Appeals Court Holds Revision to Bad-Faith Law Cannot Be Applied Retroactively

After lobbying efforts from property insurers, Florida in 2022 made it much more difficult for policyholders to file bad-faith claims against their carriers. Under the current law, Florida Statute 624.1551, plaintiffs must show that an adverse adjudication has been made against the insurance company showing a breach of the agreement, and that a final decree or judgment has been entered. While this rule restricts bad-faith claims raised after the law was enacted, an insurer tried to extend the law’s reach by claiming it also applies retroactively. 

In Vo v. Scottsdale Insurance Company, the Florida Court of Appeals reviewed a case stemming from hurricane damage that occurred to Cindy Vo’s home in 2020. While a public adjuster estimated that the covered damages amounted to slightly more than $38,000, the carrier’s estimate was only $420, a little more than 1 percent of the adjuster’s figure. When an independent adjuster retained by the carrier confirmed the larger amount, Scottsdale relented. Subsequently, Vo sought damages in a lawsuit arguing that Scottsdale acted in bad faith by failing to properly evaluate and settle the claim in a timely manner.

Scottsdale argued that strict requirements of Florida Statute 624.1551 should bar the bad-faith litigation because as a remedial measure, the law should reach back to cases that arose before it was enacted. The Florida Court of Appeals disagreed with the insurer’s argument, ruling that the 2022 statute could not be applied retroactively. Though it might have been intended as a remedy, the statute made a substantive change to the law governing bad-faith claims, rather than merely clarifying or modifying procedural rules. Under Florida law, substantive changes cannot be applied to cases that began before the law took effect. As a result, Vo’s bad-faith claim was allowed to proceed under the legal framework in place at the time the case was initiated.

Given the frequent changes to insurance law in Florida, it is important to consult with an attorney experienced in this legal practice area if you believe you've been victimized by a carrier’s bad faith, or if you have another policy-related concern. H. Clay Parker, Esq. The Florida Lawyer in Orlando advises clients throughout the state on various types of insurance law issues. Please call our firm at [ln::phone] or contact us online to schedule an appointment.