Insurance Coverage and Bad Faith

OIR Approves Binding Arbitration and Waiver of Entitlement to Relating Attorney Fees

OIR Approves Binding Arbitration and Waiver of Entitlement to Relating Attorney Fees

American Integrity is the first insurance carrier to implement binding arbitration language and a waiver of the one-way attorney’s fee provisions into its Florida homeowner’s insurance policy. On February 10, 2022, the Office of Insurance Regulation (OIR) approved language that other carrier’s may soon implement. The language outlines the procedure and timeline for pre-suit binding arbitration concerning disputes based upon the contractual relationship between the insured and insurer. Should the insured be empowered to waive his/her representation’s potential fees and costs? Through this recent approval, the OIR has found it should. Hopefully, this language limits the excessive and costly litigation brought against Florida insurers and begins to stabilize the Florida insurance marketplace.

Binding Arbitration

For a reduction in premium, American Integrity offers a Binding Arbitration endorsement within their Policy Conditions. The approved language requires resolution through binding arbitration to be requested within 5 years from the date of loss. Either party shall serve a demand for the arbitration following an unsuccessful pre-suit mediation.

This binding arbitration would address any dispute concerning the subject policy and the corresponding contractual agreement. This endorsement applies to the insured, or any additional insured, omnibus insured, other person making a claim under the policy, or an assignee of post-loss benefits.

Arbitration shall exclusively and finally resolve disputes based in both state or federal law, and concerning statutory duties, breach of contract, tort theories, punitive damages or other legal theories, irrespective of the basis for the duty or the legal theories upon which the claim is asserted. Notably, this arbitration provision would not apply to requests for injunctive relief, any action pursuant to §682.02(1), Florida Statutes, or any supplemental relief.

The provision details the arbitration timeline and allowable discovery, specifically allowing the parties to engage in discovery as provided by the Florida Rules of Civil Procedure and the Florida Revised Arbitration Code, and within any parameters set by the arbitrator. The final arbitration hearing shall be held within 120 days from the service of the demand for arbitration, and the arbitrator shall issue a written decision within 30 days after completion of the final arbitration hearing, unless the parties waive the time-requirements for conducting the final arbitration hearing or waive the time requirement for issuing the written decision.

Waiver of Entitlement to Attorney’s Fees and Costs

The OIR also approved language requiring waiver of entitlement to attorney’s fees and costs when prosecuting claims against the insurer with very limited exceptions. The policy states that this waiver is a material inducement for each party to enter into the contract and the carrier provides a reduction in premium in exchange for the insured agreeing to these terms. Will the reduction of premium be sufficient consideration for the waiver of such an entitlement? The OIR itself is governed and outlined by Florida Statute and the subsequent Insurance Code. The OIR therefore creates certain precedent through its language approvals for insurance policies. This newly approved endorsement requiring binding arbitration and allowing for waiver of entitlement to attorney’s fees should also be considered under the purview of OIR regulatory capacity. 

While American Integrity is the first insurance carrier to add arbitration language into its Florida homeowner’s insurance policy, it likely will not be the last.