Proposed Legislation to Impact First-Party Insurance Disputes in Florida
In December 2022, the Florida Legislature held a special session to address the state’s struggling insurance market, resulting in Senate Bill 2A. This comprehensive legislation repealed Florida’s long-standing one-way attorney fee provision in first-party property damage coverage disputes. While this change reduced frivolous suits, it also deterred some legitimate claims by policyholders who couldn’t afford attorney fees.
New legislative proposals, Florida House Bill 1551 (HB 1551) and Florida Senate Bill 426 (SB 426), filed in February 2025, aim to realign the playing field. HB 1551 mandates awarding attorney fees to prevailing parties in first-party insurance disputes against surplus lines and other property insurers. The bill defines a ‘prevailing party’ based on whether the judgment exceeds the highest written, good faith settlement offer made by the insurer.
Key points of HB 1551 include:
- Creating sections 627.4275 and 626.9375 of the Florida Statutes
- Defining ‘prevailing party’ based on the judgment compared to the highest settlement offer
- Requiring that insurer offers remain open for at least five business days to be considered ‘good faith’
- Excluding Florida’s offer of judgment statute where prevailing party attorney fees are awardable
SB 426, the companion bill, requires courts to award reasonable attorney fees to prevailing parties in declaratory relief actions to determine insurance coverage after an insurer has denied or reserved the right to deny coverage.
Impact and Reception
These bills aim to promote fairness and reduce unnecessary lawsuits. If passed, they would establish a ‘loser pays’ system, potentially increasing insurers’ incentives to resolve disputes fairly and quickly. However, some insurers have expressed concerns that this could lead to increased litigation and higher costs, potentially destabilizing Florida’s property insurance market.
As of March 20, 2025, HB 1551 received favorable reporting from the Insurance & Banking Subcommittee of the House. SB 426 is awaiting action before the Senate Banking and Insurance Committee. The legal community anticipates their enactment in the coming months.
The proposed legislation is expected to increase first-party property damage coverage litigation in Florida, though not to the levels seen before the 2022 reforms. It may also lead to increased insurance premiums. The new laws would apply only to policies issued on or after their effective dates.
By Julia G. Young of Wilson Elser Moskowitz Edelman & Dicker LLP
