Bad Faith: Swanson v. State Farm Mutual Auto Insurance

A federal court has ruled that Florida law does not recognize common-law first-party bad faith claims against INSURERS.

“Florida law recognizes two types of actions for bad faith against insurance companies -first party and third party. A first party action is one brought directly by an insured against the insured’s own insurance company for failing to promptly pay benefits due under the policy. In contrast, a third-party action is brought by a noninsured against the insurer of another, often a tortfeasor. Third-party bad faith consists of conduct by the liability insurer that exposes its insured to an excess judgment when the insurer could have and should have settled the claim against its insured within the policy limits. Florida law has long recognized common-law claims for bad faith in third-party actions. In the first-party context, plaintiffs may assert a statutory bad faith claim.”

In this case, the plaintiff was attempting to assert a common-law first party bad-faith claim rather than proceeding under the statute. The court found that the plaintiff had “no response to the Florida Supreme Court’s pronouncements that no common law first-party bad faith claims are permitted under Florida law.”