HB 895 – Relating to Insurance

On Thursday, February 27, HB 895 by Representative David Santiago (R-Deltona) was heard by the House Commerce Committee and was reported favorable with 15 yeas and 9 nays. AIF’s Senior Vice President of State and Federal Affairs, Brewster Bevis, stood in support of this legislation.

Florida law imposes a duty of good faith on an insurer in negotiating the settlement of a claim with the insured or a third party; meaning, the insurer must attempt in good faith to settle a claim when, under the circumstances, it can settle if it acts fairly and honestly toward its insured and with due regard to his or her interest. An insurer acting in bad faith may harm the insured party, by failing to settle a third party's claim against the insured, exposing the insured to greater liability. It could also harm a third party to the insurance contract by failing to settle its claim against the insured. Either an insured or a third party to the insurance contract can sue the insurer for bad faith. A jury decides whether the insurer acted in bad faith and determines the amount of damages.

• Claimant’s Good Faith Requirement – The bill creates a statutory good faith obligation on the insured, claimant, and the representative of the insured or claimant. In an action alleging insurer bad faith, the jury (or judge, in a bench trial) must consider whether the plaintiff and their representative acted in good faith and if they failed to so act, make a reasonable reduction in the damages awarded, if any.
• Bar to Civil Remedy – The bill prohibits a third-party lawsuit for insurer bad faith in a liability claim, if there is a single claimant and the insurer paid the lesser of the claimant’s demand or policy limits or if there are multiple claimants and the insurer submits the matter at policy limits to the court for resolution of the claimant’s percentage share of the policy limit amount either within 90 days following the second notice of claim or during the 60-day cure period following receipt of the required pre-suit notice.
• Filing of Pre-Suit Notice and Tolling of Statute of Limitation – Florida law requires a pre-suit notice to the Department of Financial Services (DFS) and the insurer 60 days prior to suing on a bad faith claim, but no particular insurer address is specified. The bill requires the insurer to designate an email address for delivery of the notice and mandates that DFS forward notices to that email. It starts the 60 days from the day the insurer receives the forwarded notice. Also, it extends the statute of limitation for 60 days, if the property appraisal process is invoked in the claim.

HB 895 will now move to the House floor.

AIF supports smart, targeted reforms that help keep the insurance markets up to date while protecting Florida policyholders.