Senate Bill 408: Additions or Modifications to Laws Related to Property Insurance

Time Limits for Claims and Statute of Limitations

Notice: Windstorm (effective June 1, 2011)
A claim, supplemental claim, or reopened windstorm or hurricane claim must be given to the insurer in accordance with the terms of the policy within 3 years after the hurricane first makes landfall or the windstorm causes covered damage.

 

Notice: Sinkhole (effective immediately)
Any claim, including, but not limited to, initial, supplemental, and reopened claims under an insurance policy that provides sinkhole coverage 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 policyholder knew or reasonably should have known about the sinkhole loss.

 

Statute of Limitations (effective immediately)
An action for breach of a property insurance contract has a 5 year statute of limitations which begins to run from the date of loss.

 

Public Adjusters

Fees (effective June 1, 2011)

  1. Public adjuster fees on a reopened or supplemental claim may not exceed 20 percent of the reopened or supplemental claim payment.
  2. Public adjuster fees are limited to 20 percent of an insurance claim payment made by the insurer more than one year after the events that are the subject of a declaration of a state of emergency by the governor.
  3. For any claim filed under any policy of Citizens Property Insurance Corporation, a public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value greater than 10% of the additional amount actually paid over the amount that was originally offered by the corporation for any one claim (*effective immediately)

 

Solicitations (effective Jan. 1, 2012)
Public adjusters are prohibited from making deceptive or misleading advertisements or solicitations. The following statements, made in any public adjuster’s advertisement or solicitation, are considered deceptive or misleading:

  1. A statement or representation that invites an insured policyholder to submit a claim when the policyholder does not have covered damage to insured property.
  2. A statement or representation that invites an insured policyholder to submit a claim by offering monetary or other valuable inducement.
  3. A statement or representation that invites an insured policyholder to submit a claim by stating that there is “no risk” to the policyholder by submitting such claim.
  4. A statement or representation, or use of a logo or shield, that implies or could mistakenly be construed to imply that the solicitation was issued or distributed by a governmental agency or is sanctioned or endorsed by a governmental agency.

 

The following must be printed on any written advertisement in bold print and ALL CAPS:

 

THIS IS A SOLICITATION FOR BUSINESS. IF YOU HAVE HAD A CLAIM FOR AN INSURED PROPERTY LOSS OR DAMAGE AND YOU ARE SATISFIED WITH THE PAYMENT BY YOUR INSURER, YOU MAY DISREGARD THIS ADVERTISEMENT.

 

Notice (effective Jan. 1, 2012)[1]

  1. A company adjuster or anyone acting on behalf of an insurer that needs access to an insured or the insured property that is the subject of a claim must provide at least 48 hours’ notice to the insured, public adjuster, or legal representative before scheduling a meeting or an onsite inspection of the insured property. The insured or claimant may deny access to the property if the notice has not been provided. The insured or claimant may waive the 48-hour notice.
  2. A company adjuster or anyone acting on behalf of an insurer that needs access to an insured or the insured property that is the subject of a claim must provide at least 48 hours’ notice to the insured, public adjuster, or legal representative before scheduling a meeting or an onsite inspection of the insured property. The insured or claimant may deny access to the property if the notice has not been provided. The insured or claimant may waive the 48-hour notice.
    1. that notice is given to the insurer,
    2. the public adjuster’s contract is provided to the insurer,
    3. the property is available for inspection of the loss or damage by the insurer,
    4. and the insurer is given an opportunity to interview the insured directly about the loss and claim.

    The insurer must be allowed to obtain necessary information to investigate and respond to the claim.

  3. The insurer may not exclude the public adjuster from its in-person meetings with the insured. The insurer shall meet or communicate with the public adjuster in an effort to reach agreement as to the scope of the covered loss under the insurance policy.
  4. A public adjuster may not act or fail to reasonably act in any manner that obstructs or prevents an insurer or insurer’s adjuster from timely conducting an inspection of any part of the insured property for which there is a claim for loss or damage.
  5. The public adjuster representing the insured may be present for the insurer’s inspection, but if the unavailability of the public adjuster otherwise delays the insurer’s timely inspection of the property, the public adjuster or the insured must allow the insurer to have access to the property without the participation or presence of the public adjuster or insured in order to facilitate the insurer’s prompt inspection of the loss or damage.
  6. A licensed contractor or subcontractor may not adjust a claim on behalf of an insured unless licensed and compliant as a public adjuster under this chapter. The contractor may discuss or explain a bid for construction or repair of covered property if the contractor is doing so for the usual and customary fees applicable to the work to be performed as stated in the contract between the contractor and the insured.

