In a recent string of opinions, the U.S. Court of Appeals for the Eleventh Circuit has corrected and clarified the requirements for a bad faith claim under Florida law, concluding in a decision in favor of policyholders that establishes that a consensual settlement and acceptance of a proposal for settlement qualify as “excess judgments,” satisfying the causation requirement for bad faith claims. This is an important result for insureds who need to have sufficient and appropriate insurance coverage when they are faced with lawsuits brought by third parties. Additionally, as previously discussed, this expansion will likely increase the number of bad faith claims policyholders can afford to pursue while at the same time maintaining Florida public policy as insureds must still prove the other elements of their bad faith claim.

Starting with McNamara v. Government Employees Insurance, No. 20-13251 (11th Cir. 2021), the Eleventh Circuit revisited—and departed from—its prior, unpublished decision in Cawthorn v. Auto-Owners Insurance, 791 F. App’x 60 (11th Cir. 2019). In McNamara, the court held that a final judgment that exceeds all available liability policy limits, whether such judgment results from a jury verdict or a consensual settlement, constitutes an “excess judgment” that can be used to satisfy the causation requirement of an insurer bad faith claim in Florida.