Property Insurance

What is bad faith in property insurance?

Bad faith is a tort claim against an insurer that mishandles a covered claim — denying without basis, delaying without justification, or underpaying despite the evidence. Damages can exceed policy limits and may include emotional distress and punitive damages.

Bad-faith insurance litigation is the remedy for carriers who fail to handle covered claims reasonably. It's distinct from a contract claim on the policy itself: the contract claim seeks the policy benefits owed; the bad-faith claim seeks tort damages for the carrier's mishandling.

Alabama bad faith.

Alabama recognizes both "normal" and "abnormal" bad faith. Normal bad faith requires showing the insurer had no debatable reason to deny — a high bar. Abnormal bad faith covers more egregious conduct: intentional or reckless mishandling beyond mere coverage debate. The Brechbill standard governs.

Florida bad faith.

Florida codifies first-party bad faith in Fla. Stat. § 624.155, requiring statutory pre-suit notice and a 60-day cure period before suit can be filed. The carrier that pays the underlying claim during the cure window typically defeats bad faith on that claim; the carrier that doesn't, faces extracontractual damages.

Damages.

Bad-faith damages can exceed policy limits and may include the unpaid policy benefits, consequential damages (financial harm, emotional distress where state law permits), attorney's fees, and punitive damages where the conduct is egregious. The exposure is real and concentrates carrier minds during negotiation.

For more, see our first-party insurance practice page and the Brechbill standard glossary entry.

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