Florida Court Sides with Homeowner, Upholding Right to Sue for Bad Faith
A Florida appeals court has delivered a significant decision in favor of homeowner Cindy Vo, overturning a lower court’s dismissal of her bad faith lawsuit against Scottsdale Insurance Company. The ruling reinforces a crucial legal principle: new legislation cannot be used to retroactively eliminate a policyholder’s established right to sue for bad faith insurance practices.
In 2020, Vo’s home suffered hurricane damage, prompting her to file a claim with Scottsdale Insurance. Initially, Scottsdale valued the damage at a mere $420.64, an amount that didn’t even exceed the policy’s wind deductible, effectively denying Vo any compensation. Disagreeing with this assessment, Vo hired a public adjuster who estimated the damage at $38,584. Scottsdale maintained its position, even bringing in another adjuster whose valuation conveniently supported the company’s original low estimate. Determined to challenge the decision, Vo filed a Civil Remedy Notice (CRN), alleging Scottsdale had engaged in bad faith claims handling and statutory violations. Eventually, the case went to appraisal, which resulted in an award of $34,545.66 – significantly higher than Scottsdale’s initial valuation. The insurer paid the awarded amount, less the policy’s deductible, and the breach of contract case was settled in 2021.
In 2022, Florida lawmakers passed section 624.1551, introducing new hurdles for policyholders seeking to sue insurers for bad faith. Under this law:
- Policyholders cannot file a bad faith lawsuit unless a court has ruled that the insurer breached the contract.
- Appraisal awards do not constitute proof of a breach.
- The law applies to claims for extra-contractual damages under section 624.155.
In 2023, Vo filed a bad faith lawsuit against Scottsdale, arguing that the insurer’s behavior throughout the claims process had been unfair and deceptive. Scottsdale moved to dismiss the case, citing the newly enacted section 624.1551. The insurer argued that Vo’s claim had been settled through an appraisal, not a court ruling, meaning she lacked legal standing under the new law. The trial court agreed with Scottsdale and dismissed the case, ruling that Vo had not met the new statutory requirements.
Vo appealed the dismissal to the First District Court of Appeal. She contended that section 624.1551 could not be applied retroactively, since her right to sue had already vested in 2021, prior to the law’s enactment. The appeals court sided with her, overturning the lower court’s decision. The court cited established legal precedent:
- New laws cannot retroactively eliminate a cause of action that was valid before the law’s passage.
- Section 624.1551 imposes new legal burdens on policyholders, therefore, it applies only to cases arising after its effective date, not to past claims.
- Vo’s bad faith claim had already vested before the statute was enacted, granting her the legal right to proceed.
This ruling serves as a significant win for policyholders and sends a clear message that insurers cannot exploit newly enacted laws to avoid accountability for prior misconduct. It also confirms that appraisal awards do not absolve an insurer of potential bad faith. The fact that an insurer eventually pays a claim after a prolonged process does not necessarily indicate that the claim was handled fairly from the beginning. The appeals court’s decision ensures that policyholders who experienced bad faith claim handling before the passage of section 624.1551 still have legal recourse.
Vo’s case highlights the challenges homeowners face when dealing with insurance companies over undervalued claims and delayed payments.
Advise clients to take proactive steps to protect their rights, including:
- Documenting everything – Maintain records of all communications, damage estimates, and insurer responses.
- Challenging low offers – Never accept an unreasonably low settlement without securing a second opinion.
- Seeking legal help – A public adjuster or attorney can help balance the power dynamic with insurers.
- Knowing their rights – Understanding state insurance laws can empower policyholders to challenge unfair claim denials.
