Page 21 - Reservation of Rights - Special Edition

counsel may be agreed upon between the parties or, if no agreement is reached, shall be set by the court.
In other words, Florida law provides that when an insurer asserts a coverage defense and the insured rejects the reservation of rights defense or declines to enter into a nonwaiver agreement, the insurer is required to provide “mutually agreeable” counsel to defend the insured. This “mutually agreeable” requirement allows for the insurer and the insured to share equal rights in the selection of defense counsel.
The statute is implicated only when the insurer raises a “coverage defense,” defined by the Florida Supreme Court as defense to coverage that otherwise exists. AIU Ins. Co. v. Block Marina Inv., Inc., 544 So. 2d 998, 1000 (Fla. 1989). Accordingly, the statute cannot create or extend coverage where none existed to begin with (such as where the loss
does not fall within the terms coverage or because of a limitation or exclusion). Rather the statute will estop a cover- age defense (such as a breach of notice provision or duty to cooperate) where there would otherwise have been cover- age for the loss.
Time for Providing Insured with Coverage Position/ Reservation of Rights
An insurer does not waive its rights to coverage defenses if a reservation of rights letter is sent to the insured, via hand- delivery or certified mail, within 30 days of when the insurer knew, or should have known of the coverage defense. As the Florida Supreme Court explained in AIU Insurance Company, the notice requirement only applies where cover- age exists under an insurance policy, but the insurer seeks to assert a coverage defense. Danny’s Backhoe Service, LLC, 116 So. 3d at 511.
2018 ReseRvation of Rights - special edition
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