Insurance Coverage Disputes & Bad Faith Claims

Insurance Coverage Disputes & Bad Faith Claims

When a significant loss occurs, most policyholders assume the insurance company will do what the policy promises. The reality is often different. Reservation-of-rights letters arrive. Claims are investigated under Examinations Under Oath. Coverage positions shift over months of back-and-forth correspondence. By the time a denial letter is issued — or a lowball settlement offer is tendered — the policyholder is usually months or years into the loss, facing pressure to settle cheaply just to stop the bleed.

John Montague, Esq. represents policyholders, additional insureds, and loss payees in first-party and third-party coverage disputes, as well as bad faith litigation under Florida Statute § 624.155 and common law. With extensive experience at Locke Lord LLP (now Troutman Pepper Locke), an AM Law 200 firm, he brings big-firm coverage analysis, insurance expert work, and trial preparation to disputes where carriers often count on outlasting the insured. The firm handles commercial general liability (CGL), directors and officers (D&O), errors and omissions (E&O), property, business interruption, cyber, employment practices liability (EPLI), and builder’s risk coverage disputes.

Key Coverage and Bad Faith Issues

Duty to Defend and Reservation of Rights

The duty to defend is broader than the duty to indemnify — but carriers routinely blur the line by defending under a reservation of rights while simultaneously pursuing declaratory judgment actions seeking to disclaim coverage. In Florida, a carrier that breaches the duty to defend can be liable for a consent judgment entered against the insured, subject to Coblentz requirements. We represent policyholders in defending DJ actions, enforcing the duty to defend, and structuring Coblentz agreements that survive judicial scrutiny.

First-Party Property and Business Interruption Claims

Hurricane, windstorm, fire, theft, water damage, and business interruption claims require proof under the specific policy language — not an insurer-friendly summary. We handle appraisal demands, pre-suit notice under Fla. Stat. § 627.70152, disputes over covered causes of loss, anti-concurrent causation clauses, and the insurer’s duty to investigate promptly and in good faith. Business interruption claims in particular require careful forensic accounting to establish lost revenue, saved expenses, and extra expense components.

D&O and Professional Liability Coverage

When officers, directors, or professionals face investigations or lawsuits, D&O and E&O coverage disputes often center on the insured-vs-insured exclusion, the conduct exclusion (with its prior knowledge and fraud carveouts), allocation between covered and uncovered claims, and the timing of the claim under claims-made policies. We work with finance, governance, and technology clients to maximize recovery under side-A, side-B, and side-C coverage, and to resist carrier arguments that delay coverage decisions past critical litigation milestones.

Cyber, Technology E&O, and Social Engineering Fraud

Cyber policies have rapidly evolved, and so have carrier exclusions. Disputes over ransomware event coverage, funds transfer fraud, social engineering endorsements, regulatory fines and penalties, and war-exclusion carveouts are increasingly common. We represent policyholders in coverage analysis, claim submission, and litigation where carriers attempt to disclaim under broadly worded exclusions.

Bad Faith Litigation Under Florida Law

Florida recognizes both statutory bad faith under § 624.155 and common law bad faith in third-party contexts. Statutory bad faith requires a Civil Remedy Notice (CRN) with 60 days for the carrier to cure. Well-drafted CRNs frame the coverage dispute, preserve bad-faith damages (including extra-contractual damages and attorneys’ fees under § 627.428 or the updated fee framework), and force carriers to evaluate their exposure beyond the policy limit. We prepare, file, and litigate bad-faith actions where carriers have failed to settle within limits, unreasonably denied coverage, or engaged in lowball claim practices.

Strategy and Trial Preparation

Insurance coverage cases often turn on contract interpretation — dispositive in many cases on early summary judgment. We start by auditing the full policy (including endorsements, exclusions, and prior policy forms) and assembling the claim file through discovery. Examinations Under Oath (EUOs), proof-of-loss requirements, and cooperation clauses require careful handling; a misstep by the policyholder can hand the carrier a defense it didn’t have.

In contested cases, we depose claims handlers, claims managers, and corporate representatives to build the record for bad-faith damages. We retain insurance industry experts to testify about claims handling standards, underwriting intent, and the reasonableness of the carrier’s coverage position. And we prepare the case for trial — including motions in limine, Daubert challenges, and jury instruction work — not just the next settlement conference. That trial-ready posture is what changes how carriers evaluate a file.

Frequently Asked Questions

The carrier is defending me under a reservation of rights. Should I accept their counsel?

A reservation of rights creates a conflict of interest. In Florida, when the carrier reserves rights, the insured is generally entitled to independent counsel at the carrier’s expense — sometimes called Cumis counsel. We evaluate whether the reservation language actually creates a conflict, demand independent counsel where warranted, and structure the coverage defense so the insured is not prejudiced by having insurer-selected counsel in the underlying case.

How long does the insurer have to pay my claim?

Under Florida’s Property Insurance Claims Bill of Rights and related statutes, property carriers must acknowledge a claim within 14 days, begin investigation within a defined period, and pay or deny within specific time frames. Delay beyond those periods can support a bad-faith claim. Commercial and liability policies have different timelines, but similar principles apply through the general duty of good faith and fair dealing.

What is a Civil Remedy Notice and why does it matter?

A Civil Remedy Notice (CRN) filed with the Florida Department of Financial Services is a statutory prerequisite to most bad-faith claims under § 624.155. It gives the carrier 60 days to cure the alleged violation. A precisely drafted CRN is critical — poorly framed notices can be deemed insufficient, barring the bad-faith claim. We draft CRNs that capture every specific violation and preserve the full range of statutory and common law remedies.

The carrier denied my claim. Can I recover attorneys’ fees if I win?

Florida has long permitted policyholder attorneys’ fees under § 627.428, although recent legislative changes have significantly altered the fee-shifting framework for many types of policies. Whether fees are recoverable depends on the policy type, the date of loss, and the specific statutory provisions in effect. We evaluate fee exposure at intake because, in many coverage disputes, the fee-shift is the single largest driver of carrier settlement behavior.