Florida law allows a bad faith claim against an insurance company even where plaintiffs do not make a clear settlement demand or offer (commonly known as  Powell claim) whenever “liability is clear, and injuries are so serious that a judgment in excess of the policy limits is likely [which places on the insurer] . . . an affirmative duty to initiate settlement negotiations.” In the case of Welford v. Liberty Insurance Corporation, the claimant was required to prove the “alleged bad faith caused the excess judgment.” Although bad faith cases almost always raise issues of fact, a judgment as a matter of law can be entered whenever “the undisputed facts would not support the conclusion that the insurer acted in bad faith.” The federal court opined that the undisputed facts of this case did not support that Liberty insurance acted in bad faith.

Liberty argued, amongst other things, that it was not required to initiate settlement talks because the insured driver at hand was not “clearly liable for the crash.” In the instant case, the insured had loaned her car to her daughter, who in turn let her boyfriend drive. Another car driving down the same road as the insured’s car struck three pedestrians walking side-by-side down a dark county road, wearing dark clothes and without illumination. The accident resulted in two deaths and one serious injury. Liberty contended that the initial call placed by the insured did not trigger a need to investigate. The insured initially denied liability and told Liberty that her daughter and the driver were the only witnesses to the accident. Accordingly, Liberty offered full policy limits within 2 days after being served with the wrongful death lawsuit. Liberty also argued that the insured falsely told plaintiff’s investigator that she had no liability insurance.

Plaintiffs argued that Powell applied here because liability was clear. However, the courts disagreed with this proposition. First, the plaintiff’s bad faith expert agreed that this was not a case of clear liability. To the contrary, liability was not clear by any objective measure. The officer investigating the crash, the investigator employed by the plaintiff’s original attorney, and his own expert witness all expressed serious doubts about the insured driver’s liability for the accident. The court then concluded, as a matter of law, that Liberty did not commit bad faith by failing to initiate settlement discussions after the insured’s initial call reporting the accident.

The federal court also disposed of the purported duty to investigate because the court was presented with a Powell case, not a “duty to investigate case.” The federal court found that there was no evidence that Liberty had placed its interests ahead of its insured. In fact, Liberty globally offered its fully policy limits to the claimants within 2 days after being served with the complaint. The federal court did not reach the issue of whether the excess verdict was primarily caused by the insured’s conduct.

The Welford case is important to practicing attorneys and insurance carriers writing coverage in Florida. This case supports the proposition that carriers are not automatically liable for bad faith in extremely low limits and potentially high exposure cases where it is shown that the carrier acted reasonably and responsibly in making a limits offer as soon as the insured liability became apparent. At Wittmer|Linehan, we have experience in negotiating and litigating against insurance companies. We understand the complex laws and relationships that are created to govern the relationship between the insured and the insurer. Let our experienced attorneys help you aggressively protect your rights to full benefits and coverage.