On March 24th, 2023, Florida Governor Ron DeSantis signed House Bill (HB) 837 into law, effective immediately. After several special sessions, this new bill was pushed through the Florida Legislature to address the state’s ongoing insurance crisis. However, instead of making it easier for insurance policyholders to receive coverage for their claims, the bill primarily focuses on protecting insurers.
HB 837 updates Florida’s regulations regarding bad faith insurance claims. Under the bill, the average policyholder may find it significantly more difficult to pursue claims when the insurance company refuses to pay. Here’s what you need to understand about HB 837 and what it may mean for your next property insurance claim.
Purpose of Florida’s New Insurance Bad Faith Legislation
Florida property owners have long faced an uphill battle in receiving the compensation they’re owed after property insurance claims. Insurers point identify insurance fraud as the reason for the difficulties, and specifically why so many providers go out of business and leave homeowners without recourse. This is particularly painful because the state’s insurance premiums are some of the highest in the country.
Despite these excessive premiums and state programs supporting insurers, they frequently deny or delay claims, particularly after major disasters. If an insurer denies a claim for reasons not permitted in the policy, it is considered a form of third-party bad faith, for which the policyholder can file a civil suit.
These are the claims HB 837 is intended to regulate. The law completely reworks the duties insurers owe policyholders to restrict and refine when these claims are used. This is intended to reduce the number of fraudulent claims overall.
According to proponents of the bill, the changes it makes should lower insurance premiums for property owners in the long run. While this has yet to be seen, it is clear that the bill will make pursuing compensation for claims more difficult in the meantime.
Florida Insurance Law Changes Made by HB 837
The tort reforms made by HB 837 are broad and far-reaching. The most important changes impacting individual policyholders include
Negligence Requirements for Bad Faith Claims
Third-party bad faith claims can no longer cite “mere negligence” as grounds for a lawsuit. Instead, plaintiffs must demonstrate that the insurer acted “solely on the basis of [its] own interests” when it denied, delayed, or underpaid a claim.
Mere negligence includes actions such as forgetting to respond to a claimant’s communications, making a mistake in calculating compensation, or failing to provide reasoning for a denial. While these are problematic, they are no longer recognized grounds for a lawsuit. Plaintiffs and their legal counsel must show that the insurer’s lack of response, underpayment, or unjust denial was purposeful and intended to benefit the company to succeed in their civil action.
Reciprocal Bad Faith Considerations
Historically, third-party bad faith claims are focused on the insurer, not the insured. HB 837 changes that. The insistence of these companies that fraudulent claims are responsible for high premiums and overly zealous denials has led the state legislature to codify two-way good faith expectations.
Specifically, the bill places a duty on claimants to act in good faith when filing claims. This includes providing sufficient information, setting reasonable deadlines on demand letters, and making a genuine effort to settle without going to court. If a claimant fails to meet these standards, their behavior may be considered during the lawsuit, reducing their likelihood of recovering damages.
Situational Immunity to Bad Faith Claims
The bill provides insurers with immunity to all bad faith lawsuits related to claims in which certain conditions are met. This immunity is granted in the following circumstances:
- The insurer paid at least the lesser amount of either the full amount demanded by the claimant or the policy limit.
- The payment was tendered within 90 days of receiving actual notice of the claim.
Additionally, the 90-day payment period does not begin until the insurer receives a claim accompanied by evidence supporting the sum demanded. A lawsuit cannot begin until:
- The claimant has provided actual notice with sufficient evidence to support the claim;
- The insurer does not pay the policy limit or demanded amount; and
- The 90-day limit has expired.
This is intended to grant insurers the opportunity to fairly investigate claims, but it also adds significant potential delays to the process for property owners in need.
Addressing Multiple Claimants
Occasional claims involve multiple claimants against a single insured party, such as when one accident harms several people. This primarily applies to property insurance policies covering homes or businesses in adjoining structures, such as condominium associations or malls. HB 837 standardizes the process of handling these claims when a policy limit is insufficient to compensate all claimants. The bill states that insurers may file interpleader actions or attend binding arbitration instead of going to court to prevent unnecessary lawsuits.
Consult The Professional Law Group Regarding Your Insurance Claims
New Florida legislation has increased the requirements to successfully pursue compensation when your insurance provider fails to act in good faith. Despite the changes, you still have options. You can consult expert insurance attorneys like those at The Professional Law Group to discuss your case and determine the best path forward.
Our skilled lawyers have decades of experience representing clients in complex insurance bad faith lawsuits. We understand the impact that new legislation will have on all cases going forward and are prepared to represent you and ensure you receive the full compensation you’re owed under the law. Learn more about how we can assist you in filing your next insurance claim in this post-HB 837 legal landscape by scheduling your free case review today.