A recent Florida state court decision underscores the importance of accepting a policy limits demand on its precise terms. See Peraza v. Robles, 983 So. 2d 1189, 1192 (Fla. 3d DCA 2008). Click here to read the decision.

In Peraza, the plaintiff's counsel demanded tender of policy limits within fifteen days. Id. at 1190. The insurer timely forwarded the settlement check (“[v]irtually by return mail”), conditioned on (a) the execution of a release which included a hold harmless agreement, and (b) a waiver of subrogation rights by plaintiff's uninsured motorist carrier. Id. at 1191.

Under Florida’s “mirror image rule,” in order for a contract to be formed, the acceptance of an offer must be “absolute, unconditional and identical with the terms of the offer.” Montgomery v. English, 902 So. 2d 836, 837 (Fla. 5th DCA 2005). Because the insurer had demanded a release and waiver, Plaintiff’s counsel argued that the insurer’s response constituted a counteroffer. The appellate court agreed, even though plaintiff's counsel acknowledged that the “entire controversy stem[med] from a desire to set the stage for a ‘bad faith’ action against the insurer.” Id. at 1192 (Cope, J., dissenting). The court found that the insurer had not demonstrated that the release and waiver were “usual settlement documents.” Accordingly, it held that, by demanding a release with a hold harmless clause and a waiver, the insurer had turned its attempted acceptance into a counteroffer. Id. at 1189.