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Homeowner Loses Right to Sue Insurance Company for Bad Faith


When you sue an insurance company for anything related to property damage, there are really two kinds of suits. The first a breach of contract, which generally alleges that the insurance company didn’t live up to its obligations in, or follow the terms of, the insurance contract between it and the homeowner.

But the second kind of lawsuit is a bad faith lawsuit, which alleges that the insurance company acted in bad faith towards the homeowner. This is like saying that the insurance company did something so obviously wrong, or did something in such a blatant way to hurt a homeowner, that the insurance company should be sued.

Bad Faith Lawsuit Obligations

These bad faith lawsuits have specific obligations on the homeowner before a suit can be filed. One of those obligations is notice—a simple letter that tells the insurance company that it has acted in bad faith, and which gives the insurance company the chance to cure or fix the problem. This is often called a civil remedy notice.

But many homeowners get in trouble for failing to prove the notice, or otherwise, providing a notice that doesn’t comply with the requirements in the law. The law requires this pre-suit notice state specifically what the homeowner thinks the insurance company has done that constitutes bad faith. The notice also has to state the names of anyone involved and note the specific language in the policy related to the alleged bad faith.

Recent Case Says Notice of Insufficient

In a recent case, an insurance company denied a homeowner payments needed to repair property that was damaged by fire. The insurance requested an examination under oath (which many policies allow the insurance company to request). In response, the homeowner alleged bad faith, and filed a bad faith notice. The notice letter referenced every single section of the insurance policy, as the sections that were violated. The letter also listed 35 different statutory sections (some relevant and some not so relevant).

The insurance company asked the court to dismiss the case, arguing that the letter was not specific enough to provide the exact notice required under the bad faith notice statute.

The homeowner argued that the law allowed the state to return deficient civil remedy notices (a law that has since been repealed). Because the state could have returned the notice and called it deficient, but did not, the homeowner argued that the notice had to be legal and effective, and thus, the bad faith lawsuit against the insurance company should be allowed to continue.

But the Courts disagreed saying regardless of the state’s right to return deficient bad faith notices, courts still had the ability to find a notice insufficient—even if the state did nothing with the letter. As such, the letter was deficient, and the bad faith claim was dismissed.

If you have a homeowner’s insurance problem, make sure your claim is handled properly. Contact the Miami property damage insurance claims attorneys at Velasquez & Associates P.A. today for help.

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