Proposed legislation that would substantially change existing insurance law barely made it out of the Judiciary Committee of the Florida State Senate this week. For some members of the committee, the bad faith provision of Senate Bill 1592 is especially troubling. The bill is supposed to encourage settlements "in a fair and objective manner," according to the sponsor. Opponents, however, say the bill, in effect, is killing an ant with an elephant.
The bill changes the legal standard for bringing an action when an insurance company rejects a "good faith" settlement offer within the policy limits; it also changes the rules for bringing a bad faith failure to settle lawsuit. And, the bill shortens the time frame in which a homeowner may file a claim.
While opponents of the proposal agree that Florida has a "bad faith lawsuit problem," they believe the bill overreaches. Consumer advocates said that the complicated ins and outs of the bill would be over most claimants' heads, indecipherable without the aid of legal counsel. The cost to policyholders would increase, or those unable to afford counsel would be powerless to pursue the matter.
Supporters counter that this scenario is pretty much what they want -- by introducing the prospect of pricey litigation, insureds would be more willing to settle. Proponents also say that the bill offers a much-needed clarification of the difference between "failure to file a claim" and "bad faith."
The next step for the bill is the Budget Committee. Both opponents and proponents expect to see a significantly altered bill come out of that committee.
In the House, the companion bill was assigned to the Civil Justice Subcommittee last week. No hearing has been scheduled.
Sunshine News, "Homeowners Can't Sue Insurers? 'Bad Faith' Bill Troubles Some Senators," Gray Rohrer, 03/23/11
Florida Senate Bill 1592 at http://www.flsenate.gov/Session/Bill/2011/1592, accessed 03/24/11