Presented by the Insurance Services Practice Group

Major Property Insurance Reform in Florida

On May 26, 2022, Governor DeSantis signed into law two property insurance reform bills that will change the landscape of the Florida property insurance world. SB 2-D and SB 4-D arose out of a Special Legislative Session that was called by the Governor to solely focus on property insurance reforms. The ongoing Florida property insurance crisis has been well documented, and these reform laws were primarily enacted to provide stability to the property insurance market and curtail excessive litigation. 

The laws enacted primarily change plaintiffs’ ability to recover reasonable attorney’s fees, give property insurers the option to offer a separate roof deductible, and modify the statutory conditions precedent for plaintiffs to prevail on a bad faith lawsuit. The property insurance reform laws are extensive and detail-orientated—ere are some of the major changes.

SB 2-D

  • AOB plaintiffs are no longer entitled to recover reasonable attorney’s fees, except under Fla. Stat. § 57.105.
  • Insured plaintiffs are no longer entitled to a multiplier for reasonable attorney’s fees and the lodestar method is presumed to be sufficient, except in rare and exceptional cases where plaintiffs cannot obtain an attorney, which matches the federal standard.
  • Insurance companies may be awarded their reasonable attorney’s fees if they obtained a dismissal because insured plaintiffs failed to file a notice of intent to initiate litigation under Fla. Stat. § 627.70152.
  • Insurance companies can now offer a separate roof deductible (usually 2% of Coverage A); the insured must prove they have paid the separate roof deductible before being entitled to replacement cost value for their roof; the roof deductible does not apply to hurricane claims and other specific scenarios.
  • Insureds must establish that the insurance company breached the contract before prevailing in a bad faith lawsuit, which can impact the appraisal process.
  • [Goes into effect 1/1/2023] Within 7 days after an insurance company assigns an adjuster to a claim, they must inform the insured that they can request a detailed estimate of the amount of loss generated from the claim and must provide the detailed estimate within 7 days after the request or 7 days after the estimate was created.
  • [Goes into effect 1/1/2023] For non-hurricane claims, insurance companies must inspect the subject property within 45 days after receiving a proof of loss statement.
  • [Goes into effect 1/1/2023] In addition to denying or paying a claim within 90 days, the insurance company must also now “provide a reasonable explanation in writing to the policyholder of the basis in the insurance policy, in relation to the facts or applicable law, for the payment, denial, or partial denial of a claim. If the insurer’s claim payment is less than specified in any insurer’s detailed estimate of the amount of the loss, the insurer must provide a reasonable explanation in writing of the difference to the policyholder.”

SB 2-D Non-Litigation-Related Changes

  • Creation of a $2 billion fund to assist insurance companies to obtain reinsurance this year and the next; insurance companies must meet certain requirements and pass savings to the insured.
  • Insurance companies cannot refuse to insure a roof that is less than 15 years old solely based on the age of the roof.
  • Creates more reporting requirements for OIR and DFS about the insurance industry and insolvencies.
  • A property insurer stability unit was created within OIR to aid in the detection and prevention of insurance company insolvencies.
  • Prohibits contractors from advertising which would encourage a homeowner to file an insurance claim unless the advertisement has some mandatory anti-fraud language.
  • Made some slight changes to mitigation grants from OIR for the My Safe Florida Program.

SB 4-D

  • The thrust of this bill is focused on condominium inspections. Most significantly, milestone inspections of condominium buildings three stories or higher must occur after it reaches 30 years in age, or 25 years if the building is within 3 miles of the coast, and must happen every 10 years thereafter. The condominium association is responsible for compliance and cost of the inspection. Additionally, the condominium association must provide copies of inspection reports to each condo unit owner. If a building is currently old enough to qualify for a milestone inspection, it must occur by December 31, 2024.
  • Furthermore, this law eliminated the “25% roofing rule” in the FBC and insurance companies are no longer required by code to replace an entire roof even if more than 25% of the roof is damaged.

Marshall Dennehey attorneys are closely following these new laws and the related impact on litigation. Please contact us with any questions or concerns.

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