Insurance Coverage and Bad Faith

Legal Update: Recent Changes to Florida Insurance Law and Its Effect on Litigation

Legal Update: Recent Changes to Florida Insurance Law and Its Effect on Litigation

It is no secret that Florida’s residential property insurance market has experienced a tumultuous past couple of years. Within the past two years alone, a myriad of Florida’s residential property insurance carriers have stopped writing or renewing policies within the state, have cancelled existing policies, or have requested steep rate increases in order to deal with the soaring litigation costs related to roof and wind damage claims.

Further exacerbating matters, between 2021 and 2022, seven major Florida insurance carriers entered insolvency, liquidation, or required midterm cancellations.[i] While Florida accounted for only 8.2% of homeowner’s claims made nationwide in 2019, more than 76% of all homeowner’s lawsuits against insurance companies originated in Florida that same year. [ii]

Therefore, on April 26, 2022, Florida Governor Ron DeSantis signed a Proclamation convening a Special Session of the Florida Legislature to address the residential property insurance crisis.[iii] And on May 26, 2022, after passage by the Florida Legislature, Governor DeSantis signed into law SB-2, a bill that seeks to stabilize Florida’s property insurance market with pro-consumer measures and legal reforms to reduce frivolous litigation that drives up costs for insurance companies and policyholders.[iv]

Among many other items, SB-2 addresses specific items related to lawsuits brought against insurance carriers by their insured’s or their assignees. Three of these are worth mentioning.

Requirements for a Bad Faith Actions Against a Residential Insurer

SB-2 creates Fla. Stat. Section 624.1551 to specify that a claimant must first “establish that the property insurer breached the insurance contract” to prevail in a bad-faith claim pursuant to Fla. Stat. 624.155(1)(b).[v] This substantially decreases a carriers’ exposure to bad-faith discovery, as this section makes it clear that a bad-faith action cannot ripen until a breach of the insurance contract has been established. This likely also establishes that pre-suit appraisal is not a basis for bad faith litigation.

Changes to Statutory Entitlement to Attorney Fees and Costs in First-Party Property Lawsuits

SB-2 further amends portions of Fla. Stat. Section 627.70152 in several ways:

  1. Strengthens the Requirement to Provide Notice of Intent to Litigate to the Carrier:The law allows an insurer to recoup reasonable attorney fees and costs when a lawsuit is dismissed without prejudice due to the insured’s failure to provide a ten-day Notice of Intent to Initiate Litigation to the insurance carrier prior to filing suit.
  2. Creates a Strong Presumption in Favor of the Lodestar Fee: The law establishes a new standard for the award of attorney fee multiplier in property insurance lawsuits and creates a strong presumption that the Lodestar Fee, amount of fees and costs without a multiplier, is sufficient and reasonable, which may only be rebutted “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.” This component significantly decreases the potential exposure many carriers face if they defend a case through trial as it reduces the likelihood that an award of attorney fees and costs to a Plaintiff might be doubled, or more.

Prohibition from Assignment of Entitlement to Attorney Fees

Florida law has long awarded attorney fees to insureds upon the rendition of a judgment in their favor against their homeowner’s insurance carrier pursuant to Fla. Stat. 627.428. Nevertheless, SB-2 adds subsection (4) to 627.428 which prohibits the transfer, assignment, or acquisition of the right to attorney fees under 627.428 to anyone who is not a named insured or named beneficiary.

This portion of SB-2 was written specifically with the legislative intent of dis-incentivizing frivolous claims, often from contractors seeking payment for unwarranted services, who file hundreds of lawsuits against insurance carriers and create a niche industry off suing for nominal claims.[vi] This section of SB-2 is also the target of a recent lawsuit filed in Leon County Circuit Court by the Restoration Association of Florida and Air Quality Assessors, LLC, which argues that the inability to recover prevailing party attorneys’ fees will effectively shut the courthouse door to plaintiffs because it will be cost-prohibitive to pay an attorney for these types of small claims.”[vii] We are hopeful that the court will not merit in this lawsuit, allowing the law to stand bringing some stability to the Florida insurance market.

[i] Companies in Receivership, (Fl. Dep’t Financial Services, July 12, 2022),

[ii] Max Reyes, Fraud and Litigation Push Florida’s Home Insurer’s Into Insolvency, Bloomberg News, (March 22, 2022),

[iii] Proclamation, Executive Office of the Governor of Florida (April 26, 2022),

[iv] Press Release, The Florida Senate Office of the President, (May 24, 2022) (

[v] Ch.2022-268, 2022 Fla. Laws.

[vi] Press Release, Executive Office of Governor Ron DeSantis, (May 26, 2022),

[vii] William Rabb, Florida Contractor Group Already Files Suit Challenging New AOB Fee Restrictions, Insurance Journal, June 1, 2022,