Recent Property Insurance Changes

Establishes the Florida Optional Reinsurance Assistance (FORA) Program for the 2023 hurricane season, which:

• Provides optional hurricane reinsurance that insurance companies can purchase at reasonable/near market rates.

• Reinsurance is insurance purchased by insurance companies. Reinsurance rates are expected to increase at least 50%. To cover the increased cost, insurance companies pass on those expenses to policyholders in the form of premium increases. The Legislature is hopeful that lower reinsurance rates offered through the Florida Optional Reinsurance Assistance program will decrease the need for insurance companies to increase premiums. 

• Reduces the deadline for policyholders to report a claim from 2 years to 1 year for a new or reopened claim, and from 3 years to 18 months for a supplemental claim.

• As the claims filing deadline nears, insurance companies begin to receive an increased number of claims filed. Insurance companies report that many of the claims filed years after an event and closer to the filing deadline are usually fraudulent and orchestrated by a bad actor or third party. 

• In an effort to resolve and pay claims quicker, the bill amends the prompt pay laws to encourage the prompt payments of claims, as follows:
  
  
  • Reduces the time for insurance companies to pay or deny a claim from 90 to 60 days. Allows the Florida Office of Insurance Regulation (OIR) to extend the 60-day period an additional 30 days if a state of emergency, cyberattack, or computer systems failure prevents the insurance company from meeting the time frame.
    
    
  • Reduces the time for insurance companies to review and acknowledge a claim communication from 14 days to 7 days.
    
    
  • Reduces the time for an insurance company to begin an investigation of a claim from 14 days to 7 days.
    
    
  • Reduces the time for an insurance company to conduct a physical inspection from 45 days to 30 days and applies this requirement to hurricane claims.
    
    
  • Specifies that insurance companies may use electronic methods to investigate the damage and allows policyholders to participate in the use of such methods.
    
    
  • Requires an insurance company to send any adjuster’s report estimating the damage to the policyholder within 7 days after it is created.
    
    
  • Requires that the insurance company’s claim records include various parts of the claim investigation and dates.
    
    
  • Provides that the requirements of the section are on hold: when a mediation or alternative dispute resolution procedure is pending and upon failure of a policyholder or representative to provide material claim information within 10 days, if the request for such information was made within the first 45 days after notice of the claim.

• Amends the Unfair Insurance Trade Practices Act to conform to changes made to the prompt pay laws by reducing the requirement to pay undisputed amounts of benefits from 90 days to 60 days and revising the factors that excuse failure to perform.
  
  
• These provisions are effective March 1, 2023.

Repeals the one-way attorney fee provisions related to property insurance claims. This means that neither party can be awarded attorney fees in a property insurance claims lawsuit. Each party is responsible for payment of their own attorney fees.  

• Prohibits the assignment, in whole or in part, of any post-loss insurance benefit under any residential property insurance policy or under any commercial property insurance policy issued on or after January 1, 2023.
  
  
• This means that Assignment of Benefits are no longer an option to be used in property insurance claims. You are unable to sign over your insurance benefits to a third party if your policy is issued on or after January 1, 2023.

• Enhances OIR’s ability to conduct market conduct exams of property insurance companies following a hurricane, including examinations of Managing General Agents (MGAs).

• Appropriates funds for OIR staff salaries to recruit and retain staff, including filling currently empty positions.

• Allows OIR to discipline insurance companies for abuse of the appraisal process; review a company’s forms and suspend the ability to use appraisal for up to two years (policyholders and insureds can still use it); and identify companies on OIR’s website that abuse the appraisal process.

• Authorizes OIR to extend the 30-day coverage period for policies of an insolvent insurance company by an additional 15 days if the OIR reasonably believes that market conditions are such that the policies cannot be placed with an authorized insurance company within the 30-day period.

• 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. Acceptance of an offer of judgment or the payment of an appraisal award, alone, is not sufficient to support a lawsuit.
  
  
• Receiving an appraisal award higher than an insurance company’s appraiser’s final estimate may be evidence of bad faith; but on its own, does not give rise to a bad faith claim. 

• 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, inclusive of Citizens surcharges and assessments, the policyholder is ineligible to remain in Citizens. For renewals, this provision applies to policies that renew on or after April 1, 2023. For take-out offers, the effective date is January 1, 2023.
  

• A new policy is ineligible for Citizens if the policyholder receives an offer from an authorized insurance company that is not more than 20% above Citizens’ premium, inclusive of Citizens surcharges and assessments.
  
  
• Requires Citizens residential policyholders to obtain flood insurance as a condition of having coverage from Citizens. Requirement is phased-in based on the flood zones and in specific years.
  
