Bad faith is a term thrown around frequently by people, lawyers included, in conversation. It is often spoke of as a simple proposition that will surely result in some big monetary damages to the carrier. Reality is, bad faith damages are diff icult, not necessarily to prosecute but the process of getting to a point where you can even discuss bad faith damages is a long road. It should first be known that in Florida an insured normally can not sue its insurance company for bad faith damages until a judgment is entered. Bad faith is also known sometimes as extra-contracualt damages. This is because you are seeking damages outside and above and beyond what the contract allows for. Every insurance policy is a contract and every policy contains a policy limit. This limit is what the two parties agreed would be the maximum the carrier would have to pay under the contractual terms. So, when you sue your insurance company because they breached the contract, you already know what the most they have to pay is, your limits.
To get an insurance company to pay more than those limits requires a bad faith or extra contractual claim. Essentially these are punitive damages. The State of Florida has several statutes in place telling insurance companies how they must treat their insureds and if they fail to meet those standards, they can be liable for these punitive type damages. These usually include requirements such as prompt communications, fair dealings, paying claims when necessary and false statements to the insureds. Just because an insurance company denies a claim or is a pain to deal with does not mean they violated these statutes necessarily and before you can sue them for these violations you must win the underlying case first and obtain a judgment against your insurance company. It is like a criminal case. You have to find the person guilty before you can sentence them. Bad faith cases are a small percentage of overall insurance suits but these days, they are likely to become much more common.