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Important Changes to Property Insurance Litigation in Florida

Look, we know that HKR doesn’t have an office in Florida.  We don’t even have an attorney licensed to practice in that State.  But, we also know this issue is important and something our clients care about. So take this for what it is—HKR passing along useful information.

Florida has long been recognized as a hostile environment for insurance companies.  The State’s Legislature has taken various actions over the past several years to curb the abusive property insurance litigation, including significant limitations on post-loss assignments of benefits.  This month, Governor DeSantis signed H.B. 837 into law, further reforming insurance litigation in Florida, with an emphasis on “bad faith” claims.  

Under this new law, fee-shifting in insurance litigation has been eliminated in all cases except certain declaratory actions following a total coverage denial.  Previously, a court was required to award a reasonable fee in favor of the policyholder who settled with or obtained a judgment against a property insurer.  The law also clarifies what constitutes bad faith, explaining that “negligence alone is insufficient to constitute bad faith.”

Most notably, the new law extends the duty of good faith to policyholders, requiring the policyholder and its representatives to act in good faith in furnishing information regarding the claim, making demands of the insurer, setting deadlines, and attempting to settle the claim.  While this new duty will not support a separate cause of action for so-called “reverse bad faith,” a policyholder’s bad faith conduct may be considered in the context of a bad faith claim against an insurer, allowing the trier of fact to reasonably reduce the damages awarded to the policyholder.

Much of the nation tends to look to what is happening in Florida (along with Texas and Louisiana) as a predictor of things to come in the insurance industry and related litigation.  We expect that these changes, along with the others enacted in recent years, will filter out to other states as they begin to experience the same issues that have plagued Florida in insurance litigation.  

HKR will continue to monitor this important issue and report on any further developments.