  
• New or renewal non-primary residences policies written on or after November 1, 2023, must be charged rates that are not less than the previous year’s Citizens rate (no decreases) and may not be charged more than 50% above the previous year’s Citizens rate.

Requires the flood notice to be part of the declarations page of an insurance policy and encourages policyholders to purchase flood insurance.

• Arbitration is a legal process in which an arbitrator (a neutral party, usually a judge or attorney) addresses disputes in a property claim, including coverage. The arbitrator listens to and reviews evidence regarding the claim from both you and the insurance company and determines the outcome of the dispute. For more information on arbitration, review the Alternative Dispute Resolution Options guide.
  
  
• Clarifies that insurance companies may only issue an optional endorsement related to mandatory arbitration with consent from policyholders. Companies must also offer a policy without a mandatory binding arbitration clause. A premium discount is required for policies with mandatory arbitration.

• If you select mandatory arbitration on your policy, the decision is binding and you waive the right to file a lawsuit against the company.

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Homeowners:

For eligible homeowners, the  My Safe Florida Home Program provides funds to obtain free hurricane mitigation inspections and matching grants to harden the home to decrease the likelihood of damage caused by a hurricane. For each $1 you spend on mitigation or hardening improvements for your home, the program provides $2 up to $10,000. Exceptions are provided for low-income homeowners. A total of $150 million is allocated for the program.

For more information, please visit the My Safe Florida Home Program site. 

Contractors:

Contractors interested in serving as an ‘eligible contractor’ for the program should respond to the Request for Statement of Qualifications listing on MyFlorida Marketplace. Be sure to submit all of the requested information and documentation. Selected contractors will be notified via email and receive a participation agreement.

Request for Statement of Qualifications: https://vendor.myfloridamarketplace.com/search/bids/detail/3038

Registration Form: https://msflh.com/contractor/

Property insurance companies are allowed to offer a policy with a separate roof deductible of up to two percent of the Coverage A (dwelling) limit of the policy or 50 percent of the cost to replace the roof, whichever is lower.

This is an opt-out endorsement, which means that you must be offered and allowed to decline the roof deductible by signing a form. If a roof deductible is added to your policy at renewal, the insurance company must provide a notice of change in policy terms and allow you to decline the separate roof deductible.

Insurance companies must offer a premium credit or discount for selecting a policy with a separate roof deductible.

The roof deductible does not apply to:

• A total loss caused by a covered incident.
• Damage caused by a hurricane.
• Damage caused by a tree or other hazard that damages the roof and punctures the roof deck.
• Damage requiring the repair of less than 50 percent of the roof.

When a roof deductible is applied, no other deductibles under the policy may be  applied.

Details regarding the roof deductible must be presented to you in a clear, concise manner. Specific language is required as a separate page of your policy. The amount of the roof deductible must be included on the declarations page.

An insurance company cannot refuse to issue or renew a homeowners insurance policy on a home with a roof less than 15 years of age solely because of the roof’s age.

If a roof is 15 years old or older, an insurance company must allow a homeowner to have  a roof inspection performed by an authorized inspector before requiring the roof to be replaced in order to have the policy issued or renewed. The homeowner is responsible for the cost of the inspection. The insurance company may not refuse to issue or renew a homeowners insurance policy solely because of roof age if an inspection of the roof indicates that the roof has five years or more of useful life.

Within 45 days of receiving a proof of loss statement, an insurance company must conduct a physical inspection of the property. This requirement does not apply to hurricane claims.

Insurance companies must notify policyholders of their right to receive any detailed report/estimate developed by the adjuster. The report must be provided to the requesting policyholder within seven days of the request or the completion of the report, whichever is later.

If there is a difference in the claim payment and the estimate, insurance companies must provide a reasonable explanation of the claim decision. 

The bill also makes changes to the following areas:

• Bad faith lawsuits
• Attorney fees related to Assignment of Benefits
• Fee multipliers awarded to attorneys
• Regulation of insurance companies
• Reporting requirements for insurance companies

If a roof was built, repaired, or replaced in compliance with the 2007 Florida Building Code or later and at least 25% of the roof is being repaired, replaced, or recovered:

• Only the part being repaired, replaced, or recovered must be constructed in compliance with the Building Code in effect at the time. 

Each building of a condominium that is three stories or higher and has reached 30 years of age must have an inspection every 10 years. If the building is near a coastline and has reached 25 years of age, it must have an inspection every 10 years.

The bill includes specific steps the condominium association and inspector must take regarding the inspections.

It also outlines how long studies on the building must be maintained and specific actions that should be taken based on the studies, including the amount of reserves to cover necessary repairs.