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Chartell Law's Outline of SB-2A

Florida Property Insurance Law Update

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Florida recently adopted a major insurance reform package that will directly impact the property insurance industry in the state. On December 13, 2022, the Florida Senate voted 27-13 to endorse Senate Bill 2A, and on December 14, 2022, the House passed the bill with a vote of 84-33. Governor DeSantis signed the bill into law on December 16, 2022.

Below we provide a quick outline of some important components of this new legislation:

NEW FILING DEADLINES FOR PROPERTY INSURANCE CLAIMS. § 627.70132.

  • A policyholder must file a claim or reopened claim within 1 year after the date of loss.  
  • A policyholder must file a supplemental claim within 18 months after the date of loss.

AMENDED CLAIMS DEADLINES FOR INSURERS. § 627.70131. Effective March 1, 2023.  

  • An insurer must review and acknowledge a claim communication within 7 calendar days unless that claim is paid within that time or “factors beyond the insurer’s control”1 cause a delay.  
  • Within 7 days after receipt of a proof-of-loss, an insurer must begin such investigation as is reasonably necessary, unless the failure to begin is caused by factors beyond the control of the insurer.
  • If the investigation following receipt of proof-of-loss statements involves a physical inspection of the property, any such physical inspections must be conducted within 30 days after receipt of the proof-of-loss statements.  
  • An insurer must send the policyholder a copy of any detailed estimate of the amount of loss within 7 days after it is generated. Note that an insurer is not required to create such estimates if doing so is not necessary as part of the investigation.  
  • An insurer must pay or deny a claim (in whole or in part) within 60 days after notice of an initial, reopened, or supplemental claim, unless the failure to pay is caused by factors beyond the control of the insurer.
  • If the insurer does not pay within the 60-day period (or permitted extension), interest accrues.
  • The requirements of § 627.70131, are tolled:
  • During the pendency of any mediation under § 627.7015 or any ADR provided for in the policy. This tolling period ends upon the completion of mediation or the ADR proceeding.
  • When a policyholder, or policyholder’s representative, fails to provide material claims information requested by the insurer within 10 days after the request was received. This tolling period ends upon the insurer’s receipt of the requested information. Tolling under this paragraph only applies to requests sent at least 15 days before the insurer is required to pay or deny the claim under § 627.70131(7).

MANDATORY BINDING ARBITRATION. § 627.70154.  

Property insurance policies may require that a policyholder participate in a mandatory binding arbitration if all the following requirements are met:

  • The mandatory binding arbitration requirements are contained in a separate endorsement attached to the insurance policy.
  • The policy’s premium includes an actuarially sound credit or premium discount for the mandatory binding arbitration endorsement.
  • The policyholder signs a form accepting the mandatory binding arbitration.  That form must set forth the rights given up in exchange for the credit or discount, including but not limited to, the right to a jury trial.
  • The endorsement establishes that the insurer will comply with the mediation provisions set forth in § 627.7015 prior to the initiation of arbitration.
  • The insurer must also offer the policyholder a policy that does not require mandatory binding arbitration.

ATTORNEY’S FEES. §§ 626.9373, 627.428.

There is no longer a right to attorney's fees in a lawsuit arising under a residential or commercial property insurance policy. This expressly applies to both domestic (§ 627.428) and surplus lines carriers (§ 626.9373).

FLOOD INSURANCE. § 627.7011.

All homeowner's insurance policies that do not provide flood insurance coverage must include the following language on the policy declarations page, at initial issuance and every renewal, in bold type, in 18-point font or larger:

“FLOOD INSURANCE: YOU SHOULD CONSIDER THE PURCHASE OF FLOOD INSURANCE. YOUR HOMEOWNER’S INSURANCE POLICY DOES NOT INCLUDE COVERAGE FOR DAMAGE RESULTING FROM FLOOD EVEN IF HURRICANE WINDS AND RAIN CAUSED THE FLOOD TO OCCUR. WITHOUT SEPARATE FLOOD INSURANCE COVERAGE, YOUR UNCOVERED LOSSES CAUSED BY FLOOD ARE NOT COVERED. PLEASE DISCUSS THE NEED TO PURCHASE SEPARATE FLOOD INSURANCE COVERAGE WITH YOUR INSURANCE AGENT.”

NOI AS EVIDENCE. § 627.70152.

The Notice of Intent to Litigate required under § 627.70152(3) (including documentation submitted in support) is not admissible in any proceeding.

BAD FAITH ACTIONS AGAINST PROPERTY INSURERS. § 624.1551.  

A policyholder cannot sue an insurer for bad faith without first having an adjudication by a court finding that the insurer breached the policy. Acceptance of an offer of judgment or the payment of an appraisal award does not constitute an adverse adjudication against the insurer. Receiving an appraisal award higher than an insurer’s appraiser’s final estimate may be evidence of bad faith but is not sufficient, on its own, to give rise to a bad faith claim.

ELECTRONIC MEANS OF INVESTIGATION. § 627.70131. Effective March 1, 2023.

  • Insurers may use electronic methods for the investigation of damage, including but not limited to color photographs, video recordings, video conferencing between the adjuster and the policyholder, video recordings or photographs using drones, driverless vehicles, or other remote-controlled devices.
  • An insurer may allow the policyholder to use such methods to assist in the investigation of the loss.  
  • An insurer may void the policy if the policyholder, or someone else at the policyholder’s direction, commits fraud by providing false, incomplete, or misleading information concerning any fact or thing material to a claim using electronic methods.
  • An insurer may still assign a licensed adjuster to physically examine the relevant property despite the use of electronic methods.

ASSIGNMENT OF BENEFITS.  § 627.7152.

A Policyholder may not assign any benefits under property insurance policies issued on or after January 1, 2023.

JOINT OFFER OF JUDGMENT/ PROPOSAL FOR SETTLEMENT § 768.79

An insurer may make a joint offer of judgment or settlement that is conditioned on the mutual acceptance of all the joint offerees.

If you have any questions regarding these legislative changes, or any inquiries regarding property insurance coverage or litigation issues in Florida, please do not hesitate to contact Chartwell Law.

[1] For the purposes of this section, “factors beyond the insurer’s control” are divided into two groups.  

  • The first include (1) a state of emergency declared by the governor, (2) a security breach, or (3) an information technology issue. If one of these occurs, the relevant deadlines may be extended for no more than thirty days. § 627.70131 (5)(a)(1).
  • The second includes actions by the policyholder or the policyholder’s representative which constitute fraud, lack of cooperation, or intentional misrepresentation regarding the claim for which benefits are owed when such actions reasonably prevent the insurer from complying with any requirement of this section. Note that for this factor, the statute does not limit the deadline extension. § 627.70131 (5)(a).

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