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A party other than an Inured cannot claim insurance coverage by estoppel due to non comlpiance with the Claims Administration Statute

Submitted by Jessica Gregory on 21 Dec, 2022

Pursuant to Fla. Stat. Ann. § 627.426 (the Claims Administration Statute):

(2) A liability insurer shall not be permitted to deny coverage based on a particular coverage defense unless:

(a) Within 30 days after the liability insurer knew or should have known of the coverage defense, written notice of reservation of rights to assert a coverage defense is given to the named insured by United States postal proof of mailing, registered or certified mail, or other mailing using the Intelligent Mail barcode or other similar tracking method used or approved by the United States Postal Service sent to the last known address of the insured or by hand delivery; and

(b) Within 60 days of compliance with paragraph (a) or receipt of a summons and complaint naming the insured as a defendant, whichever is later, but in no case later than 30 days before trial, the insurer:

  1. Gives written notice to the named insured by United States postal proof of mailing, registered or certified mail, or other mailing using the Intelligent Mail barcode or other similar tracking method used or approved by the United States Postal Service of its refusal to defend the insured;
  2. Obtains from the insured a nonwaiver agreement following full disclosure of the specific facts and policy provisions upon which the coverage defense is asserted and the duties, obligations, and liabilities of the insurer during and following the pendency of the subject litigation; or
  3. Retains independent counsel which is mutually agreeable to the parties. Reasonable fees for the counsel may be agreed upon between the parties or, if no agreement is reached, shall be set by the court.

If an insurer denies coverage based upon a coverage defense, an insured can assert a claim for coverage by estoppel if the carrier failed to comply with the requirements of the Claims Administration Statute. The carriers non-compliance with the statue would prevent them from denying coverage for the inused.

However, if the insured does not raise any claim of estoppel based on non-compliance with the Claims Administration Statute, other interested parties involved do not have standing to assert such a claim. See Gen. Sec. Ins. Co. v. Barrentine, 829 So. 2d 980, 983 (Fla. 1st DCA 2002).

In Barrentine, the First DCA held that the conditions imposed by section 627.426(2) apply only to the immediate parties to the insurance contract and are not enforceable by a third party, merely because that party may have an interest in the outcome of the coverage dispute. Therefore, if an insured fails to raise a claim for coverage by estoppel due to non-compliance with the Claims Administration Statute, a third party claimant has no standing to raise such a defense.