Some Similarities and Distinctions Between the Florida Surplus Lines Law and Traditional Insurers Under Chapter 627

In Florida, Statute 627.428 generally provides for attorney’s fees to a policyholder who prevails against his or her insurance carrier in litigation related to the claim. Florida Statute 627.428 exists, in theory, to discourage insurers from denying and forcing legitimate claims into litigation. In June of 2009, House Bill 853, regarding Surplus Lines Insurers, became law. Part of that law was 626.913(4), which stated that Chapter 627 does not apply to Florida Surplus Lines Insurers unless Chapter 627 contains provisions that specifically state it applies to Surplus Insurers.

The Florida Surplus Lines Law has its own attorneys’ fee provision, which was also part of House Bill 853, and it is Section 626.9373 of the Florida Statutes. The Florida Surplus Lines attorney’s fee provision states:

(1) Upon the rendition of a judgment or decree by any court of this state against a surplus lines insurer in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer on or after the effective date of this act, the trial court or, if the insured or beneficiary prevails on appeal, the appellate court, shall adjudge or decree against the insurer in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the lawsuit for which recovery is awarded.

(2) If awarded, attorney’s fees or compensation shall be included in the judgment or decree rendered in the case.

This is essentially the same as Florida Statute 627.428 regarding attorneys’ fees. There is the prevailing party requirement, which means that once the policyholder obtains a judgment in his or her favor, or a payment of money for the claim after the lawsuit is filed, then the surplus insurer shall be responsible for paying a reasonable amount of the policyholder’s attorney’s fee.

Another part of House Bill 853 that was signed into law was Florida Statute 626.9374, which deals with large hurricane or wind deductibles. It states:

Any surplus lines, personal lines residential property insurance policy issued on or after October 1, 2009, containing a separate hurricane or wind deductible must on its face include in at least 14-point, boldface type the following statement: THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE OR WIND LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.

This statutory provision regarding a surplus insurer’s wind or hurricane deductibles differs from its Chapter 627 counterpart in Section 627.701(4)(a). First it states that it applies to personal lines residential property policies. Second, it only applies to those personal lines residential policies issued on or after October 1, 2009. Lastly, and this may be a minor distinction between its Chapter 627 counterpart, the statement on the face of the policy advising the policyholder of the large wind or hurricane deductible needs to be in 14 point font, whereas Chapter 627 requires insurers to place it in 18 point font. So the surplus insurers can write the required statement in smaller font on the face of the policy. Another one of the advantages the Florida legislature offered the surplus lines market.

These are just a few similarities and distinctions between the Surplus Lines Law and Chapter 627 of Florida Statutes. We will continue this discussion in the upcoming weeks.