FL S1592

Revises grounds for civil actions against insurers, changing the standard for failure to settle claims from "not attempting in good faith" to "acting arbitrarily and contrary to the insured's interests."

Establishes specific requirements for third-party settlement demands, including that demands must be in writing, specify an amount within policy limits, include detailed explanations of coverage and liability issues, and be submitted by someone with legal authority to settle.

Creates a safe harbor protecting insurers from bad faith liability if they offer to pay policy limits within 60 days after notice of claim, receipt of written demand, or 30 days after the accident, whichever is later.

Provides that when multiple third-party claims exceed policy limits, insurers may file interpleader actions or use binding arbitration to distribute policy limits without liability beyond those limits, with third-party claimants receiving prorated shares.

Applies the statutory bad faith standard equally to common law claims and disapproves prior case law including Macola v. Gov't Employees Ins. Co., Berges v. Infinity Ins. Co., and Powell v. Prudential Property & Cas. Ins. Co.

Makes the act effective July 1, 2011 and includes severability provisions.