The Florida Supreme Court has just heard oral arguments in a case that will have a significant impact on Florida homeowners. The issue to be addressed is whether the Fifth District Court of Appeals properly interpreted the law in ruling that Citizens Property Insurance Corporation is not immune from liability for insurance bad faith type claims. Florida’s highest court will consider whether the insurance statutory bad faith remedy under Florida Statutes, section 624.155 applies to Citizens as a quasi-public insurance company.
Citizens contends that it is immune from liability for bad faith claims based primarily on the language of section 624.155 which provides in pertinent part:
“(s) (1) there shall be no liability on the part of, and no cause of action of any nature shall arise against, any assessable insurer or its agents or employees, the corporation or its agents or employees, members of the board of governors or their respective designees at a board meeting, corporation committee members, or the office or its representatives, for any action taken by them in the performance of their duties or responsibilities under this subsection. Such immunity does not apply to:
a. Any of the forgoing persons or entities for any willful tort;
b. The corporation or its producing agents for breach of any contract or agreement pertaining to insurance coverage;
c. The corporation with respect to issuance or payment of debt;
d. Any assessable insurer with respect to any action to enforce an assessable insurer’s obligations to the corporation under this section; or
e. The corporation in any pending or future action for breach of contract or for benefits under a policy issued by the corporation; in any such action, the corporation shall be liable to the policyholders and beneficiaries for attorneys fees under s. 627.428.”
The statute clearly does not grant immunity to Citizens from breach of contract claims brought by policyholders. In fact, the statute expressly entitles policyholders to an attorney fee award if they prevail in a breach of contract claim against the insurance carrier.
However, Citizens’ contention is that the statute precludes liability for insurance bad faith claims because such claims are not expressly listed as one of the five exceptions set forth above. The claim that good faith is not a listed exemption is based in part on the premise that failure to settle an insurance claim in good faith does not constitute a “willful tort”.
The insured prevailed in the First District Court of Appeals based on the position that the statute imposes a duty on Citizens to act in good faith toward its policyholders and that a willful breach of the duty to act in good faith settling claims constitutes a “willful tort”.
The policyholder also argues that sound public policy supports allowing an insured to pursue a statutory bad faith claim against Citizens. The insured points out that Citizens can simply deny or delay claims indefinitely when homeowners suffer devastating property losses during hurricanes and other catastrophes because the insurer would suffer no significant adverse consequences for such conduct.
You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].