Florida Appeals Court Reverses Lower Court Decision in Auto Insurance Case

In a recent case, the Fourth District Court of Appeals in Florida issued an opinion in an appeal involving an insurance claim between an Appellant, the insurer, the Appellee, the insured. The insured sued the insurer seeking a declaration that she had Uninsured Motorist (UM) coverage following an accident. The jury found in favor of the insured because the insurer failed to obtain a written rejection. The trial court entered a partial final judgment for the insured. The insurer appealed, claiming that verbal waivers of UM coverage are allowed in Florida and that the insured had verbally rejected UM coverage over the phone. The appeals court affirmed the partial final judgment.

The insured then filed a fourth amended complaint, asserting a single bad faith claim based on the insurer’s denial of coverage due to an alleged verbal waiver, and also moved for punitive damages.
The case arose when the insured contacted the insurer over the phone to purchase auto insurance coverage. During the call, the insured declined UM coverage. The insurer told the insured that she would need to sign a rejection form. Days after the policy was purchased, but prior to the insured receiving the rejection form, the insured was involved in an accident. Nearly a month after the policy was purchased, the insurer mailed the insured a letter stating that because the insured had declined UM coverage, she had to fill out and return the UM coverage rejection form. The letter contained the following warning: “If you do not return the form in its entirety or we are unable to match it to your policy, UM coverage will be added to your policy.” The insured sued the insurer seeking a declaration that she had UM coverage.

At trial, the insured argued that there was a sufficient “proffer of evidence to allow the jury to consider punitive damages.” The insured argued UM coverage would automatically be added to the policy if a written rejection was not received. Additionally, the insured argued that the insurer had a regular business practice of issuing policies without a written rejection. The insurer argued the insured sought to allege a punitive damage claim as part of a bad faith action and that the evidence failed to show that the insurer’s actions were frequent enough to be considered a business practice. The trial court found that there was a basis for punitive damages and issued a generic order granting the motion of the insured.

The appeals court found that the insured conflated the standards for bad faith and punitive damages. The appellate decision states that the while the insured may have alleged a bad faith claim, the insurer argues, and the court agrees, that the insured failed to proffer sufficient evidence as to provide a reasonable basis for recovery of punitive damages. Additionally, the appeals court found that the insured failed to proffer or show the insurer engaged in the acts giving rise to the bad faith claim with such frequency as to constitute a general business practice. The opinion goes on to state that the insured had no proof that the insurer’s actions were willful, wanton, and malicious or in reckless disregard for the rights of any insured. The appellate court reversed and remanded the case back to the trial court, striking the punitive damage claim.

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