 

Public Adjuster Contracts (effective Jan. 1, 2012)

A public adjuster contract relating to a property and casualty claim must contain the following basic information:

  1. the full name, permanent business address, and license number of the public adjuster;
  2. the full name of the public adjusting firm;
  3. the insured’s full name and street address,
  4. and a brief description of the loss.

 
The contract must also state:

  1. the percentage of compensation for the public adjuster’s services;
  2. the type of claim, including an emergency claim, nonemergency claim, or supplemental claim;
  3. the signatures of the public adjuster and all named insureds; and the signature date. (If all of the named insureds signatures are not available, the public adjuster must submit an affidavit signed by the available named insureds attesting that they have authority to enter into the contract and settle all claim issues on behalf of the named insureds).

An unaltered copy of the executed contract must be remitted to the insurer within 30 days after execution.

 

Notice of Cancellation (effective immediately)

The insurer shall give the named insured written notice of nonrenewal, cancellation, or termination at least 120 days prior to the effective date of nonrenewal, cancellation, or termination for a named insured whose residential structure has been insured by the insurer or an affiliated insurer for at least a 5-year period immediately prior to the date of the written notice

 

Replacement Cost Coverage (effective immediately)

Dwelling

In the event of a loss for which a dwelling is insured for replacement costs:

  1. The insurer must initially pay at least the actual cash value of the insured loss, less any applicable deductible. The insurer shall pay any remaining amounts necessary to perform such repairs as work is performed and expenses are incurred. If a total loss of a dwelling occurs, the insurer shall pay the replacement cost coverage without reservation or holdback of any depreciation in value, pursuant to s. 627.702.

 

Personal Property

In the event of a loss for which a dwelling is insured for replacement costs:

  1. The insurer must offer coverage under which the insurer is obligated to pay the replacement cost without reservation or holdback for any depreciation in value, whether or not the insured replaces the property.
  2. The insurer may also offer coverage under which the insurer may limit the initial payment to the actual cash value of the personal property to be replaced, require the insured to provide receipts for the purchase of the property financed by the initial payment, use such receipts to make the next payment requested by the insured for the replacement of insured property, and continue this process until the insured remits all receipts up to the policy limits for replacement costs.
    1. The insurer must provide clear notice of this process before the policy is bound.
    2. A policyholder must be provided an actuarially reasonable premium credit or discount for this coverage.
    3. The insurer may not require the policyholder to advance payment for the replaced property

 

Sinkhole Insurance (effective immediately)

Definition Modifications

  1. Neutral evaluator”: a professional engineer or a professional geologist who has completed a course of study in alternative dispute resolution designed or approved by the department for use in the neutral evaluation proves and who is determined by the department to be fair and impartial.
  2. Sinkhole loss”: structural damage to the covered building including the foundation, caused by sinkhole activity. Contents coverage and additional living expenses apply only if there is structural damage to the covered building caused by sinkhole activity.
  3. Sinkhole activity”: settlement or systematic weakening of the earth supporting the covered building only if the settlement or systematic weakening results from contemporaneous movement or raveling of soils, sediments, or rock materials into subterranean voids created by the effect of water on a limestone or similar rock formation. – Professional engineer means a person, as defined in s. 471.005, who has a bachelor’s degree or higher in engineering. A professional engineer must also have experience and expertise in the identification of sinkhole activity as well as other potential causes of structural damage.
  4. Structural damage”: a covered building, regardless of the date of construction, has experienced the following:
    1. Interior floor displacement or deflection in excess of acceptable variances as defined in ACI 117-90 or the Florida Building Code, which results in settlement related damage to the interior such that the interior building structure or members become unfit for service or represents a safety hazard as defined within the Florida Building Code;
    2. Foundation displacement or deflection in excess of acceptable variances as defined in ACI 318-95 or the Florida Building Code, which results in settlement related damage to the primary structural members or primary structural systems that prevents those members or systems from supporting the loads and forces they were designed to support to the extent that stresses in those primary structural members or primary structural systems exceeds one and one-third the nominal strength allowed under the Florida Building Code for new buildings of similar structure, purpose, or location;
    3. Damage that results in listing, leaning, or buckling of the exterior load bearing walls or other vertical primary structural members to such an extent that a plumb line passing through the center of gravity does not fall inside the middle one-third of the base as defined within the Florida Building Code;
    4. Damage that results in the building, or any portion of the building containing primary structural members or primary structural systems, being significantly likely to imminently collapse because of the movement or instability of the ground within the influence zone of the supporting ground within the sheer plane necessary for the purpose of supporting such building as defined within the Florida Building Code; or
    5. Damage occurring on or after October 15, 2005, that qualifies as ―substantial structural damage as defined in the Florida Building Code.
      1. Primary structural member means a structural element designed to provide support and stability for the vertical or lateral loads of the overall structure.
      2. Primary structural system means an assemblage of primary structural members.

