The Florida Legislature may have added a force-placed insurance, statutory bad faith cause of action when it enacted the following Unfair Method of Competition and Unfair or Deceptive Act or Practice effective June 16, 2021:
(1) Unfair methods of competition and unfair or deceptive acts.--The following are defined as unfair methods of competition and unfair or deceptive acts or practices:
* * *
(z) Sliding.--Sliding is the act or practice of any of the following:
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4. Initiating, effectuating, binding, or otherwise issuing a policy of insurance without the prior informed consent of the owner of the property to be insured.[1]
At least arguably, every homeowner with a mortgage owns the property to be insured. Force-placing an insurance policy is also at least arguably "initiating, effectuating, binding or otherwise issuing a policy of insurance" on "the property to be insured." By definition, force-placed insurance policies are placed by force without the prior informed consent of the homeowner.
The argument that the Florida Legislature has intentionally or otherwise enacted a statutory provision which makes lender force-placed insurance an actionable unfair method of competition or unfair or deceptive act or practice, may be undercut by the Florida Legislature's adoption of the following provision at the same time in the same legislation:
- Mailing, transmitting, or otherwise submitting by any means an invoice for premium payment to a mortgagee or escrow agent, for the purpose of effectuating an insurance policy, without the prior informed consent of the owner of the property to be insured. However, this subparagraph does not apply in cases in which the mortgagee or escrow agent is renewing insurance or issuing collateral protection insurance, as defined in s. 624.6085, pursuant to the mortgage or other pertinent loan documents or communications regarding the property.[2]
These two subparagraphs which have just been quoted, subparagraphs 4 and 5, respectively, of paragraph (z), subsection (1) of Florida's Unfair Methods of Competition and Unfair or Deceptive Acts or Practices Act or UCDPA,[3] have apparently not yet been reconciled by a court of competent jurisdiction as these words are written. Their reconciliation remains in the arguments yet to come from practitioners, and others. However it is worth pointing out that the Florida Legislature could have made subparagraph 4 subject to the same exception as it wrote in subparagraph 5 but it did not do so.
[1] Fla. Stat. § 626.9541(1)(z)4.
[2] Fla. Stat. § 626.9541(1)(z)5 (emphasis supplied).
[3] Fla. Stat. § 626.9541(1)(z)4&5.
There are all kinds of questions about statutory bad faith, including express causes of action, implied causes of action, preemption, civil remedy notices, and damages. Many of the questions are asked and answered in statutes and interpreted in third-party bad faith cases, see generally 1 DENNIS J. WALL, §§ 3:28-3:30, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2022 Supplements in process), and in first-party cases too. See generally 2 id. §§ 9:14-9:16.
Insurer bad faith ramifications of force-placed insurance are addressed in 2 id. §§ 9:33-9:35. The whole field of force-placed insurance, also known as lender-placed insurance, and also known as lender force-placed insurance, is a book by itself. There was no book on the subject so I wrote the first one that I know of. Still very much in use today, it was published by American Bar Association Publishing in 2015, LENDER FORCE-PLACED INSURANCE PRACTICES.
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