Florida Abolishes One-Way Attorney's Fees to help insurance companies

In an effort to assist the insurance industry in Florida, the state legislature held a special session in December 2022, resulting in Senate Bill 2A. This bill repealed the one-way attorney's fee provision that had long governed property insurance lawsuits and introduced other changes that will help carriers, effectively reduce homeowners' coverage, and litigation procedures. It is crucial for Florida homeowners to understand these alterations and develop strategies to adapt.

Key Changes

• Repeal of One-Way Attorney's Fees
  Senate Bill 2A's most notable change is the repeal of Florida's one-way attorney's fee provision, which had previously obligated insurance companies to pay a prevailing homeowner's attorney's fees exclusive of the homeowner's property damage. The bill modified Sections 627.428 and 626.9373 of the Florida Statute, eliminating the right to attorney fees. This move is intended to help insurance carriers raise their profits while passing attorneys fees to Florida's homeowners.
  
  
• Termination of Assignment of Benefits
  The bill also effectively ends assignments of insurance benefits by prohibiting policyholders from assigning post-loss insurance benefits for residential or commercial property insurance policies issued on or after January 1, 2023. There are exceptions for property purchasers, powers of attorney, and liability coverage under a property insurance policy. Interestingly, a common defense raised by insurance companies is that a homeowner failed mitigate their damages to prevent their property from taking on more damage after a loss. An example of this is when a homeowner does not place a tarp on his or her roof- the elimination of assignments of benefits will essentially limit the availability of companies willing to provide emergency mitigation services after a disaster. Homeowners will now be on their own more often to mitigate their damages or pay a company upfront out of pocket for the services.
  
  
• Amendments to Claims Handling Procedures
  Senate Bill 2A introduces several changes to claims handling procedures aimed at expediting the overall process. Insurers are now required to acknowledge reported claims within seven days instead of 14, provide loss estimates within seven days of the adjuster's evaluation, and deliver a coverage determination within 60 days instead of 90. Additionally, the time frame for policyholders to report claims has been shortened.
  
  
• Reforms to Citizens Property Insurance Corporation
  The bill also alters the relationship between Florida residents and the state-backed insurer of last resort, Citizens Property Insurance Corporation. It mandates that Citizens policyholders accept any renewal or take-out offer from an authorized insurance company within 20% of their Citizens premium. Policyholders must also obtain flood insurance as a condition of coverage for residential policies, with the requirement being gradually phased in over the next few years.
  
  
• Takeaways
  While the repeal of the one-way attorney's fee provision is the most high-profile change, the new law also contains several other provisions that will alter insurance litigation in Florida. Carriers should now be less apprehensive about litigating coverage disputes, paying appraisal awards, and offering settlement proposals, as the risk of substantial fee awards has been considerably shifted over to the homeowner. Homeowner's access to the courts and legal representation have been severely diminished. Insurance companies now have more freedom to do what they want with impunity and/or fear of reprisal from their customers.

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