First-Party vs. Third-Party Bad Faith Insurance Claims in Florida

Insurance companies are supposed to act in good faith, which means fulfilling their contractual obligations to policyholders. Unfortunately, this is not always the case.

Florida home insurance companies may attempt to withdraw from its responsibility to honor a policyholder’s legitimate claim, especially after a major weather event. The company could then face a legal action called a first-party bad faith claim. What’s the difference between this from a third-party bad faith action? Our insurance bad faith lawyers explain.

If you need to pursue a bad faith claim against your homeowners insurance, one of our skilled attorneys at Insurance Claim HQ can help you obtain a successful outcome.

The Difference Between Third-Party and First-Party Bad Faith Claims in Florida

Insurance companies that do not always act in good faith may find themselves facing either a first-party and third-party bad faith insurance claim. The insurance company is obligated to act in good faith; the main difference lies in who the harmed individual is.

First-party claims

Policyholders, as direct clients of an insurance company, can file a first-party claim against their insurance carrier when it does not act in good faith. When you are an insured party, you should expect to receive payment for the cost of the damage or a mishap covered by your policy. This represents a first-party claim.

If your insurance carrier fails to uphold its part of the contract by not honoring your claim, you may pursue a first-party bad faith legal action against the insurer. Damages caused by fire or hurricane winds to your home or property are examples of first-party insurance claims.

Third-party claims

Third-party claims are liability insurance issues. The insured party, in these cases, is not you but rather someone who has caused you harm and is liable for the damage. That is to say, you’re acting as a third party seeking compensation from another individual’s liability coverage after that person’s actions or non-actions caused you harm.

In a liability claim, a business or a private individual could be the insured party.

If the other party’s liability insurance covers the type of harm you suffered, such as injuries from falling on a broken stairway, their insurance carrier should act in good faith and compensate you.

Common Law and Statutory Remedies

If and when it appears that an insurance company is not acting in good faith by paying you either a first-party or third-party claim, you may pursue the applicable common law or statutory remedy. In some cases, a judge’s ruling may serve as the deciding factor in a third-party or first-party bad faith claim.

Common law remedies

In cases involving legal actions filed against companies or individuals acting in bad faith, the courts tend to rule on certain issues in a specific way. The collection of the courts’ previous rulings serves as the common law and forms the basis of how judges rule on future bad faith cases.

Statutory remedies

In addition to common law remedies, state governments have also passed laws related to bad faith issues involving insurance companies. This type of legislation, which reflects statutory law, provides plaintiffs with an additional remedy option when they decide to pursue a bad faith claim against an insurance company.

Florida law provides both statutory and common law remedies for plaintiffs who wish to file bad faith claims.

Civil Remedy Notice Requirements

Individuals residing in Florida who wish to file a bad faith suit against an insurance company must first submit a Civil Remedy Notice. The plaintiff must submit the CRN form to the Florida Department of Financial Services at least 60 days before initiating any legal action against the insurance company involving a third-party or first-party bad faith claim. The CRN form is available through the Florida DFS and must include the following when submitted:

• Statutory law violated: The CRN must include the Florida bad faith law that the insurance company violated, along with the specific verbiage contained in the applicable statute.
• Facts and circumstances related to the claim: The manner in which the insurance company violated the noted Florida statute must be fully described.
• Involved parties: The CRN must include the names of any and all individuals involved in the intended civil action.
• Relevant policy language: If there is any relevant specific language in the insurance company’s policy, the CRN must reference it unless the intended civil action involves a third-party bad faith claim in which the insured party did not provide a copy of the policy after receiving a written request.
• Statement of Intent: The CRN must contain a statement that the initiator of the civil action is providing notice regarding an intent to pursue a civil remedy allowed by statutory law.

The court may render the CRN defective if it does not comply with any of the specified requirements.

Limits to Recovery

Florida’s HB 873 statute, signed into law on March 24, 2023, changed some of the factors governing the Sunshine State’s framework regarding third-party and first-party bad faith claims. In addition to reducing the statute of limitations for filing a claim from four years to two years, HB 873 provides a 60-day “safe harbor” period for insurance companies to respond to and attempt to correct the issues involved in a bad faith claim.

HB 873 also limits the way Florida’s courts calculate reasonable attorneys’ fees in bad faith claims. The courts typically use the “lodestar method” to determine the amount awarded to cover attorneys’ fees based on the number of hours an attorney would devote to a case multiplied by a reasonable hourly rate.

Prior to HB 878, Florida also allowed courts to apply a 1.5 or 2.0 multiplier to the “lodestar method” amount in certain cases. Unless there exists “a rare and exceptional circumstance,” courts will now presume that the previous multipliers are no longer needed.

Contact a Bad Faith Insurance Attorney Serving Florida

Rather than navigating through the often-complex details of an insurance case all on your own, give serious consideration to teaming up with an attorney who can remain focused on your best interests.

Whether your claim involves a third-party or first-party bad faith issue, one of our knowledgeable attorneys at Insurance Claim HQ can explain Florida’s available civil and statutory remedies. Schedule an informational free consultation and let us make good use of our team’s many decades of experience in maximizing recovery amounts. Call us today or reach out online.