Insurance Insight - Florida: Claimant's Bad-Faith Claim Doomed By Insured's Failure To Cooperate During Settlement Negotiations

A federal District Court applying Florida law recently ratified an insurer's diligent responses to a claimant's cat-and-mouse attempt to manufacture a bad-faith set-up claim. The ruling is interesting because it addresses two common situations. First, the insured did not cooperate with the insurer's attempt to meet a time-limited settlement demand, which caused the deadline to pass without settlement. Second, the claimant tried to create a no-win situation for the insurer by offering to forego collection on an excess verdict if the insurer would forego an appeal. The insurer responded appropriately with regard to both issues, providing a road map for future insurers to obtain summary judgment when put in the same situations.

The Claim

In Hinson v. Titan Ins. Co., No. 3:13-CV-394-MCR-EMT, 2015 WL 5256848 (N.D.Fla. Sept. 6, 2015), the insured caused a collision with a cyclist. A day after the collision, the adjuster had already confirmed that the insured was clearly at fault, and that the cyclist's injuries exceeded the policy limit. Accordingly, she set reserves in the amount of the policy limits to be paid out to the driver of the motorcycle. The adjuster also sent an "excess letter" to the insured, informing him that the driver's injuries could exceed the policy limits and that he could be personally liable for any excess judgment. Within a week of the collision, the insurer sent a settlement letter offering to pay the full $10,000 bodily injury limit; the claimant's counsel rejected it. Shortly over a month following the collision, the insurer again offered the bodily injury policy limits and tendered the full policy limits for the bodily injury claim, which was also rejected.

The Demand

Three months following the collision, the insurer received from claimant's counsel a time-limited demand to settle in exchange for (1) the bodily injury policy limits, (2) an amount to cover the damages to the motorcycle plus interest and the cost of upgrades and (3) an affidavit from the insured identifying any other applicable insurance. The letter demanded compliance with all terms within 20 days. The claims adjuster for the insurer attempted to contact the insured multiple times by phone concerning the affidavit but was never able to speak with him directly. The adjuster also mailed a letter to the insured with a copy of the demand letter and an affidavit for him to execute. In addition to sending the letter, the adjuster also hand delivered a copy of...