A Florida appeals court has told property insurers that paying a jury verdict does not buy them out of a bad faith claim.
In a June 10, 2026 decision, the Fourth District Court of Appeal revived a restaurant's bad faith suit against AmGUARD Insurance Company, finding a trial court had read the law backwards when it dismissed the case.
The trouble began in 2017, when the dining area ceiling at the insured restaurant collapsed and the fire department deemed the property unsafe. The commercial policy covered business personal property up to $30,000, business income up to $1,000,000, and food spoilage up to $10,000. It also covered "collapse," including collapse caused by "[d]ecay that is hidden from view" and "[u]se of defective material or methods in construction."
AmGUARD's own engineer called the damage "a sudden and accidental occurrence," and its field adjuster estimated recoverable losses at $60,000 before asking the carrier whether it would extend coverage. Two months later, AmGUARD denied the business personal property and business income claims and agreed to pay only food spoilage. The court noted the denial letter did not include the engineer's or the field adjuster's reports, or otherwise tell the insured what they had concluded.
The insured sued for breach of contract in 2018. A 2022 jury found that defective construction and hidden decay caused the collapse and set the damages at $31,330. The insured also filed a civil remedy notice - the formal warning Florida requires before a bad faith suit - alleging AmGUARD failed to settle in good faith and left key findings out of its denial. AmGUARD did not pay within the sixty-day cure window. It appealed the verdict, lost in 2023, and only then paid.
When the insured sued for bad faith, AmGUARD moved to end it quickly. It pointed to Fridman v. Safeco, a Florida Supreme Court ruling, and argued the $31,330 verdict fixed the damages for good, that nothing more could be recovered, and that no bad faith claim could exist because the judgment never topped policy limits. The trial court agreed, dismissed the suit, and called it a "second bite at the apple."
The appeals court disagreed. Fridman, it said, was an uninsured motorist case, and its logic does not transfer cleanly to property claims. In a UM case, a jury can find damages well above policy limits and the insured can pursue that excess later. Property insurance offers no such path. So the verdict settles the contract damages only - it does not block a separate claim for extra-contractual damages from bad faith, such as interest, costs, and fees. Those, the court added, could not have been raised in the contract trial anyway, because claims-handling evidence is barred there.
The court also rejected AmGUARD's argument that an excess judgment is a required element of a first-party bad faith claim, and said it knew of no authority letting an insurer extend the cure period by appealing.
The case returns to the circuit court, where the insured may seek extra-contractual damages but not the contract money already awarded.
