Florida Considers Allowing Lawsuits Over Property Insurance Claims
A surprising shift is underway in the Florida Legislature. Lawmakers are considering consumer-friendly legislation that could allow property owners to legally challenge their insurance companies’ claim denials. This potential change represents a stark contrast to previous efforts and addresses Florida’s ongoing property insurance crisis.
House Bill 1551, introduced by state Rep. Hillary Cassell, a Republican from Dania Beach, would restore policyholders’ right to sue insurance companies that deny valid claims. This marks a reversal of the state’s 2022 decision, where lawmakers, with the support of Governor Ron DeSantis, limited policyholders’ ability to pursue legal action. The initial rationale for curbing lawsuits was to protect the insurance industry’s solvency in Florida.
The 2022 measures, aimed at what some called “tort reform,” were intended to alleviate the financial strain on insurers who cited litigation as a primary cause of high costs. While litigation decreased, a recent report indicated that insurers continued to pay substantial sums to shareholders and affiliates while reporting significant losses. This disclosure has angered policyholders, compelling lawmakers to reconsider consumer protections.
The proposed legislation could require insurers to cover plaintiffs’ attorney’s fees in certain cases. The bill passed the Insurance and Banking Subcommittee with bipartisan support, indicating some momentum, despite potential opposition from the Florida Chamber of Commerce.
The insurance industry is expected to resist the shift, arguing that a return to lawsuits would drive up rates, increase premiums, and discourage insurers from offering property coverage in Florida.
However, lawmakers should view these industry concerns with skepticism. The payouts highlighted in the 2022 report occurred during a period when insurers were canceling policies, raising rates, and claiming financial distress. Furthermore, state regulators knew about the payouts but didn’t release the findings to the public. It’s understandable that a bill offering even minor adjustments is now attracting support from both parties.
By 2022, Florida’s insurance market was at its peak of instability, marked by rising claims and severe weather. This prompted insurers to either withdraw entirely or raise premiums and restrict coverage. The state government had previously implemented measures restricting litigation and providing funds to cover rising reinsurance costs, promising that rates would decline within two years. Those reductions never materialized.
Even with the litigation restrictions already in place, rates haven’t fallen as much as promised. Legislative committee hearings show that many property owners continue to complain about insurers’ slow response to claims and persistent reluctance to pay for damages.
Cassell’s bill, along with another that would require qualified human professionals to review claims denial decisions instead of AI, offers a potential solution in a state that has often prioritized the insurance industry over its consumers. Last year, despite Cassell’s efforts, the proposed balancing of the insurance crisis only got a discussion in committee. The bill’s current progress through one legislative chamber is a step forward, but it needs support in both chambers to become law.
