New Laws in Florida for Property Insurers
New Legal Landscape for Property Insurers in Florida.
Florida has undergone a significant legislative change in regards to property damage insurance claims and bad faith. The changes, many of which took effect in December 2022 and March 2023 (and some of which took effect between 2020 and 2021). These changes have inarguably made it more difficult for policyholders to hold their insurance companies accountable for bad faith conduct and for failing to provide policyholders with proper compensation on their property claims in Florida.
The changes to the law include several significant modifications to statutory provisions and are a result of heavy lobbying by the insurance industry under threat, by certain insurers, to leave Florida if changes were not made that were favorable to the insurance industry. They were approved by the legislature and signed by Governor DeSantis. One of the most significant recent changes (which occurred in July of 2021 and later amended) is the new requirement that policyholders give notice of their intent to file a lawsuit before filing. This change has been criticized as creating an additional burden on policyholders and allowing insurance companies more time to prepare a defense.
Another significant change is the modification of the statutory bad faith standard. The new standard requires a showing by the policyholder that the insurer has engage in conduct that is more akin to fraud (or a willful tort) to prove bad faith conduct of the insurer. Thus, generally, the showing of an insurer’s negligence with respect to its policyholder (as previously allowed to prove bad faith) will no longer suffice to hold the insurer accountable for its bad faith actions. This new standard is much higher and more difficult for policyholders to meet.
Furthermore, under the new legal framework, policyholders will have a significantly smaller window of time to file their initial, supplemental, and/or reopened claim for property damage with their insurer. Failing to meet the timeframes set forth by statute could ultimately mean that more policyholders will be left holding the bag for repair expenses in the wake of natural disasters such as a hurricane.
Perhaps the most important change is the modification of the attorney fee statute (Sec. 627.428, Fla. Stat.) – which, as a legal standard in Florida, has (in some variation) been the law of Florida since before the year 1900. Previously, if a policyholder won a lawsuit against their insurance company, the insurance company would be responsible for paying the policyholder’s attorney fees. The new law modifies this by generally disallowing attorneys’ fees for the prevailing policyholder (in a first party property damage insurance claim, residential or commercial) when they are forced to sue their insurance company to receive fair settlement of their property insurance claim. This change will likely deter some policyholders from pursuing legal action because they’ll be faced with either (a) paying legal fees out of pocket or (b) paying a percentage of their insurance claim settlement to their attorney as a fee with no ability to seek reimbursement for such fees from the insurer to offset the percentage.
The changes to Florida law have received criticism from consumer advocates who argue that they are anti-policyholder and anti-consumer. Indeed, objectively speaking (as Floridians watch their property insurance premiums skyrocket, notwithstanding these statutory concessions to the insurance industry), even the insurance industry and its advocates cannot truthfully argue otherwise (though they will argue this nonetheless). The changes inarguably make it more difficult for innocent policyholders to receive fair compensation for their losses and to hold insurance companies accountable for bad faith conduct. Notably, this new legislative framework, the underlying purpose of which was identified as to bring down ballooning rates for property insurance premiums, provided the Florida consumer with no statutory concessions from the insurance industry whatsoever with respect to firm commitments to bring down rates. Rather, the legislature is trusting the insurance industry to “do the right thing” in response to these changes – a practice (and, in most instances, a duty of the insurer) which, time and time again, the insurance industry has monumentally failed to do.
An article for the Insurance Litigation Reporter by Dennis J. Wall, Esq., dated March 3, 2023, entitled “Consumers Had No Voice: Changes to Property Insurers’ Laws in Florida” (link to article below) provides a thorough analysis of these new legislative changes for those interested in a more detailed legal analysis.
Are the New Laws Applicable to my Hurricane Ian Insurance Claim?
The answer to this question is “probably not, but maybe”. Each time a new “insurer friendly” statutory provision is passed in Florida – notwithstanding that there may be no apparent legislative intent to make the new law retroactive (applying to policies and/or claims that ensued before enactment) – insurers consistently argue to state and federal courts that the law should be applied retroactively. Every. Single. Time. And, every single time some judges agree with this argument.
