Whether a policyholder can assign their bad faith claim to someone else is an interesting question—that is, if you find insurance issues and assignments interesting like I do; if not, then reading about assignments in insurance can be a cure for insomnia. Anyway, in my last post on this topic, we discussed a Pennsylvania case allowing a policyholder to assign their bad faith claim to another person. This post will look at Florida law on the topic.
The initial question to ask when thinking about this question is whether the duty breached is a tort that is personal to the injured party. This is because the Florida Supreme Court has held that purely personal tort claims cannot be assigned.1 Examples given by the court of purely personal tort claims held to not be assignable, were claims for medical malpractice and claims for intentional infliction of emotional distress. Third-party bad faith claims have been held to be assignable in Florida.2
In Florida, first-party bad faith cases are statutory and arise from Section 624.155 of the Florida Statutes. So given that first-party bad faith claims in Florida are statutory and not personal tort claims, they are assignable in Florida. Another interesting question comes about at this point of the discussion however:
If a policyholder issues a full assignment of benefits of “any and all rights and benefits under the policy” to another person, does that act as an assignment of the right to pursue any bad faith action for handling the claim?
The language of this assignment is silent as to whether it deals with assignment of any bad faith claim. It should be specific, and say “any and all rights and benefits under the policy,” and does not even mention claims handling/bad faith. If the bad faith is meant to be assigned, it should specifically state so. Additionally, the question of when the assignment was given will be important to note. Were there actions that occurred at the time of the assignment being issued that could constitute bad faith claims handling? Was there a Civil Remedy Notice filed yet by the time of the assignment? A Civil Remedy Notice is a necessary precondition to any bad faith action. If the bad faith actions had not yet occurred then there is a question whether the ability to pursue a bad faith action had even accrued at the time the assignment was given. If the ability to pursue a bad faith claim had not yet accrued at the time of the assignment then the policyholder may still have the ability to pursue any bad faith action. If a policyholder intends to assign their bad faith claim to another, I would recommend that the intent of that arrangement be done specifically and unambiguously with an assignment dealing with it rather than a generic document that may not reflect the policyholder’s true intent.
There are some cases involving the issue of assignments of insurance benefits that are currently set for oral argument in Florida appellate courts. We will monitor those cases and will provide updates on those outcomes and whether they shed any light on this part of the topic/issue dealing with the ability to assign statutory first-party bad faith claims in Florida.
1 Wachovia Ins. Services, Inc. v. Toomey, 994 So.2d 980 (Fla. 2008).
2 Aaron v. Allstate Ins. Co., 559 So.2d 275 (Fla. 4th DCA); McNulty v. Nationwide Mut. Ins. Co., 221 So.2d 208 (Fla. 3d DCA).
