Presented by the Insurance Services Practice Group

Property Insurance Reform Laws Passed in Florida-Now What?

By
Michael A. Packer

On December 16, 2022, Florida Governor DeSantis signed into law potentially historic insurance reform, commonly referred to as SB 2A. This comprehensive and sweeping legislation will require insurance companies to investigate claims more efficiently, while changing the landscape in which first-party property claims are litigated into the future. Unless otherwise stated expressly, the provisions in SB 2A take effect on December 16, 2022 (the date the act became law). The following provisions of the new and amended laws* will most significantly impact insurance companies and insurance litigation.

BAD FAITH

  • FS 624.1551 was amended to address the dilemma carriers faced paying an appraisal award after a Civil Remedy Notice of Insurer Violation (CRN) has expired. Under the amended statute, an insured will only be permitted to bring a bad faith action where the property insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer. Further, the acceptance of an offer of judgment under s. 768.79 or the payment of an appraisal award does not constitute an adverse adjudication under this section.

ATTORNEY FEES

  • Florida Statute 626.9373, subsections (1) and (3) which apply to suits brought against surplus lines carriers, are amended to eliminate any rights to attorneys fees for suits arising under a residential or commercial property insurance policy; 
  • Florida Statute 627.428(4) is amended to provide there is no right to attorneys’ fees in lawsuits which arise under a residential or commercial property insurance policy under this section. IT SHOULD BE NOTED, attorneys’ fees may still be awarded under Florida Statutes 57.105 and 768.79; 
  • The attorneys’ fees provisions and calculations contained in Florida Statute 627.70152, just enacted in 2021, have all been deleted from the statute and are no longer applicable to first party property claims arising under residential or commercial property insurance policies. This amendment is consistent with the legislative intent of the second special session of 2022, the elimination of the “one way” attorneys’ fees in first-party property litigation in Florida.

MODIFICATION OF TIME PERIODS TO TAKE ACTION

  • Florida Statute 627.71031 is amended to shorten the time periods in which the insurance companies must take certain actions (effective March 1, 2023):

(1)(a) Upon an insurer’s receiving a communication with respect to a claim, the insurer shall, within 7 (previously 14) calendar days, review and acknowledge receipt of such communication;

(3)(a) Unless otherwise provided by the policy of insurance or by law, within 7 days (previously 14) after an insurer receives proof-of-loss statements, the insurer shall begin such investigation as is reasonably necessary;

(3)(b) If such investigation involves a physical inspection of the property, the licensed adjuster assigned by the insurer must conduct any such physical inspection within 30 days after its receipt of the proof-of-loss statements;

(3)(e) The insurer must send the policyholder a copy of any detailed estimate of the amount of the loss within 7 days after the estimate is generated by an insurer’s adjuster;

(7)(a) Within 60 days after an insurer receives notice of an initial, reopened, or supplemental property insurance claim from a policyholder, the insurer shall pay or deny such claim or a portion of the claim unless the failure to pay is caused by factors beyond the control of the insurer.

  • Florida Statute 626.9541(1)(i)4. is amended to shorten the time for surplus lines carriers to make payment from 90 to 60 days from the date the insurer receives notice of of residential property damage claim unless payment of the undisputed benefits is prevented by factors beyond the control of the insurer as defined in s. 627.70131(5).

TIME TO FILE CLAIM

  • Florida Statute 627.70132(2) is amended to shorten the time for an insured to report a new claim. Specifically, a claim or reopened claim, but not a supplemental claim, is barred unless notice of the claim was given to the insurer within one year (previously two years) after the date of loss. A supplemental claim is barred unless notice of the supplemental claim was given to the insurer within 18 months (previously three years) after the date of loss.

BINDING ARBITRATION

  • Another goal of the December 2022, special session was the creation of Florida Statute 627.70154, which permits insurance companies to issue property policies which contain mandatory binding arbitration endorsements to resolve disputes with policy holders. There are very specific requirements for the insurers that wish to incorporate mandatory binding arbitration into their policies, including reduced premiums; signed election forms; and the option to purchase a policy that does not include mandatory binding arbitration.

HOMEOWNER BILL OF RIGHTS

  • Effective March 1, 2023, pursuant to Florida Statute 627.7142, insurers will be required to amend the Homeowner Claims Bill of Rights to include the following:

YOU HAVE THE RIGHT TO:

3. Receive from your insurance company a copy of any detailed estimate of the amount of the loss within 7 days after the estimate is generated by the insurance company’s adjuster.

4. Within 60 (previously 90) days, subject to any dual interest noted in the policy, receive full settlement payment for your claim or payment of the undisputed portion of your claim, or your insurance company’s denial of your claim.

5. Receive payment of interest, as provided in s. 627.70131, Florida Statutes, from your insurance company, which begins accruing from the date your claim is filed if your insurance company does not pay full settlement of your initial, reopened, or supplemental claim or the undisputed portion of your claim or does not deny your claim within 60 (previously 90) days after your claim is filed.

OFFERS OF JUDGMENT

  • Florida Statute 768.79 (Offer of Judgment and Demand for Judgment) was amended to address recent appellate court decisions and subsection (6) was added to provide,

768.79(6) For a breach of contract action, a property insurer may make a joint offer of judgment or settlement that is conditioned on the mutual acceptance of all the joint offerees.

ASSIGNMENT OF BENEFITS

  • Finally, one of the most important aspects of the December 2022 special session was to once and for all address and eliminate “assignment of benefits” or “AOBs” in property damage claims. Accordingly, Florida Statute 627.7152, just enacted in 2019, was amended to eliminate AOBs in residential and property damage claims. Specifically, 

627.7152(2)(a)1. provides an assignment agreement must be executed under a residential property insurance policy or under a commercial property insurance policy, issued on or after July 1, 2019, and before January 1, 2023; and most importantly, 

627.7152(13) was added to state, except as provided in subsection (11)**, a policyholder may not assign, in whole or in part, any post-loss insurance benefit under any residential property insurance policy or under any commercial property insurance policy as that term is defined in s. 627.0625(1), issued on or after January 1, 2023. An attempt to assign post-loss property insurance benefits under such a policy is void, invalid, and unenforceable.

Readers are cautioned that the above information is intended to merely highlight the most significant portions of the amended and new property laws and is not intended to be comprehensive or complete. Recipients are encouraged to review the new and amended statutes in their entirety and contact us with specific questions about how they may apply to claims and policies.

 

Footnotes:

*The amendments primarily apply only to residential and commercial property damage claims.

**(11) This section does not apply to:

(a)An assignment, transfer, or conveyance granted to a subsequent purchaser of the property with an insurable interest in the property following a loss;

(b)A power of attorney under chapter 709 that grants to a management company, family member, guardian, or similarly situated person of an insured the authority to act on behalf of an insured as it relates to a property insurance claim; or

(c)Liability coverage under a property insurance policy.

 

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