Bad-faith lawsuits targeting automobile insurers in Florida impose a heavy burden on the state’s auto insurance system and auto insurance consumers. The possibility of winning large bad-faith settlements and court judgments creates powerful incentives for potential claimants and their attorneysto file auto liability insurance claims that otherwise would not be filed.
The Insurance Research Council (IRC) estimates that deterioration in the liability claim environment attributable to Florida’s third-party bad-faith law resulted in approximately $813 million in excess bodily injury (BI) liability claim costs in 2013. This estimate includes costs resulting from the changed liability claim environment attributable to third-party bad-faith lawsuits. It does not include any direct costs associated with the litigation and settlement of actual third-party bad-faith lawsuits.
Third-Party Bad Faith in Florida’s Automobile Insurance System