Without a judicial determination that the insurer acted in bad faith, it was reversible error for the trial court to enter a final judgment in excess of the policy limits.

This appeal followed a trial for underinsured motorist (UM) benefits in which the judge entered a final verdict in the amount of $1,052,593.21, despite the fact that the policy only provided $100,000 in UM benefits. State Farm appealed the amount of the final verdict, and the Second District Court of Appeals agreed and remanded the case for further proceedings.

The appellate court agreed that, absent a judicial determination that the carrier acted in bad faith, it was reversible error for the trial court to enter a final judgment in excess of the policy limits. The appellate court rejected the argument put forth by counsel for the plaintiff/insured that, when a jury renders a verdict in excess of the policy limits before a bad faith determination, trial courts must enter a final judgment against the insurer for the full amount of the verdict but limit execution to the policy limits.

It should be noted that, pursuant to Florida Statute §627.727(9), the gross verdict amount will establish the amount of damages should the plaintiff/insured pursue a bad faith lawsuit. Potential damages will also include any interest on unpaid benefits, reasonable attorney’s fees and costs, and any damages caused by a violation of a law of this state. 

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