A statutory bad faith claim is NOT tolled merely because the property insurer invoked the appraisal process in the property insurance policy. Zaleski v. State Farm Florida Ins. Co., 46 Fla.L.Weekly D416b (Fla. 4th DCA 2021). A statutory bad faith claim requires the insured to comply with Florida Statute s. 624.155 and submit a civil remedy notice with Florida’s Department of Financial Services identifying the bad faith violations. The insurer is given sixty days to cure the asserted bad faith violations (typically involving non-payment or the payment of a lowball amount due to failure to settle a claim in good faith).
A statutory bad faith claim under s. 624.155 “is ripe for litigation when there has been (1) a determination of the insurer’s liability for coverage; (2) a determination of the extent of the insured’s damages; and (3) the required [civil remedy] notice is filed pursuant to section 624.155(3)(a).” Zaleski, supra (citation omitted).
In Zaleski, the property insurer argued that the sixty-date statutory cure period under section 624.155 should be tolled when it invokes the appraisal process within this sixty-day window; and because the insurer timely paid the award rendered by the appraiser, there can be no statutory bad faith. This argument was rejected:
The appraisal award is not a condition precedent to [the property insurer’s] obligation to pay Homeowners a fair amount due under the policy. To allow the sixty-day cure period to toll at the invocation of the appraisal process would allow insurers to cause delay or otherwise act in bad faith while escaping liability as long as it makes payment within the sixty-day time period of the appraisal award. This would negate and frustrate the purpose of the statute.
Of importance, when an insurer receives a statutory bad faith claim (i.e., the civil remedy notice), it
[M]ust evaluate a claim based upon proof of loss required by the policy and its expertise in advance of a determination by a court or arbitration. In other words, when an insurer receives a claim, it has an independent duty to evaluate the claim in advance of a determination of damages and take timely, independent action. Thus, the focus in a bad faith case is not whether the insurer ultimately paid the amounts due under the policy, but whether it acted reasonably in evaluating a claim prior to the determination of damages.
For example, “[a] fair evaluation would be evidence that an insurer did not action in bad faith. But a lowball offer made in bad faith is not cured by an insurer ultimately paying what it is later found to owe via appraisal process.” The determination of good faith or bad faith, however, “is usually a question for the finder of fact.”
Zaleski, supra, (internal citations omitted).
As I have mentioned in prior articles, it is key to work with qualified counsel when pursuing a property insurance claim and, of course, a bad faith insurance claim. Counsel can ensure all rights are preserved when it comes to preserving a bad faith claim and preparing and submitting the required civil remedy notice that starts the clock for the sixty-day cure period. Notably, in Zaleski, the insurer recognized coverage and paid what the insured believed, and what turned out to be, a lowball amount. The insured filed its civil remedy notice to start the cure period. The insurer then invoked the appraisal process hoping it would cure the sixty-day cure period; it did not. The appraiser determined the insured was entitled to almost the amount the insured’s adjuster valued the claim, which the insurer paid. However, as discussed, the invocation of the appraisal process and the timely payment of the appraiser’s award had NO bearing on whether the insurer committed bad faith based on its initial lowball payment.
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