Florida – a bright light of tort reform

In response to rapidly rising social inflation and insurance premiums, Florida passed new tort reform legislation in late 2022 (Senate Bill 2-A) and early 2023 (House Bill 837). The changes impact property and casualty lines to help level the playing field between plaintiffs, defendants, and insurers.

1. Assignment of Benefits

Problem: Insureds assigned their insurance benefits to contractors who fixed the property and then filed a claim with the insurance company, leading to inflated costs, unnecessary repairs, and the inability of insurers to recommend repair contractors.

Reform: Policyholders can no longer assign their insurance benefits to contractors.

2. One Way Prevailing Party Attorney Fees

Problem: Plaintiff attorneys could recover their fees from insurers if the judgment was more than the insurer’s initial offer to settle, which impeded settlement and incentivized plaintiff attorneys to go to trial.

Reform: Plaintiff attorneys no longer recover their fees in this scenario.

1. Comparative Fault

Problem: Plaintiffs could recover damages from defendants, even when the plaintiff was mostly at fault.

Reform: A change of standard from pure comparative negligence to modified comparative negligence, meaning plaintiffs no longer recover damages when apportioned >50% of fault by juries.

2. Property Owner Liability

Problem: Property owners were being held fully liable for injuries to tenants, guests, and even those on the property to commit crimes.

Reform: Fault is now apportioned between all parties contributing to the injury, and property owners owe no duty to criminal actors.

3. Statute of Limitations

Problem: Four year statute of limitation for negligence claims.

Reform: New two-year statute of limitations encourages plaintiffs to file earlier and allows defendants (and insurers) to gather evidence closer to the time of the event. This will likely reduce the number of frivolous claims and procedural delays.

4. Phantom Damages

Problem: Plaintiffs could recover for all medical services billed, whether or not those bills were ultimately paid by the plaintiff or their health insurance.

Reform: Plaintiffs can no longer receive awards for damages billed but never actually paid.

5. Plaintiff Attorney Fee Multipliers

Problem: Plaintiff attorneys were regularly awarded additional fees by the court beyond their contingency fee arrangement with their client.

Reform: There is now a presumption that the standard fee is sufficient, and can only be overcome in exceptional circumstances.

6. Bad Faith Claims

Problem: Plaintiff attorneys had no independent duty to act in good faith.

Reforms:

a) Plaintiff attorneys and defendants/insurers now have separate, independent duties to act in good faith to each other when providing information, making demands, setting deadlines, and attempting to settle claims.

b) Negligence alone is no longer sufficient to constitute bad faith by insurers.

c) Insurers have 90-day “safe harbor” periods after receiving a demand and supporting evidence, during which no bad faith action can be brought just because the insurer tenders less than the amount demanded by the plaintiff.

d) Insurers can avoid excess of policy limits exposure or extra contractual obligations if they deposit limits with the court for apportionment.

The changes have helped Florida’s insurance market.

• Fourteen new insurers have set up shop.
• Auto and homeowners’ insurance rates are falling. Progressive will refund ~$1B to drivers, citing reduced losses due to tort reforms, while twenty-seven insurers have filed to reduce homeowners’ rates since January 2024.
• Average settlement times are down – fewer lawsuits mean clearer court dockets and more efficient litigation resolution processes.
• Florida was ranked #2 for nuclear (>$10M) verdicts from 2009-2022. In 2024 it was #10.

 
The reforms have restored some balance to the litigation landscape, and Florida’s insurers and policyholders are reaping the benefits.

To discuss further, contact Frank DeMento (fdemento@transre.com) or Bryan McCarthy (bmccarthy@transre.com).