Can Citizens Property Insurance Be Held Liable Under Bad Faith Statute?

Sep 11, 2017

In 2015, the Florida Supreme Court unanimously ruled that the state’s bad faith statute does not apply to Citizens Property Insurance Corporation, a government-created entity that provides property insurance.

The government created Citizens Property in 2002 to provide property insurance to Florida residents who can’t find coverage in the private market. Eligible residents include both homeowners and business owners. Citizens Property operates according to statutory requirements and its operating plan must be approved by the Florida Financial Services Commission.

The law requires other insurance providers to act in good faith in resolving insurance claims. They must act fairly and honestly and with due regard for the customer’s interests. The goal is to protect consumers from unfair insurance practices.

But what if Citizens Property is your property insurance provider? Can you still hold them unaccountable for bad faith practices?

A Different Standard for Citizens Property?

The state Supreme Court has held that the legislature did not intend for the bad faith statute to apply to Citizens Property.

This case stemmed from a dispute between Citizens Property and one of its customers, Perdido Sun Condominium Association. Perdido filed an insurance claim with Citizens Property after sustaining property damage during Hurricane Ivan in 2004. When Citizens failed to resolve the claim Perdido filed a lawsuit in Escambia County Circuit Court, alleging that the insurer breached its contract and acted in bad faith.

According to Perdido, “Citizens purposely engaged in a pattern of obstruction, delay and avoidance in order to avoid its obligation to pay” the condominium association’s claim. But Citizens argued that, as a government entity, it is immune to bad faith liability.

Sovereign immunity is a legal doctrine that prevents the government, government agencies, government entities and other government actors from being sued without their consent. Generally such consent is established by statute. The Perdido case asked whether the Florida legislature intended for Citizens to be immune to bad faith liability.

While statutory immunity is granted to Citizens in most cases, Perdido argued that the bad faith statute falls within the “willful tort” exemption and that Citizens should be held liable under the bad faith standard.

The county court ruled in favor of Citizens, but then the appellate court reversed. The case made its way to the state Supreme Court, which held that Citizens cannot be sued under the bad faith statute. Specifically, the court said: “Perdido Sun brought a first-party bad faith claim pursuant to [Florida law]. That claim is a statutory cause of action and does not fall within the willful tort exception to Citizens’ immunity.”

What Does This Mean for Citizens Property Policyholders?

Citizens Property Insurance enjoys a benefit that private insurance companies do not. Because they are immune from bad faith liability, they don’t have an incentive to resolve insurance claims quickly and fairly..

Don’t Worry and don’t be intimidated by Citizens Property Insurance Corporation! When Citizens Property Insurance drags their feet, we will fight for you and push them towards a resolution. 

Let Us Help You with Your Case Against Citizens Property Insurance.  

A Florida attorney at the Insurance Litigation Group can help with your insurance dispute against  Citizens Property Insurance Corporation. Our experience and knowledge in successfully fighting against Citizens Property Insurance is based upon our years in public adjusting and our courtroom litigation against Citizens Property Insurance. ILG has handled hundreds of claims against Citizens Property Insurance and is very familiar with their tactics. ILG will aggressively work your case to resolve it quickly and effectively. When experience and rapid results matter, think ILG.

Contact us today for a free consultation.



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