 

Additions

  1. The insurer may require an inspection of the property before issuance of sinkhole loss coverage.
  2. The insurer may restrict catastrophic ground cover collapse and sinkhole loss coverage to the principal building, as defined in the applicable policy.

 

Demand for Testing

If coverage for sinkhole loss is available and the insurer denies the claim, without performing testing under s. 627.7072, the policyholder may demand testing by the insurer under s. 627.7072.

  1. The policyholder’s demand for testing must be communicated to the insurer in writing within 60 days after the policyholder’s receipt of the insurer’s denial of the claim.
  2. The policyholder shall pay 50 percent of the actual costs of the analyses and services provided under ss. 627.7072 and 627.7073 or $2,500, whichever is less.
  3. The insurer shall reimburse the policyholder for the costs if the insurer’s engineer or geologist provides written certification pursuant to s. 627.7073 that there is sinkhole loss.

 

Repairs

  1. If a covered building suffers a sinkhole loss or a catastrophic ground cover collapse, the insured must repair such damage or loss in accordance with the insurer’s professional engineer’s recommended repairs. However, if the insurer’s professional engineer determines that the repair cannot be completed within policy limits, the insurer must pay to complete the repairs recommended by the insurer’s professional engineer or tender the policy limits to the policyholder.
  2. In order to prevent additional damage to the building or structure, the policyholder must enter into a contract for the performance of building stabilization and foundation repairs within 90 days after the insurance company confirms coverage for the sinkhole loss and notifies the policyholder of such confirmation. This time period is tolled if either party invokes the neutral evaluation process, and begins again 10 days after the conclusion of the neutral evaluation process.
  3. The stabilization and all other repairs to the structure and contents must be completed within 12 months after entering into the contract for repairs described in paragraph (b) unless:
    1. There is a mutual agreement between the insurer and the policyholder;
    2. The claim is involved with the neutral evaluation process;
    3. The claim is in litigation; or
    4. The claim is under appraisal or mediation.
  4. Upon completion of any building stabilization or foundation repairs for a verified sinkhole loss, the professional engineer responsible for monitoring the repairs shall issue a report to the property owner which specifies what repairs have been performed and certifies within a reasonable degree of professional probability that such repairs have been properly performed.
    1. The professional engineer issuing the report shall file a copy of the report and certification, which includes a legal description of the real property and the name of the property owner, with the county clerk of the court, who shall record the report and certification.
    2. This subsection does not create liability for an insurer based on representation or certification by a professional engineer related to the stabilization or foundation repairs for the verified sinkhole loss.

 

Payment for Sinkhole claims

  1. Upon the insurer’s obtaining the written approval any lienholder, the insurer may make payment directly to the persons selected by the policyholder to perform the land and building stabilization and foundation repairs. The decision by the insurer to make payment to such persons does not hold the insurer liable for the work performed. The policyholder may not accept a rebate from any person performing the repairs specified in this section. If a policyholder does receive a rebate, coverage is void and the policyholder must refund the amount of the rebate to the insurer. Any person making the repairs specified in this section who offers a rebate commits insurance fraud punishable as a third degree felony as provided in s. 775.082, s. 775.083, or s. 775.084.
  2. As a precondition to accepting payment for a sinkhole loss, the policyholder must file a copy of any sinkhole report regarding the insured property which was prepared on behalf or at the request of the policyholder. The policyholder shall bear the cost of filing and recording the sinkhole report. The recording of the report does not:
    1. Constitute a lien, encumbrance, or restriction on the title to the real property or constitute a defect in the title to the real property;
    2. Create any cause of action or liability against any grantor of the real property for breach of any warranty of good title or warranty against encumbrances; or
    3. Create any cause of action or liability against a title insurer that insures the title to the real property.

