In Universal Prop & Cas. Ins. Co. v. West Naze, No. 4D2024-0098 (Fla. 4th DCA Jun. 4, 2025), the Florida Fourth District Court of Appeal reaffirmed that an insured cannot introduce evidence of claim handling in a breach of insurance contract action.  The court reasoned that permitting the introduction of claims handling evidence may allow a jury to rule in the insured’s favor because the insurer did not do a good job handling the claim.

In December of 2020, West Naze made a claim under its policy with Universal Property & Casualty Insurance Company for water damage due to a leak in a dishwasher. Several days after receiving the claim, Universal sent a field adjuster to the insured’s property for an inspection. Following the inspection, Universal requested the insured provide multiple documents supporting its claim. On December 29, 2020, the insured provided only some of the requested documentation. Nearly two months later, on February 19, 2021, Universal sent another letter asking for all of the documentation. Universal could not complete its determination of coverage until the insured provided all the necessary documentation to substantiate the cause of the water damage. Universal’s position was if the water damage was a result of a design defect in the dishwasher or if the damage occurred because of constant or repeated leakage of water from the dishwasher, then coverage was excluded under the policy.

Eventually, the insured brought an action for breach of the insurance contract against Universal for failing to pay the water damage claim. Notably, the insured did not raise any allegations of bad faith. In response to the insured’s breach of contract claim, Universal denied it breached the insurance contract and raised a defense that the insured failed to satisfy a condition precedent under the policy by failing to provide all the documentation requested by Universal.

During opening statements at trial, the insured’s counsel argued that Universal was “just flailing around” and was slow to respond to the insured’s adjuster regarding the claim. Universal’s counsel objected, arguing the comments ventured into claim handling. The court overruled the objection.

During trial, the insured’s adjuster testified that after he submitted his own estimate of the water damage to Universal, the carrier did not reach out to him regarding the additional documentation Universal had previously requested. He also testified that when he finally did make contact with someone at Universal, there was no examiner assigned to the claim. Once again, Universal’s counsel objected. The court overruled the objection, ruling that the testimony was only relevant to the “status and movement of the claim, handling of the claim” and not regarding any allegations Universal handled the claim in bad faith. The insured’s adjuster continued with his testimony, explaining that when he spoke to an examiner at Universal in April of 2021, he told the examiner “it’s not your fault, but intake really dropped the ball on this one.” The insured’s adjuster also testified he never received a coverage determination from Universal, despite being told by Universal’s examiner one would be sent.

During closing arguments, the insured’s attorney emphasized how Universal “didn’t even have an adjuster assigned at the time” Universal sent its letters to the insured requesting documents. The insured’s attorney also questioned who at Universal was even looking at the documents and sending correspondence to the insured, and went as far as to state, “[t]here was no investigation” by Universal.

In contrast, Universal’s counsel argued to the jury during closing arguments that instead of providing the documentation requested, the insured stayed quiet and filed a lawsuit.

After the jury returned a verdict in favor of the insured, Universal moved for a new trial. The court denied the motion, finding that the testimony regarding Universal’s claim handling “wasn’t bad faith” but was only relevant regarding the “omission and negligence” of the carrier.

On appeal, the Fourth District Court of Appeal reversed the trial court and remanded for a new trial. In its opinion, the district court held that “a bad faith action cannot accrue until the underlying lawsuit seeking insurance benefits is resolved in the insured’s favor.”

Significantly, the appellate court noted that the essential question of the case was whether the insured complied with the insurer’s request for documents.  However, by permitting the insured to introduce evidence about claim handling and how Universal was “slow or incompetent” in processing the claim (such as the comments about Universal “flailing around” and “dropping the ball”), the appellate court held that the jury could have ruled in favor of the insured “solely because [Universal] did not do a good job” in handling the claim by considering evidence that went beyond disproving Universal’s affirmative defense. The district court found the facts in this case was similar to its decision in Citizens Prop. Ins. v. Mendoza, 250 So. 3d 716 (Fla. 4th DCA 2018), which held it was improper for the court to allow testimony and a jury instruction regarding the carrier’s “duty to adjust” the claim, as the jury could have decided the case solely because of how the carrier handled the claim and not on the issue of whether the carrier properly excluded the claim under the policy.

The district court also rejected the trial court’s ruling that the claim handling evidence could be heard by the jury because it only alleged negligence and not bad faith against Universal. The district court held that negligence fell within the definition of bad faith or claims handling under Florida law. Thus, it was impermissible of the trial court to allow the evidence in because the insured could not have alleged bad faith against Universal along with its breach of contract claim.