In the past year, there have been several significant changes regarding property insurance in Florida that many homeowners may not be aware of. These alterations have deep implications for policyholders, and unfortunately, many of these changes could negatively impact them. As public adjusters, it is our duty to ensure that you are kept abreast of these changes and understand how they could affect your insurance coverage and claims. Many of these points will be further elaborated in upcoming blog posts, but for now, we wanted to provide a brief summary of the recent legislative changes.
Special Session - December 2022
In December 2022, the Florida Legislature convened for a Special Session specifically to address property insurance among other topics. The Legislature passed Senate Bill 2A, which introduces sweeping changes to the property insurance claims process, reinsurance, regulation of insurance companies, and more. Here's a summary of some of the key changes that you need to be aware of.
Awards of Attorney Fees in Property Insurance Lawsuits
One of the more controversial changes brought about by Senate Bill 2A is the repeal of the one-way attorney fee provisions related to property insurance claims. Previously, if an insured homeowner disputed a claim with their insurance company and won the case, the insurer would be required to pay for the homeowner's attorney fees. This arrangement served as a crucial protection for policyholders, as it ensured that they could afford legal representation in a dispute with their insurance company, regardless of their personal financial situation.
However, with the repeal of this provision, neither party can be awarded attorney fees in a property insurance claims lawsuit. This change could significantly disadvantage homeowners, who may find themselves in a David vs. Goliath situation when trying to challenge decisions made by their insurance companies. The financial burden of attorney fees may deter some homeowners from pursuing rightful claims and could potentially tip the balance of power toward the insurance companies who can afford protracted legal battles. It's a shift that emphasizes the importance of understanding the fine print of your insurance policy and seeking professional advice when needed.
Claim Filing Deadline
The deadline for policyholders to report a claim has been reduced from 2 years to 1 year for a new or reopened claim, and from 3 years to 18 months for a supplemental claim.
Prompt Pay Laws for Property Insurance
The bill amends the prompt pay laws to encourage quicker resolution and payment of claims. Some notable changes include reducing the time for insurance companies to pay or deny a claim from 90 to 60 days and the time for insurance companies to review and acknowledge a claim communication from 14 days to 7 days.
Assignments of Benefits
The bill prohibits the assignment of any post-loss insurance benefit under any residential or commercial property insurance policy issued on or after January 1, 2023.
Regulation of Insurance in Florida by the Office of Insurance Regulation (OIR)
The bill enhances the OIR’s ability to conduct market conduct exams of property insurance companies following a hurricane, including examinations of Managing General Agents (MGAs).
Bad Faith Failure to Settle Actions Against Property Insurers
The bill requires a court finding of breach of contract before a policyholder can sue a property insurance company for bad faith based on how the insurance company settled the claim.
Citizens Property Insurance Corporation (Citizens)
The bill introduces a number of changes to Citizens' policies, such as if a policyholder receives a renewal or take-out offer from an authorized insurance company that’s within 20% of the policyholder’s Citizens premium, the policyholder is ineligible to remain in Citizens.
Flood Notice
The flood notice is now required to be part of the declarations page of an insurance policy and encourages policyholders to purchase flood insurance.
Arbitration
The bill clarifies that insurance companies may only issue an optional endorsement related to mandatory arbitration with consent from policyholders.
Florida Optional Reinsurance Assistance Program
The bill establishes the Florida Optional Reinsurance Assistance (FORA) Program for the 2023 hurricane season. Reinsurance is insurance purchased by insurance companies, and the rates for which are expected to increase by at least 50%. The Legislature hopes that the FORA program will help mitigate the need for insurance companies to increase premiums to cover these costs.
Senate Bills 2D & 4D
The legislature had also previously concluded a Special Legislative Session in May 2022, passing Senate Bills 2D and 4D with immediate effect, introducing further changes to property insurance. These changes include the My Safe Florida Home Program providing funds for hurricane mitigation, contractor solicitation prohibitions, separate roof deductibles, claims handling, and roof compliance among others.
In summary, the recent changes to Florida's property insurance laws could potentially place homeowners at a disadvantage. From stricter claim filing deadlines to changes in attorney fee awards, these new rules seem to lean in favor of insurance companies.
We'll delve into many of these topics in upcoming blog posts. Meanwhile, you can read the official bill here.
Stay informed, and protect your rights as a homeowner.