A Look Inside Florida’s Recent Property Insurance Reform

Cozen O'Connor
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Cozen O'Connor

Two years after implementing meaningful assignment of benefits reform, Florida enacted broader property insurance claim reform. On June 11, 2021, Governor DeSantis sign S.B. 76, which takes effect on July 1, 2021. S.B. 76 focuses on reducing insurance claim litigation by, amongst other things, requiring timely notice of claims, curtailing certain solicitation practices used by roofing contractors, and limiting the circumstances in which attorney’s fees can be awarded to policyholders in property insurance lawsuits.

Deadlines for Notice of Claims

S.B. 76 expanded Florida Statutes Section 627.70132, which previously set notice deadlines for windstorm claims. The amended Section 627.70132 is applicable to both admitted insurers and surplus lines insurers and applies to claims arising from any peril. The amended statute states:

(2) A claim or reopened claim, but not a supplemental claim, under an insurance policy that provides property insurance, as defined in s. 624.604, including a property insurance policy issued by an eligible surplus lines insurer, for loss or damage caused by any peril is barred unless notice of the claim was given to the insurer in accordance with the terms of the policy within 2 years after the date of loss. A supplemental claim is barred unless notice of the supplemental claim was given to the insurer in accordance with the terms of the policy within 3 years after the date of loss.

The statutes defines “reopened claim” as “a claim that an insurer has previously closed, but that has been reopened upon an insured’s request for additional costs for loss or damage previously disclosed to the insurer.” The term “supplemental claim” is defined as “a claim for additional loss or damage from the same peril which the insurer has previously adjusted or for which costs have been incurred while completing repairs or replacement pursuant to an open claim for which timely notice was previously provided to the insurer.”

Accordingly, under this amended statute, whether a claim is open will affect the amount of time the policyholder has to submit a request for additional costs. For claims that are open, and thus continue to be adjusted, the insured must submit the supplemental claim within three years. For closed claims, the insured is required to give notice within two years. For hurricanes, tornadoes, windstorms, severe rain, or other weather-related events, the date of loss is the date that the hurricane made landfall or the weather-related event is verified by the NOAA. Section 627.70132 does not affect the statute of limitations.

Notice of Intent to Initiate Litigation

The most significant part of S.B. 76 is the creation of Florida Statutes Section 627.70152, a comprehensive statute pertaining to property insurance litigation. With the exception of those suits brought by assignees, insureds are now required to submit a notice of intent to the Florida Department of Financial Services at least 10 days before filing suit, but may not do so until the insurer has made a coverage determination as required by Section 627.70131. The notice must specify the alleged acts or omissions giving rise to the suit and, if for reasons other than a denial of coverage, must include an itemized pre-suit settlement demand.

Insurers must respond in writing within 10 business days after receiving a pre-suit notice. If responding to a notice regarding a denial of coverage, the insurer may respond by accepting coverage, continuing to deny coverage, or asserting the right to re-inspect the property. If the insurer is responding to a notice alleging an act or omission other than a coverage denial, the insurer must respond by making a settlement offer, invoking appraisal, or requiring the insured to participate in another form of alternate dispute resolution.

If an insured files suit without giving its notice of intent, or if the insured files suit before the insurer has an opportunity to respond, the suit must be dismissed without prejudice.

Claims for Attorney’s Fees

Claims for attorney’s fees in lawsuits brought under property insurance policies will be governed by Section 627.70152. In the notice of intent, policyholders are required to make a pre-suit settlement demand. In response, insurers are required to make a pre-suit settlement offer. The difference between the pre-suit demand and pre-suit settlement offer is the “disputed amount.” The amount of “reasonable attorney’s fees” will be calculated as follows:

