Construction-Defect Subrogation on the Rise But it Just Became More Difficult in Florida

July 17, 2023

Florida lawmakers this year approved a law that could help reduce liability insurance premiums for home and condo builders – and limit exposure and litigation for liability insurers.

But Senate Bill 360, which took effect in April, could also make it more difficult for property insurers to bring construction-defect subrogation suits, just as more carriers appear to be embracing the subro strategy to recoup some of the losses from years of heavily litigated roof, water and hurricane claims.

“Construction-defect subrogation is worth it. It is,” said John Henley, chief claims officer at Swyfft Insurance Co., a property insurer in Florida and four other states.

Data on the volume of CD subrogation suits in Florida is hard to come by. But Courthouse News Service has reported that construction-defect suits from all plaintiffs in Florida has exploded, from just 31 in 2008 to almost 1,000 in 2017.

SB 360 has now changed the calculus a bit and could give insurers and their adjusters a new sense of urgency to investigate properties for issues that could be the fault of the builder or subcontractor.

The bill, sponsored by state Sen. Travis Hutson, a real estate developer in northeast Florida, reduces the statute of limitations and the statute of repose on lawsuits, giving homeowners and insurance companies seven years instead of 10 to take legal action against contractors, in many cases.

That’s an issue because many defects don’t show up until after seven years, said attorney Josh Goodman, of Miami, chair of the Cozen O’Connor law firm’s subrogation and recovery unit.

At a Senate Judiciary Committee hearing in February, Hutson argued that the change was needed because of a sharp increase in bogus construction-defect lawsuits from homeowners, which are driving up liability insurance premiums.