How does House Bill 837 Affect Bad Faith Claims

Governor Ron DeSantis signed HB 837 on March 24, 2023.  This new law provides sweeping reforms that dramatically effect Florida’s insurance and tort landscape.  As proof of their impact, Plaintiffs have filed thousands of lawsuits to get in under the wire before these laws take effect.  HB 837 is beneficial to only the insurance carriers.  It does nothing for Plaintiffs other than make it harder for them to collect settlements owed for their claims. 

Protections For Insurance Companies Against Bad-Faith Claims

Extra-contractual liability is costly for insurance companies and is an overall way to keep their settlement practices in check.  Insurance companies risk extra-contractual liability if they do not settle a claim in a timely manner or when the circumstance require.   See   Section 624.155  HB 837 provides protections for insurance carriers by allowing them to engage in conduct previously considered bad faith without the consequences. For example, if an insured or a third-party claimant sends a demand for payment to an insurance carrier, HB 837 protects the carrier from a bad-faith lawsuit if it tenders the policy limits or demand amount within 90 days of the demand.  In other words, HB 837 gives insurance companies an extension of time beyond the prescribed demand to make payment.  If payment is made within 90 days, it cannot be used as evidence of Bad Faith.  Expect carriers to utilize this additional time to delay payment. Any idea that insurance companies will tender within the time frame prescribed in a demand are pretty much out the door. 

Further,  HB 837 codifies that “mere negligence” alone is insufficient to establish a bad-faith claim, thereby requiring a heightened showing of clear and convincing evidence that the insurance company acted in Bad Faith.  For example, if a Plaintiff makes a demand for the policy limits, the insurance company refuses to tender the policy limits and then the Plaintiff receives an award at trial above the policy limits the Plaintiff may have no recourse to go after your insurance company for failing settle in good faith the first time.  This newfound change gives the insurance company the incentive to short change the claim knowing it is less likely they will face bad faith repercussions.  In other words, the insurance company is now incentivized to maximize the time value of money by waiting to settle, with limited bad faith repercussions checks and balances. 

These changes are only good for insurance companies.  They allow insurance companies to do what they do best, delay, deny and avoid settling claims while they make money off of the money their customers pay them on a reoccurring basis. 

If you have questions regarding HB837 or how it affects Bad Faith Claims please call my office at 407-452-4918.