A Courtroom. (Pacific Standard)
The risk of paying an insured's attorney's fees in the event the insured prevails in litigation with an insurer is one of the factors that insurers must take into account. This is something that comes to an insurer's attention first at the stage when the carrier decides whether it will deny coverage. At that stage, the calculus includes the insurer's best guess whether the fact, timing, or context of denying an insured's claim is likely to lead to litigation.
Once in litigation, most if not all insurers will continue the calculus by estimating the likelihood that its insured may prevail. The threat of paying its insured's attorney's fees is a continuing factor in making the insurance carrier's decision whether to affirm or deny coverage, whether that decision is made before or after litigation with the insured has begun. The threat of paying an insured's attorney's fees cannot be underestimated.
In 2022, the statute which previously authorized a prevailing insured to recover its attorney's fees in litigation caused by its insurer, was changed exclusively for the sole benefit of property insurers. Since the change, policyholders that win their case cannot recover their attorney's fees from a property insurer even if their property insurer was the one that caused the fees to be incurred. However, other insurance companies remain subject to the risk. See Fla. Stat. § 627.428.
The property insurers were also protected by changes to the Surplus Lines Statute governing Attorney's Fees. In a mirror image of Section 627.428 applicable to all insurers generally, before 2022 insureds prevailing in litigation caused by their surplus lines insurers could recover their attorney's fees incurred in defending or prosecuting the litigation. That changed in 2022, as well, but once again only with respect to property insurers. Other surplus lines insurance companies remain subject to the risk. See Fla. Stat. § 626.9373.
Thomson Reuters is publishing the author's forthcoming article, Consumers Had No Voice: Changes to Property Insurers' Laws in Florida, in the next edition of Insurance Litigation Reporter.
Please read the disclaimer. ©2023 Dennis J. Wall. All rights reserved.
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