  1. If the difference between the amount obtained by the claimant and the pre-suit settlement offer, excluding reasonable attorney fees and costs, is less than 20 percent of the disputed amount, each party pay its own attorney fees and costs and a claimant may not be awarded attorney fees under s. 626.9373(1) or s. 627.428(1).
  2. If the difference between the amount obtained by the claimant and the pre-suit settlement offer, excluding reasonable attorney fees and costs, is at least 20 percent but less than 50 percent of the disputed amount, the insurer pays the claimant’s attorney fees and costs under s. 626.9373(1) or s. 627.428(1) equal to the percentage of the disputed amount obtained times the total attorney fees and costs.
  3. If the difference between the amount obtained by the claimant and the pre-suit settlement offer, excluding reasonable attorney fees and costs is at least 50 percent of the disputed amount, the insurer pays the claimant’s full attorney fees and costs under s. 626.9373(1) or s. 627.428(1).

The “disputed amount” is the critical element for determining whether and to what extent a policyholder may be entitled to an award of attorney’s fees. The reasonableness of a fee award is determined by looking at: (1) the difference between the amount obtained and the insurer’s pre-suit offer, and (2) comparing the difference to the “disputed amount.” Therefore, this statute encourages both policyholders and insurers to fairly evaluate and attempt to resolve claims without litigation.

Regulation of Contractors and Public Adjusters

Florida Statutes Chapter 489 regulates contractors. S.B. 76 creates Fla. Stat. Section 489.147, which prohibits contractors from soliciting residential property owners by means of a prohibited advertisement, offering residential property owners financial incentives for allowing the contractor to conduct and inspection or submit an insurance claim for roof damage, and advising policyholders about coverage. Prohibited advertisements are any advertisement that encourages a consumer to contact a contractor or public adjuster for the purpose of making an insurance claim for roof damage. Contractors and unlicensed persons found to be in violation of Section 489.147 may be fined up to $10,000 per violation.

S.B. 76 also several subsections of Florida Statutes Section 626.854, which regulates public adjusters. The revised statute further prohibits contractors from adjusting or soliciting insurance claims, except that a contractor may suggest that a consumer consider contacting his or her insurer to determine if a proposed repair is covered. Additionally, revised Section 626.854 prohibits public adjusters from offering financial incentives to residential property owners for allowing the adjuster to inspect the property owner’s roof or making a claim for damage to the property owner’s roof.

Statutory Offers of Judgment

There has been some question among those following S.B. 76 regarding whether the bill prohibits statutory offers of judgments. Florida Statutes Section 768.79 encourages settlement of claims by providing an attorney fee shifting mechanism in instances where the defendant makes an offer of judgment to the plaintiff, and the ultimate judgment is one of no liability or the plaintiff obtains a judgment that is at least 25% less than the amount of the offer. Section 768.79 has a corresponding provision for plaintiffs that make reasonable proposals for settlement.  

S.B. 76 amends Florida Statutes Sections 626.9373 and 627.428, the statutes that provide attorney fee shifting for policyholders, to state, in part: “In a suit arising under a residential or commercial property insurance policy not brought by an assignee, the amount of reasonable attorney fees shall be awarded only as provided in s. 57.105 or s. 627.70152, as applicable.” Under a strict reading of this language out of context, it would seem that Section 768.79 is no longer relevant in property insurance litigation. However, that interpretation may not be accurate considering the context. This language was added to the end of a paragraph creating one-way attorney fee shifting for prevailing policyholders. In context, this new language appears only to be narrowing the definition of “reasonable sum as fees” in the existing one-way attorney-fee shifting mechanism.

Considering that Section 768.79 applies “[i]n any civil action for damages,” it seems reasonably likely that courts will continue to enforce statutory offers of judgment made by defendants in property insurance litigation. 

Consolidation of Related Lawsuits

Section 627.70153 requires parties to give written notice to the court if they are aware of ongoing  multiple lawsuits involving coverage for the same residential property policy under the same insurance policy with the same owner. The court then may order the cases be transferred or consolidated.

Closing Thoughts

S.B. 76 should have a positive impact on the insurance claim landscape in Florida. The Florida Legislature is encouraging insurers to pay legitimate claims, and discouraging unscrupulous contractors and other actors from abusing the insurance claim process and from clogging the courts with frivolous litigation.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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