Bad Faith Claims Against Insurers On The Rise

It appears that there is a growing trend throughout the United States that is reducing barriers and making it easier for insureds to establish their bad faith claims against their insurers, thereby expanding the scope of an insurer’s potential exposure to claims of bad faith.

In light of these recent decisions, it is paramount for insurance carriers to take great care to follow the ever-changing landscape in those jurisdictions where they issue policies and/or handle claims.

For example, in McNamara v. Government Employees Ins. Co., (30 F.4th 1055 (11th Cir. 2022)), the 11th U.S. Circuit Court of Appeals recently held that Florida law allows for consent judgments to constitute excess judgments that could satisfy the causation requirement for a bad faith claim.

This is a reversal of the 11th Circuit’s prior ruling in Cawthorn v. Auto-Owners Ins. Co., (791 F.App’x 60 (11th Cir. 2019)), which held Cawthorn misinterpreted Florida law by holding that an excess judgment was required to be based upon a final verdict reached by the court.