Insureds Are Not Entitled to Mutually Agreeable Defense Counsel in Florida
Often times attorneys become confused when reading Florida Statute Section 627.426(2), and think that insureds are entitled to mutually agreeable defense counsel when an insurer agrees to defend under a reservation of rights. That is generally not the case. Section 627.426(2) applies to “coverage defenses” which include such things as late notice or other “defenses” to otherwise legitimate coverage. The exclusions and exceptions to coverage that insurers usually reserve their rights on are not considered “coverage defenses” and are not governed by this statute. An insurer in Florida is permitted to unilaterally select defense counsel for its insured. For more explanation, see Travelers Indem. Co. of Ill. v. Royal Oak Enterprises, Inc., 429 F. Supp. 2d 1265 (M.D. Fla. 2004).
Contrary to Royal Oak’s assertion, this statute does not create a duty to provide mutually agreeable counsel. First, the statute is implicated only when the insurer raises a “coverage defense,” defined by the Florida Supreme Court as “a defense to coverage that otherwise exists.” So defined, a “coverage defense” does not include a disclaimer of liability based on an express coverage exclusion in the policy.23 Second, the only penalty for noncompliance provided for in the statute is that the insurer is precluded from denying coverage “based on a particular coverage defense.” It does not provide that the insurer’s failure to obtain mutually agreeable counsel in the event of a coverage dispute entitles the insured to recover the fees and costs of its separately retained counsel. Accordingly, § 627.426(2) cannot serve as a basis for imposing a duty on Travelers to obtain mutually agreeable counsel for Royal Oak.
Tags: Duty to Defend, Reservation of Rights, right to independent counsel
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Florida Insurance Coverage Law 
May 30, 2013 at 12:35 PM
[…] the insurance company can appoint defense counsel unilaterally on behalf of its insured (as is the case in Florida) or whether the insured can choose their own counsel. The case law indicates that an insured in […]