Defined term
First-party bad faith
First-party bad faith is a tort claim against an insurer that mishandles its own insured's claim — separate from the contract dispute, with damages that can exceed policy limits.
First-party bad faith arises when an insurer fails to act reasonably in handling its insured's own claim — denying without basis, delaying without justification, or underpaying despite the evidence. The claim is tort-based, separate from the breach-of-contract claim on the policy itself.
Damages can exceed policy limits and may include emotional distress and punitive damages. Alabama recognizes both "normal" bad faith (no debatable reason to deny) and "abnormal" bad faith (intentional or reckless mishandling). Florida requires statutory pre-suit notice under § 624.155 and a 60-day cure period before suit can be filed.
Cases
- Chavers v. National Security Fire & Casualty Co. (1979), Brechbill basis
Statutes
- Fla. Stat. § 624.155