What is an insurer's duty of good faith?

An insurer’s duty of good faith is a legal obligation that requires them to act in the best interest of the policyholder. In Florida, it is codified in the state’s insurance code, which requires insurers to promptly investigate and process any claims submitted by policyholders. The insurer must also act in an efficient and reasonable manner when dealing with claims, ensuring that the policyholders receive the benefits they are entitled to under the policy. The insurer must also act honestly, fairly, and in the policyholder’s best interests, even when it may be disadvantageous for them. The Florida Supreme Court has emphasized the importance of the insurer’s duty of good faith, noting that the relationship between insurers and policyholders is not an arms-length transaction. Instead, the insurer has a special relationship with the policyholder and must take all reasonable steps to ensure that they are fairly treated. If an insurer fails to meet their duty of good faith, the policyholder may be entitled to damages. This could include compensation for any losses that the policyholder suffered as a result of the insurer’s breach of duty.

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What is an insurer's duty of good faith?

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