What is a Cunningham agreement?

Answer 1

A Cunningham agreement is based off a Florida Supreme Court case. In insurance litigation, an injured claimant often wants to "open up" the insured's policy limits and sue the insurer for bad faith.

Generally speaking, the claimant must obtain a judgment against the insured (in the underlying action) in excess of the insured's policy limits before pursuing the insurer for bad faith.

However, if parties may stipulate to try bad faith liability before the underlying action by entering a Cunningham agreement. The policy behind these agreements is to avoid needless litigation.