In an article published by the Insurance Journal (link below), Fort Lauderdale insurance defense attorney Michael Packer (of the Marshall Dennehey firm) stated as follows: “‘Our current analysis is that the attorney fee provision in SB 2A, which eliminates the one-way attorney fee provision, should apply to lawsuits filed after 1/1/23 or notices of intent’ filed after the law took effect in December, Packer said. The right to attorneys’ fees is triggered only with the filing of a lawsuit, not the issuance of an insurance policy, he said.” Thus, it’s apparent that defense attorneys are already gearing up to argue that the new law applies to your Hurricane Ian claim notwithstanding the fact that Hurricane Ian occurred (and your insurance policy was issued) at least 2.5 months before the law was changed.
As noted in this Insurance Journal article (link below), the plaintiffs’/policyholders’ bar (Parrish Law included) does not believe that an interpretation of the new laws allowing retroactive application is proper or correct. That said, only time will tell. It’s an issue that will need to be litigated and decided by the appellate courts.
Historically speaking, insurance defense attorneys arguing (on behalf of their insurance company clients) in favor of retroactive application of new insurance laws has (a) been received with a moderate (generally less than 1/2 rate of success) rate of success in the lower courts (with some trial court judges agreeing but most disagreeing) and then (b) almost unanimously been defeated at the appellate court level (in recent history at least, with respect to changes that occurred in 2020 and 2021). Thus, while policyholders’ counsel with respect to Hurricane Ian claims will almost certainly be faced with these “retroactivity” arguments in trial courts (and potentially suffer setbacks at this lower level of the judiciary, depending upon the judge and until binding precedent is set at the appellate level), the odds of ultimate success of these “retroactivity” arguments, when presented to the appellate courts, are (assuming, without knowing, that recent history can be a proper indicator here) less than favorable for the insurance industry. Notwithstanding, every policyholder who hires an attorney should be aware that there is a chance that they may not be able to collect their attorneys’ fees from the insurer for their Hurricane Ian claim.
At the end of the day, the “retroactivity” arguments, even if they ultimately prove unsuccessful at the appellate level (which will take an extended period of time to know, for sure), will certainly (a) create an additional litigation burden for a court system that is already backed up by a flood of new Hurricane Ian cases and (b) make these cases more lengthy and more difficult to settle such that the policyholder can move forward with repairing their homes and restoring normalcy to their lives in the wake of Hurricane Ian. Furthermore, it can be said with certainty, that moving forward to our next hurricane season (which is, at the time of this blog entry, roughly 2.5 months away) and then subsequent hurricane seasons, the policyholders’ experience with respect to holding their insurers accountable will be much different and far more difficult. Thus, even if the new laws do not apply to your Hurricane Ian claim, they should be discussed and understood nonetheless.
Conclusion.
The new laws enacted in Florida change many longstanding legal protections that were previously in favor of the policyholder and served, in part, as a deterrent to bad faith claims handling by Florida insurers. Whether or not these new laws will affect your Hurricane Ian claim, or your ability to recover attorneys’ fees from your insurer with respect to litigating your Hurricane Ian claim, is yet to be determined. In all likelihood, the new laws will not be applied retroactively; however, in litigating your case, you will be faced with these arguments nonetheless as insurers scramble to mitigate their exposure in the wake of Hurricane Ian. Furthermore, if the appellate courts side with the insurance industry with respect to the “retroactivity” argument, which is an unfortunate contingency that could ultimate come to fruition, you may be unable to recover your attorneys’ fees from your insurance carrier.
If you have questions and/or concerns with respect to the new legislative framework and how it may affect your Hurricane Ian claim, please call Parrish Law for a free of charge consultation. Even if you choose not to hire us, we’re always happy to discuss these and all other insurance related matters with our potential clients and/or policyholders who are facing difficulties with their insurance claims and need guidance.
Final Thought/Rant/Opinion (whatever you want to call it).
One final thought here, that Parrish Law hopes to elaborate more comprehensively on later, is that the politics of the foregoing should not be a partisan issue. Policyholders that are both Republican and Democrat should all comprehensively agree that these new laws (as currently enacted), which are overwhelmingly one-sided in favor of the insurance industry, are unfair and should be repealed (in whole or in part). The new law fails to strike a balance on behalf of Florida residents with respect to their insurance carriers (who continue, and will continue, to raise insurance premiums). The insurance industry gave very little (next to nothing, in fact) in the way of concessions and is, nonetheless, receiving a windfall from the People of Florida with these new laws. People who have suffered through the devastation of a hurricane (such as Hurricane Ian, or Hurricane Irma, or Hurricane Laura, or Hurricane Ida, or Hurricane Wilma, or Hurricane Michael, or Hurricane Sally, or Hurricane Andrew, etc.) and then the subsequent mistreatment by their insurers understand just how unfair these new laws are (or will be) to policyholders.
