President, Personal Insurance Federation of Florida
PH: (850) 597-7425
FOR IMMEDIATE RELEASE
PIFF URGES HOUSE TO ADOPT SENSIBLE REFORMS TO FLORIDA “BAD FAITH” LAW
TALLAHASSEE, Fla. (Nov. 7, 2017) – The Personal Insurance Federation of Florida (PIFF) today urged members of the House Commerce Committee to pass common sense reforms to Florida’s insurer “bad faith” law.
“Florida’s third-party insurance ‘bad faith’ laws create a perverse incentive for persons injured in auto crashes to game the system in order to set up an insurer for a bad faith claim that could greatly exceed the amount of coverage purchased by the insured,” said Michael Carlson, president of PIFF.
Under Florida law, there are specific requirements for “first-party” bad faith claims that are filed between the insured and their insurer. In a first-party claim, pre-suit notice is required and the insurer is given 60 days to pay the claim or tender policy limits. However, there are no such rules for third-party claims, creating an unfair legal playing field that hurts consumers.
In 2014, the Insurance Research Council estimated that the costs associated with third party bad faith litigation amounted to $79 per insured vehicle, or $800 million a year.
House Bill 19, filed by Rep. Erin Grall, R-Vero Beach, repeals the Personal Insurance Protection (PIP) requirement in 2019, replacing Florida’s current auto injury reparations system with a full tort system. Under the new law, every motorist would have to buy a minimum of $25,000 per person, $50,000 per occurrence bodily injury insurance, which would benefit third parties who are injured in auto crashes caused by the insured.
Moving to a tort-based system will increase litigation and increase the opportunity for third-party claimants to play games in order to avoid the contractual limits of coverage that may be used to pay the claim. The goal is to create increased liability for the claim – even when the insurer was acting in good faith in attempting to settle.
PIFF supports three common sense reforms that would create a fair system for adjudicating third-party bad faith claims: (1) Require claimants to make a written notice of the claim and give the insurer 45-days to pay the amount agreed upon or the limits of the policy, whichever is less; (2) Require the trier of fact to consider whether the claimant acted in good faith when evaluating whether the insurer acted in good faith; and (3) Permit insurers to provide policy proceeds to a court so that it can determine who is entitled to compensation when there are competing claimants.
“These sensible reforms will help improve the health of the auto market, increase competition, and lower costs. Without them, Florida’s free-for-all legal system will continue to hit the pocketbooks of Floridians,” Carlson said.
Follow PIFF @PIFFNews.