May 31, 2019
Re: Client Update
Florida Legislature Passes Right of Contribution among Liability Insurers for Defense Costs
There has been a major change in the Florida Legislature regarding the right to contribution among insurance carriers, overturning the long standing decision of Argonaut Ins. Co. v. Maryland Cas. Co., 372 So. 2d 960 (Fla. 3d DCA 1979). The bill recently passed in the house and the senate and is on its way to be presented to Governor DeSantis. According to the Florida House of Representatives Staff Analysis, the bill was designed to address legislative concerns regarding a “waiting game” when multiple co-primary insurers have potential defense obligations due to the current absence of a right of contribution among co-primary insurers at common law. See Continental Cas. Co. v. United Pacific Ins. Com., 637 So. 2d 270 (Fla. 5th DCA 1994).
The recently passed bill creates Florida Statute Section 624.1055, providing for the right of contribution among liability insurers for defense costs. The bill provides that a liability insurer who owes a duty to defend an insured and who defends the insured against a claim, suit, or other action has a right of contribution for defense costs against any other liability insurer who owes a duty to defend provided that the contribution may not be sought from any liability insurer for defense costs that are incurred before the liability insurer’s receipt of notice of the claim, suit, or other action. Therefore, if more than one liability insurer, including surplus line insurers, have a duty to defend an insured, the insurer(s) that does defend the insured is entitled to contribution from the insurer(s) that does not defend the insured for defense costs.
This new statute will be available to admitted and surplus lines liability insurers, but not to motor vehicle liability or medical professional liability insurers. It applies to insurance policies issued within the State of Florida and whenever the underlying claim is filed within the State of Florida.
The bill also states that a court shall allocate defense costs among liability insurers who owe a duty to defend the insured against the same claim, suit, or other action in accordance with the terms of the liability insurance policies. Additionally, a liability insurer entitled to contribution from another liability insurer under Fla. Stat. § 624.1055, may file an action for contribution in a court of competent jurisdiction.
The statute, effective July 1, 2019, applies to any claim, suit or other action initiated on or after January 1, 2020. The timing and wording of the “effective date” language raises interesting questions pertaining to claims that have accrued, claims that have yet to be reported, and claims that are not yet in litigation.
As always, we will continue to keep you advised regarding any pertinent legislative changes. Should you have any questions regarding the above, do not hesitate to contact the undersigned.
Very Truly Yours,
JOHN BOND ATKINSON