CORRECTION: Florida Insurance Bad Faith Bill (HB 813) Temporarily Postponed Today by House Civil Justice Subcommittee

CORRECTION:  The headline above has been corrected to say “House” to reflect that HB 813 is a bill filed with the Florida House of Representatives (not the Senate, as previously stated).

HB 813, which would have created a notice and right to cure period prior to instituting litigation alleging bad faith was temporarily postponed in the Florida House of Representatives’ Civil Justice Subcommittee today, March 18, 2013. 

The bill provides that common law third-party actions for bad faith are subject to the same requirements as an action for bad faith brought pursuant to statute.

For instance:

• Before bringing an action under the statute or based on the common-law claim of bad faith, the party claiming bad faith must give the Florida Department of Financial Services (“DFS”) and the authorized insurer 60 days’ written notice of the alleged violation;
• A notice of violation filed with the DFS must include specific information set out in statute, including whether the violation consists of a failure to pay or tender moneys and the amount of such moneys;
• An individual cannot bring an action under the statute or based on the common-law claim of bad faith, if, within 60 days after filing the notice, either the damages are paid or the circumstances giving rise to the violation are corrected;
• The insurer’s tender of either the amount demanded in the notice or the applicable policy limits constitutes correction of the circumstances giving rise to the violation; and
• In third-party liability claims, the insured is entitled to a general release from the claimant under the following circumstances:
• A claimant files a notice of violation and the insurer tenders the amount demanded in the notice or applicable policy limits; or
• The insured files the notice and the claimant accepts the insurer’s tender.

Florida courts recognize a common law duty of good faith on the part of an insurer to the insured in negotiating settlements with third-party claimants. In addition, Florida statute recognizes a claim for bad faith against an insurer not only in the instance of settlement negotiations with a third party, but also for an insured seeking payment from his or her own insurance company.

HB 813, which would become effective on July 31, 2013 if enacted, must pass through the House Civil Justice Subcommittee, as well as the Insurance and Banking Subcommittee and Judiciary Committee before proceeding to the full Floor of the House for a vote.

Similar legislation in the Senate, SB 1284, has not yet been calendared for any committee hearings to date.

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