When an Insurance Company Puts You at Risk of an Excess Judgment

When you purchase liability insurance, whether for your car, business, or home, you expect that your insurer will defend and protect you if someone files a claim against you that is covered by your policy. You expect your insurance company to protect you from the financial consequences of a lawsuit. However, this isn’t always the case. Sometimes, insurers don’t act in the best interest of their policyholders. Instead of promptly settling a claim for a reasonable amount within your policy limits, your insurance company may wrongfully deny coverage, refuse to negotiate in good faith, or cause delays. When this happens, you, the insured, could face an excess judgment, putting your assets at serious financial risk.

Your Insurer’s Legal Obligation to You

In Florida, insurance companies are legally obligated to act in good faith toward their policyholders. As a liability policyholder, the following are some of the key legal obligations your insurer owes you under Florida law;

• Duty to provide you with legal defense if a covered claim is made against you
• Duty to settle where a reasonable person, faced with the total exposure, would do so
• Duty to communicate regarding settlement opportunities, advise regarding the probable outcome of litigation, warn of the possibility of exposure over policy limits, and advise you of any steps you can take to avoid this excess exposure

Insurance companies, when protecting their insureds from claims, must act with the same care and diligence as if the claim was being made against the company directly. If your insurance company fails in its duty towards you, specifically, if it has a chance to settle a covered claim within your policy’s coverage limits, but fails to do so, it could put you at risk of an excess judgment.

What Is an Excess Judgment?

An excess judgment occurs when a plaintiff takes their case to trial after the insurance company fails to settle the case, and the court awards a judgment against you greater than your policy limits. For instance, suppose your auto insurance has a liability limit of $200,000. You are involved in a collision and the other party files a claim against you. The claim is likely worth $400,000, but the other party is willing to settle out of court for $200,000. Your insurer refuses to pay and decides to go to trial, hoping for a lower verdict. The jury then decides to award the claimant $400,000. In such a case, you would be personally liable for the remaining $200,000.

Often, excess judgments arise when an insurance company rejects a reasonable settlement offer within policy limits, delays or denies coverage without proper justification, or fails to investigate or assess claims properly. In such cases, if the insurer’s decision results in an excess judgment, it can put your personal assets at risk. It could mean losing your personal or business assets, damage to your credit, or wage garnishment.

What Can You Do?

When an insurer has a chance to settle a claim within a policy’s coverage limit but fails to do so, this gives rise to a claim for “insurance bad faith.” If you can prove that your insurer acted in bad faith, you may be able to hold them accountable for the full amount of the judgment and other damages. A skilled attorney can help you protect your rights.

Contact a Tampa Insurance Bad Faith Lawyer

If your insurer has acted in bad faith and exposed you to an excess judgment, or if your insurance company has failed to settle a claim against you, contact our skilled Tampa insurance bad faith lawyers at Gunn Law Group P.A. for legal help.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0700-0799/0766/0766ContentsIndex.html