What You Need to Know About Recent Changes to Florida Property Insurance Law Affecting Admitted and Surplus Lines Insurers

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Having been called back to the capitol by Florida’s governor for a special session to address issues within the property insurance market, the Florida Legislature passed two property insurance bills, SB 2-D and SB 4-D, both of which were signed by the Governor on May 26, 2022. SB 2-D and SB 4-D have provisions that affect both admitted carriers and surplus lines carriers. The key provisions of these bills addressed in this article became effective upon the Governor’s approval of the bills on May 26, 2022.

In addition to these recent legislative changes, the Florida Supreme Court on May 26, 2022 amended Florida Rule of Civil Procedure 1.442 regarding serving proposals for settlement. The rule amendment, effective July 1, 2022, provides that a proposal for settlement must exclude nonmonetary terms, with the exception of dismissal with prejudice and any other nonmonetary terms permitted by statute.

Provisions Relating to Roofs

Roof Deductibles

SB 2-D creates Florida Statute § 627.701(2)(c), permitting a carrier, with the approval of the Florida Office of Insurance Regulation, to offer special deductibles applying only to roof losses. SB 2-D creates Florida Statute § 627.701(4)(e)1 and 2 requiring mandatory language and disclosures on the declarations page for policies that contain deductibles applying only to roof losses.

SB 2-D creates Florida Statute § 627.701(10) addressing the mechanics of a roof deductible applying to losses other than losses from a hurricane. A separate roof deductible is permitted if the insured is given a premium credit or discount for the policy. If the separate roof deductible is offered by the carrier at the time of the initial issuance or renewal of the policy, the insured must sign a form approved by the Florida Office of Insurance Regulation in order to opt-out of the separate roof deductible.

If the separate roof deductible applies, no other deductible can apply. The separate roof deductible may not exceed the lesser of 2% of Coverage A limit or 50% of the cost to replace the roof. The roof deductible can only apply to a Replacement Cost claim and it cannot not apply to

  1. A total loss by a covered peril;
  2. A hurricane loss;
  3. A loss from tree fall or other hazard that damages the roof and punctures the roof deck; or
  4. A roof loss requiring repair that is less than 50% of the roof.

SB 2-D amends Florida Statute § 627.7011(3)(a), providing that, if a separate roof deductible applies, the insurer may limit the claim payment to Actual Cash Value of the roof until the carrier receives reasonable proof of payment of the deductible. Reasonable proof of payment includes a cancelled check, money order receipt, credit card statement, or copy of an installment plan contract or other financing arrangement requiring full payment of the separate roof deductible.

Underwriting

SB 2-D creates Florida Statute § 627.7011(5) applying only to policies issued or renewed on or after July 1, 2022. Florida Statute § 627.7011(5) prohibits carriers from refusing to insure a home with a roof that is less than 15 years old solely because of the age of the roof. If the roof is at least 15 years old, and the carrier requires the replacement of the roof to issue or renew the policy, the homeowner can have a roof inspection paid for by the homeowner. The insurer is prohibited from refusing to issue a policy solely because of the age of the roof if the inspector determines that the roof has 5 or more years of useful life left.

25% Rule under Florida Building Code for Roof Repairs

SB 4-D creates Florida Statute § 553.844(5) to provide that, if the existing roofing system or roof section was built, repaired, or replaced in compliance with the 2007 Florida Building Code or any subsequent editions of the Florida Building Code, then only the repaired, replaced, or recovered portion is required to be constructed in compliance with the current Florida Building Code.

Provisions Relating to Advertising, Assignments of Benefits, and Attorneys’ Fees

Contractor and Public Adjuster Advertisements

SB 2-D amends Florida Statute § 489.147, a statute created in 2021 to address contractor and public adjuster solicitations by prohibiting certain advertisements. Previously, a federal District Court in Gale Force Roofing & Restoration, LLC v. Brown, 548 F. Supp. 3d 1143 (N.D. Fla. 2021), enjoined, through a preliminary injunction, enforcement of certain sections of the statute as an unconstitutional restriction on commercial speech. Although the court has only issued a preliminary injunction, and not a permanent injunction, as the litigation is continuing, the Legislature’s changes to Florida Statute § 489.147 seek to address the court’s issues with the statute’s original definition of a “prohibited advertisement”.

