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Florida Legislature Passes Law Creating Right of Contribution Among Liability Insurers for Defense Costs

November 4, 2019

Florida Governor Ron DeSantis recently signed into law House Bill 301, an omnibus insurance reform bill effective July 1, 2019. Among other things, House Bill 301 created Florida Statute Section 624.1055, which gives most liability insurers a statutory right of contribution for defense costs from other liability insurers who also have a duty to defend the insured. Expressly excluded from the provisions of the new statute are motor vehicle liability insurance policies and medical professional liability insurance policies. The statute applies to any claim, suit, or action initiated on or after January 1, 2020.

Section 624.1055 allows a liability insurer who owes a duty to defend an insured and    defends the insured a right of contribution for defense costs from any other liability insurer who also owes a duty to defend the insured in that same action. There is no entitlement to recovery of defense costs incurred prior to the other liability insurer’s receipt of notice of the claim. Defense costs are to be allocated by the court according to the terms of the applicable liability insurance policies. Section 624.1055 applies to liability insurance policies issued for delivery in Florida or under which an insurer has a duty to defend an insured against claims or actions asserted in Florida, including surplus lines insurance policies.
 
Prior to the recent enactment of Section 624.1055, a liability insurer’s right to contribution of defense costs was essentially prohibited pursuant to Florida case law. See Penn. Lumbermens Mut. Ins. Co. v. Ind. Lumbermens Mut. Ins. Co., 43 So. 3d 182, 186 (Fla. 4th DCA 2010) (“[T]here is no right of reimbursement to defense costs between primary insurers of a common insured.”); Cont’l Cas. Co. v. United Pac. Ins. Co., 637 So. 2d 270, 271 (Fla. 5th DCA 1994) (“[T]he duty of each insurer to defend its insured is personal and does not inure to the benefit of another insurer.”); Argonaut Ins. Co. v. Md. Cas. Co., 372 So. 2d 960, 963-64 (Fla. 3d DCA 1979) (same).

Now, through the enactment of Section 624.1055, Florida law regarding the right of contribution of liability insurers for defense costs is more akin to the law in most other states.

For more information, contact us at info@kubickidraper.com.

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