## Facts

- Dr. Thomas Vest was killed in a 1995 automobile accident caused by an underinsured motorist.
- Dr. Vest carried uninsured/underinsured motorist (UM) coverage with Travelers Insurance Company with limits of $200,000.
- The tortfeasor’s liability insurer tendered $1.1 million; Jana P. Vest requested Travelers’ authorization to accept that settlement and demanded payment of the $200,000 UM limits.
- Vest filed a civil remedy notice alleging Travelers failed to settle and failed to pay UM limits, then sued Travelers for first-party statutory bad faith.
- During the litigation, Travelers approved Vest’s settlement with the tortfeasor under Florida’s UM settlement procedure; Travelers later paid the $200,000 UM limits.
- The trial court entered summary judgment for Travelers on the bad-faith claim; the district court of appeal affirmed on the view that a bad-faith claim could not proceed without a damages determination exceeding policy limits.

## Issues

1. Whether a first-party statutory bad-faith action under section 624.155 may proceed when the insurer pays UM policy limits after the alleged bad-faith conduct and after suit is filed.
2. When a first-party bad-faith claim accrues in the UM context, and what determinations are conditions precedent to maintaining the action.

## Decision

- The Florida Supreme Court quashed the district court’s decision and remanded.
- A first-party bad-faith cause of action does not accrue until there is a determination of the tortfeasor’s liability and the full extent of the insured’s damages in the UM action.
- The insurer’s conduct before that determination may later be evaluated as bad faith once the conditions precedent are satisfied.
- Payment of UM policy limits after the alleged bad-faith conduct does not, as a matter of law, bar or moot a statutory bad-faith claim seeking damages caused by the earlier failure to settle in good faith.

## Legal Principles

- A statutory first-party bad-faith claim under section 624.155 is premature until the insured establishes (in the underlying benefits action) liability of the uninsured/underinsured tortfeasor and the extent of the insured’s damages.
- The relevant bad-faith conduct may occur during claim handling and settlement negotiations before liability and damages are fixed; accrual is delayed, not negated.
- Subsequent payment of policy limits does not “cure” prior bad faith and does not foreclose recovery of damages caused by the bad-faith failure to settle, including amounts beyond contract limits.
- A bad-faith plaintiff need not obtain an excess judgment as a prerequisite; the required predicate is a favorable resolution of liability and damages, which then supplies the measure for potential extra-contractual damages.

## Conclusion

The court held that first-party UM bad-faith claims accrue only after liability and the insured’s damages are determined, but an insurer’s earlier settlement conduct can still support liability for bad faith, and later payment of policy limits does not defeat the statutory claim.


Vest v. Travelers Ins. Co., 753 So. 2d 1270 (Fla. 2000)