida. As a bit of review, the state-created insurance entity manages over 500,000 policies within Florida, and is working diligently to bring this number down amid unrelenting claims of water damage, sinkholes, and similar disasters. In other words, the company faces an onslaught of litigation each year, including the most recent holding out of the Supreme Court concerning claims of 'bad faith' claims denials.

In a case captioned "Citizens Property Ins. Corp. v. Perdido Sun Condominium Ass'n, Inc." the petitioner urged the Florida Supreme Court to insulate it from liability under a statutory exception to immunity - an exception known as "first party bad faith." Under this caveat to sovereign immunity (which is generally enjoyed by state agencies and insulates state actors from liability), a group like Citizens could face liability for willfully wrongfully denying claims if doing so was the result of the insurer's refusal to attempt to settle the matter. However, an insurer can rebut a claim of bad faith by proving that it "acted fairly and honestly toward its insured," as well as offered the insured's claim "due regard." Moreover, immunity will protect an agency like Citizens from bad faith claims, provided the conduct does not amount to a "willful tort," or intentional conduct.

According to the respondent in the action, Citizens had failed them in the following ways:

  • Refusal to pay the full amount owed under the terms of the policy
  • Refusal to engage in the mandatory appraisal process
  • Delayed payment of the appraisal reward
  • Engaged in conduct to avoid or delay the payment of claims.

Nonetheless, the Supreme Court held that Citizens' alleged misconduct did not rise to the level necessary to find it liable under the "willful tort" caveat, and the respondent would be therefore unable to obtain compensation from the company.

If you are facing a difficult situation with your property insurer and would like to discuss your options, you should contact an experienced property claims attorney promptly to discuss your options.

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