Florida Enacts Broad Insurance coverage Reforms Specializing in Unhealthy Religion

From 2019 to 2022, the Florida Legislature enacted 4 separate property insurance coverage reforms that sought to rein in abusive property insurance coverage litigation fueled by one-way legal professional’s price shifting and a military {of professional} plaintiffs submitting lawsuits pursuant to assignments of advantages. In its newest reform, the Legislature has shifted its focus to the broader insurance coverage market and to tort reform. For a few years now, Florida has considerably led the nation in tort prices per family.  This metric has been pushed by a excessive octane litigation setting, ever rising private damage verdicts, and a regularly sharpened concentrate on establishing insurers for unhealthy religion claims.


On March 24, 2023, Governor DeSantis signed into legislation H.B. 837, which eliminates legal professional’s price shifting in insurance coverage litigation in all situations besides sure declaratory actions following a complete protection denial, and establishes sure unhealthy religion protected harbors to cut back unhealthy religion setups. Notably, the brand new legislation imposes an obligation of excellent religion on policyholders. On this article, we are going to focus on the legislative modifications affecting insurance coverage protection and bad-faith litigation.

90 Day Protected Harbor Interval for Insurers to Examine Legal responsibility Claims

Almost twenty years in the past, a dissenting Florida Supreme Court docket Justice acknowledged that there are methods “to create unhealthy religion claims towards insurers when, after an goal, suggested view of the insurer’s claims dealing with, unhealthy religion didn’t happen. It is a technique which consists of setting synthetic deadlines for claims funds and the withdrawal of settlement presents when the bogus deadline shouldn’t be met.”[1]

The Legislature has now amended Part 624.155 so as to add a 90 day protected harbor investigation interval for legal responsibility insurers:

(4)(a) An motion for unhealthy religion involving a legal responsibility insurance coverage declare, together with any such motion introduced below the frequent legislation, shall not lie if the insurer tenders the lesser of the coverage limits or the quantity demanded by the claimant inside 90 days after receiving precise discover of a declare which is accompanied by adequate proof to help the quantity of the declare.

The brand new Part 624.155(4)(a) provides insurers some safety towards unreasonably quick synthetic deadlines, but in addition places a 90 day restrict on the protected harbor interval, which begins “after receiving precise discover of a declare which is accompanied by adequate proof to help the quantity of the declare.” Whereas events may disagree as to what proof is adequate, the requirement for proof additional weakens the unhealthy religion setup, which is normally achieved at a time when info remains to be being gathered.

Florida Enacts Broad Insurance coverage Reforms Specializing in Unhealthy Religion

Unhealthy Religion Requirements

The Legislature codified sure requirements regarding unhealthy religion. A number of years in the past, the Florida Supreme Court docket determined Harvey v. Geico and, regardless of acknowledging that “negligence shouldn’t be the usual,” decided that “negligence is related to the query of excellent religion.” The choice was extensively criticized for decreasing long-established requirements for proving unhealthy religion—from unhealthy religion to negligence. To get rid of any confusion, the Legislature has now codified in Part 624.155(5)(a) that “negligence alone is inadequate to represent unhealthy religion.”

The Legislature has additionally imposed religion customary on policyholders and claimants. One other frequent unhealthy religion setup tactic is for policyholders or claimants to make investigating claims as troublesome as attainable for insurers. It appears counterintuitive—a claimant ought to need to make it simple for an insurer to resolve it ought to pay cash—however some have discovered it extra worthwhile to create conditions the place they will then declare to have been wronged and sue for extra money. The brand new good religion customary for claimants in Part 624.155(5)(b) is as follows:

(b)1. The insured, claimant, and consultant of the insured or claimant have an obligation to behave in good religion in furnishing info relating to the declare, in making calls for of the insurer, in setting deadlines, and in making an attempt to settle the declare. This obligation doesn’t create a separate explanation for motion, however could solely be thought of pursuant to subparagraph 2.

2. In any motion for unhealthy religion towards an insurer, the trier of truth could think about whether or not the insured, claimant, or consultant of the insured or claimant didn’t act in good religion pursuant to this paragraph, during which case the trier of truth could fairly scale back the quantity of damages awarded towards the insurer.

