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Fair Claims Settlement


PROBLEM: Fear of being hit with awards far in excess of policy limits forces many insurers to settle and pay claims even when the insurer doubts the validity of the claim, increasing insurance premiums for everyone. 

BACKGROUND: Under the current provisions of §624.155, F.S., any person—not just the insured—can bring a civil action against an insurer for failure of that insurer to, in good faith, settle a claim within policy limits.

Plaintiffs’ attorneys demand policy limits in almost every case, even those where liability of the insurer is doubtful, and the insurer usually has only 60 days in which to investigate the claim and decide whether or not to pay. However, Florida law does not require claimants who are not the policyholder to send a demand or clearly state the amount of money demanded to achieve a fair settlement. The absence of clear rules to satisfy third party claims has enabled plaintiffs’ attorneys to game Florida’s judicial system, which forces settlements and increases the cost of insurance for everyone.

SOLUTIONSenate Bill 632 by Sen. Richter and House Bill 5 by Rep. Passidomo address the problem in a straightforward manner. As a condition precedent to a third party bad faith claim, the insured, claimant, or someone else acting on behalf of the claimant must send the insurer a written notice of loss, and if within 45 days the insurer pays the lesser of the demand amount or the policy limits in exchange for a full release of the insured, then the insurer will not be liable for a bad faith failure to settle under the statute or common law. 

CALL TO ACTION: Support passage of SB 632 and HB 5.

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