Policyholders and their advocates are fully aware that authorized carriers may be found liable for attorneys’ fees under Florida Statute 627.428, which provides:

(1) Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured’s or beneficiary’s attorney prosecuting the suit in which the recovery is had.

However, what if a Surplus Lines carrier wrongfully denies or underpays a claim? Florida has specific laws that apply to these types of carriers. The specific chapters governing Surplus Lines carriers range from 626.901-626.939. As to attorney’s fees, Florida Statute 626.9373 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.

At Merlin Law Group, we are privileged to practice law all over the country and Florida is special because of these "fee statutes." Other states provide the opportunity to recover attorney’s fees in subsequent bad faith actions; however, many states set a high "unreasonable basis" standard to recover extra-contractual damages, i.e., attorney’s fees and taxable costs. Many Surplus Lines carriers are surprised to learn that they will owe attorney’s fees if a judgment is entered against them in Florida.

This additional exposure is significant for Surplus Lines carriers to consider when facing a breach of contract allegation. In a complex case, it is not unusual for attorney’s fees for both parties to accumulate quickly and only continue to increase through further litigation.