To that end, let your voices be heard. Call your state senators and state representatives, email them, send them letters, and let them know how you feel. If they don’t listen, vote them out of office. This issue is too big to ignore, and it affects everyone equally regardless of where your political allegiance lies. The problem is, the insurance lobby’s voice in Tallahassee is much louder, and their pocketbooks are much larger, than the individual policyholders (and those who represent them). That needs to change.
The insurance law in Florida is broken and it likely can’t be fixed without a complete and total overhaul that addresses the inequity on both sides. Both sides proclaim unfairness; however, realistically, there is blame to be shared by everyone. Neither the insurance industry nor representatives of the policyholders’ bar enter this debate with clean hands. The problem is, with this round of new legislation, the people on only one side of the debate (the people who are, inarguably, the least culpable with respect to the problem) are now forced to bear the burden of paying for it. Everyone should be held equally accountable for their actions in the eyes of the law.
As an attorney who has litigated cases in both Florida and Louisiana, I can say that the legal framework in Louisiana (a state that is far more conservative leaning that Florida) is far more balanced and better tailored to holding all parties accountable than Florida’s current legal framework. Attorneys and litigants (on both sides) are held more fervently accountable in Louisiana for their bad faith actions than their Florida counterparts. When bad actors present themselves in Louisiana, they are stomped out. See Claims Journal Article dated March 6, 2023, (Link Below) regarding a Texas law firm being suspended from practicing in Louisiana over ethical questions raised about its handling of hundreds of hurricane insurance claims in Louisiana.
The law in Florida needs to be revamped to comprehensively hold everyone accountable – the insurers, the insureds, the contractors, the attorneys, the judges, and (especially) the legislators – rather than focusing punishing innocent policyholders statewide by removing (or lessening) legal accountability remedies. If an attorney knowingly files a frivolous claim or defense, the attorney and his client should be punished. Period. If an insurer acts in bad faith, the insurer should be held accountable for the damages it inflicts on the innocent policyholder. Period. If an insured acts in bad faith with respect to its insurer, or commits fraud, the insured should be held to account for same. Period. Florida’s legislature should find a balanced solution that fairly addresses all of these problems (and more), leaving in place all remedial measures (or increasing the remedial measures even) that deter and/or punish wrongdoing by anyone who falls out of line regardless of which side they’re on. The legislature has failed to do this, and they should be held accountable by you, the policyholder, and/or the People of the State of Florida from whom these legislators derive their power. Period.
Those who seek equity must do equity. Or, better (albeit, perhaps, less elegantly) stated by the fictional Judge Mildew in A.P. Herbert’s Uncommon Law, “A dirty dog will not have justice by the court.” It’s time Florida started stamping out the “dirty dogs” (whomever they may be and regardless of which side they are on) rather than leaving them to roam the streets and further empowering them to feed on the powerless. To that end, State of Florida has failed miserably with respect to creating an equitable solution to the “insurance crisis” within the state.
Links to Articles Referenced Above:
Insurance Litigation Reporter Article (by Dennis J. Wall), Consumers Had No Voice: Changes to Property Insurers’ Laws in Florida, https://www.dennisjwall.com/attachments/Consumers-Had-No-Voice—Changes-to-Property-Insurers–Laws-in-Florida–March-2023–.pdf, last accessed April 4, 2023.
Insurance Journal Article, Florida’s SB 2A Ended One-Way Legal Fees. Now Some Insurers Say it’s Retroactive, https://www.insurancejournal.com/news/southeast/2023/03/01/709901.htm, last accessed April 4, 2023.
Claims Journal Article, Federal Judge in Louisiana Suspends Texas Law Firm Over Hurricane Claims, https://www.claimsjournal.com/news/southcentral/2023/03/06/315693.htm, last accessed April 4, 2023.