In Universal Property & Casualty Insurance Company v. West Naze, No. 4D2024-0098 (Fla. 4th DCA June 4, 2025), the Fourth District Court of Appeals addressed the admissibility of evidence, specifically claims handling evidence, in property insurance disputes. The 4th DCA ruled evidence of claims handling is irrelevant and prejudicial when the complaint does not include allegations of poor claims handling or bad faith. The case arises from a water damage claim made by the policyholder, West Naze, against the Insurer, Universal Property & Casualty Insurance Company. The policyholder reported the claim on December 10, 2020. In response, the Insurer sent a field adjuster to inspect the property a few days later and on December 18, 2020, requested additional documents from the policyholder. The policyholder responded on December 29 with some, but not all, of the documents requested. Universal did not respond for nearly two months, but eventually denied coverage on the basis of prejudice. In response, the policyholder filed a complaint alleging breach of contract; the complaint did not allege bad faith or wrongdoing.

During trial, the policyholder tried to present evidence suggesting the Insurer was negligent in their claim handling, including delay processing the claim and assigning an adjuster. This raised the issue of whether evidence of deficient claims handling, which is often indicative of bad faith, should be admissible in a breach of contract action. Despite the Insurer’s objections, the trial court permitted the policyholder to make references to the claim handling, including testimony regarding delay of the investigation and communications with the policyholder. The Jury returned a verdict in favor of the policyholder. The Insurer moved for a new trial, arguing the trial court erred in admitting irrelevant and prejudicial claim handling evidence, but the verdict was upheld.

On appeal, the 4th DCA agreed with the Insurer finding the trial court had improperly admitted the evidence of claim handling. Specifically, the Court noted claim handling was not relevant to the issues pled, specifically whether the policyholder had complied with submitting documentation per the policy requirements. By admitting the evidence of claim handling, the trial court permitted the policyholder to paint the insurer in a negative light and suggest bad faith in the handling of the claim, rather than focusing on the merits of the case. The 4th DCA compared the case to Citizens Property Insurance Corporation v. Mendoza, 250 So. 3d 716 (Fla. 4th DCA 2018) where the 4th DCA reversed a verdict and remanded a new trial due to improper jury instructions regarding a “duty to adjust”. The Court in Mendoza also emphasized the potential for prejudice to the insurer by admitting evidence of claim’s handling.

Practical Considerations

In addition to the West Naze decision, § 624.1551 (2022) confirms that an action for bad faith is not ripe unless and until there is an adverse adjudication that the insurer breached its policy. Thus, insurers are well-served to take offensive steps in precluding claims-handling related evidence in a breach of contract suit.

• Pre-Trial Motions in Limine – Proactively file motions in limine to exclude any evidence of claims handling or bad faith.
• Motions for Protective Order for Corporate Representative Depositions – Proactively file a Motion for Protective Order for the Insurer’s Corporate Representative Depositions to limit testimony, specifically regarding claim handling procedures and/or guidelines.
• Jury Instructions – Ensure the jury instructions focus on the legal issues as alleged in the complaint and do not interject claims handling or bad faith issues.
• Identify red flags in discovery – Be mindful for discovery requests related to claims handling and assert proper objections.
• Trial Objections – Make timely and proper objections at trial, ensuring right to appeal.

The 4th DCA’s West Naze decision distinguishes between breach of contract disputes and claims of an insurer misconduct. Specifically, the Court is clear that unless bad faith is specifically pled, evidence related to claims handling is not relevant in a breach of contract action. The 4th DCA’s decision in West Naze serves as a reminder that defense strategies and practical considerations should begin as early as the pleading stage, not just trial.