A number of Claimant Unhealthy Religion

One of the crucial troublesome conditions for any legal responsibility insurer is figuring out easy methods to method settlement the place a number of claimants have competing claims with damages prone to exceed the out there protection, equivalent to when a number of individuals are injured in a automotive accident. If the insurer is unable to safe a world settlement, it’s prone to face a foul religion go well with no matter its diligence and reasonableness.

The newly created Part 624.155(6) provides choices for insurers in situations the place “two or extra third-party claimants have competing claims arising out of a single incidence, which in complete could exceed the out there coverage limits of a number of of the insured events who could also be liable to the third-party claimants.” The insurer is not going to be liable past the coverage restrict if, inside 90 days after receiving discover of the competing claims in extra of the coverage restrict, the insurer both:

  • Recordsdata an interpleader motion in a Florida courtroom for the coverage restrict.
  • Upon settlement between the insurer and claimants, makes the coverage restrict out there and submits the matter to binding arbitration. A 3rd-party claimant whose declare is resolved in arbitration should execute and ship a common launch to the insured social gathering whose declare is resolved by the continuing.

Lawyer’s Charge Shifting

The Legislature formally repealed Part 627.428, the insurance coverage legal professional’s price shifting statute, and its surplus strains counterpart, Part 626.9373. This important change in Florida legislation will probably apply solely to insurance policies issued or renewed after March 24, 2023.

Nevertheless, the Legislature additionally created a brand new statute, Part 86.121, which allows awards of legal professional’s charges in “an motion introduced for declaratory reduction in state or federal courtroom to find out insurance coverage protection after the insurer has made a complete protection denial of a declare.” The statute makes clear that “[a] protection supplied by an insurer pursuant to a reservation of rights doesn’t represent a protection denial of a declare.” Subsequently, an insurer that defends below a reservation of rights, after which seeks a declaration as to its protection obligations wouldn’t be topic to paying legal professional’s charges.

Below this statute, legal professional’s charges could be recovered solely by a named insured, omnibus insured, or named beneficiary. The proper can’t be transferred or assigned. Part 86.121 doesn’t apply to any motion arising below a residential or industrial property insurance coverage coverage.

Modified Comparative Fault

The Legislature amended Part 767.81, the comparative fault statute, to restrict restoration for a celebration discovered to be higher than 50% at fault: “In a negligence motion to which this part applies, any social gathering discovered to be higher than 50 p.c at fault for his or her personal hurt could not get better any damages.” Nevertheless, this limitation doesn’t apply to actions for private damage or wrongful demise arising out of medical negligence introduced below Florida Statutes Chapter 766.

Efficient Dates

H.B. 837 states that it “shall not be construed to impair any proper below an insurance coverage contract in impact on or earlier than the efficient date of this act. To the extent that this act impacts a proper below an insurance coverage contract, this act applies to an insurance coverage contract issued or renewed after the efficient date of this act.” The legislation additionally states that “[e]xcept as in any other case expressly supplied on this act, this act shall apply to causes of motion filed after the efficient date of this act.”

Based mostly on how courts have handled the prior reforms, the elimination of Sections 627.428 and 626.9373 will probably not apply to claims below insurance policies that had already been issued, and can as an alternative apply to insurance policies issued or renewed after March 24, 2023.

It’s much less clear how the unhealthy religion modifications will apply. The clause making the legislation apply to causes of motion filed after the efficient date may sufficiently present an intent by the Legislature to use the legislation to insurance coverage claims already in progress, and to doubtlessly even get rid of some accrued unhealthy religion causes of motion. We anticipate that there might be litigation as as to whether the unhealthy religion statutory modifications apply to all unhealthy religion fits going ahead, or solely to unhealthy religion fits arising below insurance policies issued after the efficient date, or solely to unhealthy religion go well with arising from civil treatment notices filed after the efficient date.

Closing Ideas

After passing a number of rounds of reforms centered on curbing abusive property insurance coverage litigation, the Legislature is now making an attempt to broadly discourage lawyer-driven litigation and to curb bad-faith setups. With the Legislature now seguing into broader tort reform, it seems that this spherical of reforms would be the final important insurance coverage reform for the foreseeable future.

[1] Berges v. Infinity Ins. Co., 896 So. second 665, 685 (Fla. 2004) (Wells, J., dissenting).

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