Insurance Coverage and Bad Faith

A Liability Insurer’s Expense of Defense Should Be Considered in Determining Jurisdictional Amount For Declaratory Judgment Action

In Elisias v. GEICO, (decided July 31, 2013), the Fourth District Court of Appeal examined whether a circuit court had jurisdiction over a declaratory judgment action to determine coverage where the policy limits at issue fell below  the circuit court’s jurisdictional limits. In order to fall within the jurisdictional limits of a Florida circuit court, the amount in controversy must exceed $15,000.  § 34.01(1)(c), Fla. Stat. (2010). In Elisias, the insured argued that since the liability limits of the policy at issue were only $10,000, the circuit court lacked jurisdiction.  

In filing its declaratory judgment action, Geico sought both a determination of its duty to defend and its duty to indemnify.   

The Fourth District Court of Appeal agreed with Geico’s argument that in calculating the amount in controversy, the cost of providing its insured with a defense in the underlying liability suit should also be considered. By including this costs, the Fourth District agreed that the amount in controversy in the declaratory judgment action exceeded $15,000 and thus jurisdiction existed in the circuit court.

Prior to the Fourth District’s decision, no Florida appellate court had specifically addressed this issue. The decision makes it easier for liability carriers to have coverage disputes resolved in circuit court.

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