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Legal Update: Big Changes to First Party Property Insurance Litigation

December 21, 2022

The Florida Senate and House have passed SB 2-A, an act relating to property insurance. Here are some highlights of the major changes for litigation and claims handling:

A bad faith lawsuit may not be filed until resolution of the underlying first party litigation.

Section 624.1551, Florida Statutes, is amended to provide that there can be no cause of action for extra-contractual damages until there is adjudication on the merits of the underlying breach of insurance contract action against the insurance carrier and a final judgment or decree is entered against the insurance carrier.
Acceptance of a proposal for settlement or payment of an appraisal award is not a final judgment. However, the difference between the final appraisal award and the estimate prepared by the appraiser for the insurance carrier may be evidence of bad faith.
Shorter times to investigate a loss and communicate with the policyholder.
Section 627.70131, Florida Statutes, is amended. Several deadlines are shortened, including:

• The time to review and respond to claims communications is changed from 14 days to 7 days unless there are factors beyond the control of the carrier.

• The time to start an investigation after receipt of a proof of loss is changed from 14 days to 7 days unless there are factors beyond the control of the carrier.

• Reduces the time to pay or deny a claim from 90 days to 60 days from the notice of the claim unless there are factors beyond the control of the carrier.

Additional changes to Section 627.70131, Florida Statutes, include:

• A requirement that any estimate generated by the insurance carrier must be sent to the insured within 7 days.

• Provisions for inspection and investigation of the claim through electronic methods which provides clear photographs and documentation of the property.

• A definition for “Factors Outside of the Carrier’s Control.”
Shortened time frames to make claims.
Section 627.70132, Florida Statutes, is amended to provide:

• A claim or re-opened claim must be made within 1 year of the date of loss. Under the previous version of the Statute, there were 2 years to make a claim or re-opened claim.

• A supplemental claim must be made within 18 months of the date of loss. Under the previous version of the Statute, there were 3 years to make a supplemental claim.

Eliminates one-way attorney’s fees.
Section 627.70152, Florida Statutes, is amended to eliminate attorney’s fees and costs. Attorney’s fees and costs are no longer available under Section 627.428, Florida Statutes, for lawsuits involving residential or commercial property insurance policies.

Binding arbitration for resolution of claims.
Section 617.70154, Florida Statutes, is created and sets forth requirements for including an endorsement in insurance policies to resolve claims through mandatory binding arbitration.

Assignment of Benefits are eliminated for residential and commercial policies issued on or after January 1, 2023.

Permits a joint proposal for settlement.
Section 768.79, Florida Statutes, is amended to allow a property insurer to make a joint offer of judgment or settlement that is conditioned on mutual acceptance of all joint offerees in a breach of contract action.

This legislation is targeted at reducing litigation costs, shortening the time to bring a claim to resolution and keeping affordable private insurance options for consumers. With the changes above, we anticipate the years to come will focus on alternative dispute resolution and bad faith litigation.

Stay tuned for CE opportunities in 2023 hosted by the Kubicki Draper’s First Party Practice Group regarding issues of making proper claims determinations during the initial stages of a claim, preparing for arbitration, and defending bad faith claims – all of which are implicated by new law.



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