inSurerSnowHavearigHttodeFenSeCoStContribution
construction law Section
Chairs:DebbieCrockett-CheffyPassidomo,P.A.&KatherineHeckert,CarltonFields
Section624.1055createda
rightofcontributionfor
defensecosts.
Sometimes more than one
liability insurer will have
a defense obligation. Each
insurer has a separate,
independent obligation to defend.
Until recently, insurers did not have
a right of contribution from other
insurers to recover a share of
defense costs.
Section 624.1055 of the Florida
Statutes changed that. Effective
July 1, 2019, section 624.1055
created a right of contribution
among liability insurers for defense
costs. The statute applies to claims,
suits or other actions initiated after
January 1, 2020. “Other actions”
to which the statute may apply
include Chapter 558 proceedings. 1
The statute directs that “[t]he
court may use such equitable
factors as the court determines
are appropriate in making such
allocation.” 2 Section 624.1055 does
not otherwise describe what a court
should consider when allocating
defense costs. A California court
has found that the “varying
equitable considerations which may
arise, and which affect the insured
and the ... carriers, and which
depend upon the particular policies
of insurance, the nature of the
claim made, and the relation of
the insured to the insurers” make a
definite standard unmanageable. 3
To date, no Florida District
Court of Appeal has addressed
the propriety of a lower court’s
allocation of defense costs in a
statutory contribution claim. Courts
in other jurisdictions vary in their
approach to allocation. One court
listed several potential allocation
methods based upon:
(1) The relative duration of each
primary policy as compared to
the overall coverage period during
which the “occurrences” happened
(the “time on the risk” method);
(2) The relative policy limits of
each primary policy (the “policy
limits” method);
(3) The relative durations and
the relative policy limits of
each primary policy, through
multiplying the policies’ respective
durations by the amount of their
respective limits, so that insurers
issuing primary policies with
higher limits would bear a
greater share of the liability per
year than those issuing primary
policies with lower limits (the
“combined policy limit time on
the risk” method);
(4) The amount of premiums
paid to each carrier (the
“premiums paid” method);
(5) Equal shares up to the policy
limits of the policy in the same
fashion until the entire loss has
been apportioned in full (the
“maximum loss” method); and
(6) Equal shares (the “equal
shares” method). 4
The statute also raises other,
practical issues. For instance,
insurers hoping to avoid litigation
under the statute will try to reach
agreements concerning the direction
and scope of the defense, what
method of allocation should apply,
and the coordination of each
insurer’s billing requirements for
counsel retained for the insured,
among other issues. It will be
interesting to see Florida courts
implement this new law. n
1
Cf. Altman Contractors, Inc. v. Crum
& Forster Specialty Ins. Co., 232 So. 3d
273, 279 (Fla. 2017).
2
Section 624.1055(1), Fla. Stat.
3
CNA Casualty of California v.
Seaboard Surety Co., 176 Cal. App. 3d
598, 619 (1986).
4
Centennial Ins. Co. v. U.S. Fire
Ins. Co., 88 Cal.
App. 4th 105,
112–13 (2001)
(Citations for each
method omitted).
Author: Steve
Rawls – The Law
Office of Jeffrey
Zwirn, P.A.
join tHe ConstRuCtion lAw seCtion At HillsBAR.CoM.
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