The amendment to Florida Statute § 489.147 requires that a contractor or public adjuster advertisement contain, in at least 12 point font size and no smaller than at least half the font size as the largest font size used in the communication, the following language:

  1. The consumer is responsible for payment of any insurance deductible;
  2. It is insurance fraud punishable as a felony of the third degree for a contractor to knowingly or willfully, and with intent to injure, defraud, or deceive, pay, waive, or rebate all or part of an insurance deductible applicable to payment to the contractor for repairs to a property covered by a property insurance policy; and
  3. It is insurance fraud punishable as a felony of the third degree to intentionally file an insurance claim containing any false, incomplete, or misleading information.

Defining Assignment Agreements

SB 2-D amends Florida Statute § 627.7152(1)(b) to expand the definition of assignment agreements to include any person providing services that include inspecting, protecting, repairing, restoring, or replacing the property or mitigating. A public adjuster fee agreement does not fall within the definition of assignment agreements.

Notices of Intent to Litigate from Assignees of Benefits

SB 2-D modifies Florida Statute § 627.7152(9)(a) to provide that an assignee’s notice of intent to litigate must be served, if by certified mail, to the name and mailing address on the policy forms and, if by electronic delivery, to the email address designated on the policy forms.

Attorneys’ Fees for Suits under Assignment of Benefits Lawsuits

SB 2-D amends Florida Statute § 626.9373 (applying to surplus lines carriers) and § 627.428 (applying to admitted carriers) to provide that, in a lawsuit under a residential or commercial insurance policy, the right to attorneys’ fees may not be transferred to, assigned to, or acquired by any manner by anyone other than a named or omnibus insured or a named beneficiary.

SB 2-D amends Florida Statute § 627.7152(10), removing an assignee’s ability to recover fees under Florida Statute § 627.7152 and limiting the ability of an assignee to obtain fees and costs to Florida Statute § 57.105.

Attorneys’ Fees for Suits from Insureds

SB 2-D amends Florida Statute § 627.70152(8)(b) to allow for awarding attorney’s fees to a carrier if a lawsuit is dismissed for not filing a Notice of Intent to Initiate Litigation as required by statute.

SB 2-D creates Florida Statute § 627.70152(8)(c), providing a strong presumption that the lodestar fee is sufficient and reasonable. This presumption can only be rebutted (for the application of a multiplier) in “rare and exceptional circumstances” with evidence that competent counsel could not be retained in a reasonable manner.

Provisions Relating to Claims Handling and Bad Faith

Claims Handling

SB 2-D amends Florida Statute § 627.70131(3)(b), requiring a physical inspection within 45 days after receipt of a proof of loss, except in claims subject to a hurricane deductible.

SB 2-D creates Florida Statute § 627.70131(3)(d), requiring a carrier to advise, within 7 days after the assignment of an adjuster, a policyholder of the right to request a copy of a detailed estimate generated by the carrier’s adjuster. Upon receiving such a request from a policyholder, the carrier must send the detailed estimate within the later of 7 days after the carrier receives the request or 7 days after the estimate of the amount of loss is completed. A carrier is not required to create a detailed estimate if the estimate is not reasonably necessary as part of the investigation.

SB 2-D amends Florida Statute § 627.70131(7)(a) to require a carrier to provide a written explanation of the basis in the policy in relation to the facts or applicable law, for the payment, denial or partial denial of the claim. It also requires the carrier to provide a written explanation if the payment is less than the detailed estimate.

Bad Faith

SB 2-D creates Florida Statute § 624.1551, requiring that a claimant must establish that a carrier breached the insurance contract in order to prevail in a claim brought for extra-contractual damages under Florida Statute § 624.155(1)(b).

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