 

Neutral Evaluation of Disputed Sinkhole Claims

  1. Neutral evaluation is available to either party if a sinkhole report has been issued pursuant to s. 627.7073. At a minimum, neutral evaluation must determine:
    1. Causation;
    2. All methods of stabilization and repair both above and below ground;
    3. The costs for stabilization and all repairs; and
    4. Information necessary to carry out subsection (12).
  2. The neutral evaluator must be allowed reasonable access to the interior and exterior of insured structures to be evaluated or for which a claim has been made. Any reports initiated by the policyholder, or an agent of the policyholder, confirming a sinkhole loss or disputing another sinkhole report regarding insured structures must be provided to the neutral evaluator before the evaluator’s physical inspection of the insured property.
  3. The department shall allow the parties to submit requests to disqualify evaluators on the list for cause. However, the department shall disqualify neutral evaluators for cause based only on any of the following grounds:
    1. A familial relationship exists between the neutral evaluator and either party or a representative of either party within the third degree.
    2. The proposed neutral evaluator has, in a professional capacity, previously represented either party or a representative of either party, in the same or a substantially related matter.
    3. The proposed neutral evaluator has, in a professional capacity, represented another person in the same or a substantially related matter and that person’s interests are materially adverse to the interests of the parties. The term “substantially related matter” means participation by the neutral evaluator on the same claim, property, or adjacent property.
    4. The proposed neutral evaluator has, within the preceding 5 years, worked as an employer or employee of any party to the case.
  4. The parties shall appoint a neutral evaluator from the department list and promptly inform the department. If the parties cannot agree to a neutral evaluator within 14 business days, the department shall appoint a neutral evaluator from the list of certified neutral evaluators. The department shall allow each party to disqualify two neutral evaluators without cause. Upon selection or appointment, the department shall promptly refer the request to the neutral evaluator.
  5. Within 14 business days after the referral, the neutral evaluator shall notify the policyholder and the insurer of the date, time, and place of the neutral evaluation conference. The conference may be held by telephone, if feasible and desirable. The neutral evaluator shall make reasonable efforts to hold the conference within 90 days after the receipt of the request by the department. Failure of the neutral evaluator to hold the conference within 90 days does not invalidate either party’s right to neutral evaluation or to a neutral evaluation conference held outside this timeframe.
  6. If, based upon his or her professional training and credentials, a neutral evaluator is qualified to determine only disputes relating to causation or method of repair, the department shall allow the neutral evaluator to enlist the assistance of another professional from the neutral evaluators list not previously stricken, who, based upon his or her professional training and credentials, is able to provide an opinion as to other disputed issues.
    1. A professional who would be disqualified for any reason listed above must be disqualified. The neutral evaluator may also use the services of professional engineers and professional geologists who are not certified as neutral evaluators, as well as licensed building contractors, in order to ensure that all items in dispute are addressed and the neutral evaluation can be completed.
    2. Any professional engineer, professional geologist, or licensed building contractor retained may be disqualified for any of the reasons listed in subsection above.
    3. The neutral evaluator may request the entity that performed the investigation pursuant to s. 627.7072 perform such additional and reasonable testing as deemed necessary in the professional opinion of the neutral evaluator.
  7. The evaluator’s report shall be sent to all parties in attendance at the neutral evaluation and to the department, within 14 days after completing the neutral evaluation conference.
  8. The neutral evaluator’s written recommendation, oral testimony, and full report shall be admitted in any action, litigation, or proceeding relating to the claim.
  9. Neutral evaluators are deemed to be agents of the department and have immunity from suit as provided in s. 44.107.
  10. The department shall adopt rules of procedure for the neutral evaluation process.

 

Florida Insurance Guaranty Association

The definition of a “covered claim” with regards to FIGA does not include: any amount payable for a sinkhole loss other than testing deemed appropriate by the association or payable for the actual repair of the loss, except that the association may not pay for attorney’s fees or public adjuster’s fees in connection with a sinkhole loss or pay the policyholder. The association may pay for actual repairs to the property, but is not liable for amounts in excess of policy limits.


Gary Miller, Esq. of Freemon & Miller, P.A. and Curtis Hutchens, Esq., Assistant General Counsel of Citizens Property Insurance Corporation, delivered a presentation regarding ethical considerations affecting public adjusting to attendees at the WIND Regional Symposium held in Atlanta, Georgia in May 2011.

 
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