June 17, 2014
Recent Developments in Florida Property Insurance Law
The 2014 regular session of the Florida Legislature focused on several property issues. Chief among these is flood insurance by creating a private flood insurance market allowing authorized insurers to offer policies of varying coverage levels. Other bills passed by the Legislature are consumer-oriented restrictions, with one bill requiring the transmittal of a Homeowner Claims Bill of Rights to a named insured following a claim.
The Legislature passed Senate Bills 1672, 708, 542, 424, and 1524. On June 13, 2014, Senate Bills 1672, 708, and 542 were signed by Governor Scott. Senate Bills 424 and 1524 have been presented to Governor Scott, but have not been signed. However, we anticipate these bills will be signed into law in the very near future. The provisions of all the bills become law on July 1, 2014, unless otherwise provided for in the bills. These bills contain changes in, and additions to, Florida’s property insurance laws that will impact the underwriting, adjustment and litigation of insurance claims. Below is a summary of the significant changes contained in the new laws.
Senate Bill 1672
- Creates Fla. Stat. §626.621(15), providing that an agent, adjuster, customer representative, service representative, or managing general agent directly or indirectly accepting any “compensation, inducement, or reward” for referring an owner of the inspected property to an inspector or inspection company is an additional discretionary ground for denial of the application, a suspension or revocation of the license or refusal to renew the license of that individual.
- Creates Fla. Stat. §626.854(18), prohibiting a public adjuster or public adjuster apprentice from entering into contracts or power of attorney agreements that give the public adjuster the power to choose the repair person or entity in residential property insurance claims.
- Creates Fla. Stat. §817.234(7)(d), making it a third-degree felony for a repair contractor with the intent to defraud or deceive to waive, rebate, or pay all or part of the insured’s deductible that would be payable to the contractor for repairs to property covered by a property insurance policy.
Senate Bill 708
- Creates Fla. Stat. §627.409(b)(3), providing that a residential property insurance claim cannot be denied on the basis of publicly-available credit information if the policy has been in effect for more than 90 days.
- Creates Fla. Stat. §627.4133(2)(b)(4), providing that a personal lines or commercial residential property insurance contract in effect for more than 90 days cannot be canceled or terminated based upon publicly-available credit information.
- Creates Fla. Stat. §627.70151, establishing grounds for disqualification of umpires in appraisals. Umpires may be disqualified where (1) there is a familial relationship within the third degree between the umpire and a party or representative of the party; (2) the umpire previously represented a party in a professional capacity in the same claim or a matter involving the same property; (3) the umpire has represented another person in the same claim or a substantially related matter that includes the claim, the same property or adjacent property, and the person’s interests are materially adverse to the interests of a party; or (4) the umpire was an employer or employee of a party within the past 5 years.
- Creates a new section to Fla. Stat. §627.7074(7), providing for the denial of an application or the revocation of the certification of a neutral evaluator in sinkhole claims if the person violates any of the following five grounds: (1) lacking qualifications; (2) material misstatements, misrepresentation, or fraud in the neutral evaluator application process; (3) lack of fitness or trustworthiness to serve; (4) fraudulent or dishonest practices in an evaluation or in a financial services business; or (5) violation, or the inducement of another to commit a violation, of the neutral evaluation statutes or a departmental rule.
- Creates Fla. Stat. § 627.7142, requiring an insurer on a personal lines residential policy, within 14 days of the first contact, to transmit to insured a Homeowner Claims Bill of Rights with the specific statutory language. An insurer is excused from transmitting the Homeowner Claims Bill of Rights if the claim results from an event that is the subject of a disaster declaration by the Governor. The insurer is subject to administrative action for failure to send the notice; however, the Homeowner Claims Bill of Rights does not create a civil cause of action by any policyholder against an insurer for failure to send the notice nor is the insurer’s failure admissible as evidence against the insurer in a first-party action.
Senate Bill 542 (effective upon signing by Governor Scott)
- Creates Fla. Stat. §627.715, establishing a private flood insurance market for personal lines residential policies covering any structure or contents. Bars Citizens Property Insurance Corporation from writing flood policies. Also bars the Hurricane Catastrophe Fund for reimbursing private flood insurer for losses from flood policies.
Senate Bill 424
- Amends Fla. Stat. §626.9541, making it an unfair method of competition and an unfair or deceptive act to charge an “unfairly – discriminatory rate” or refuse to issue, reissue or renew personal lines property policy based on lawful firearm use, possession, or ownership. An insurer can, however, charge a separate premium for coverage to insure a firearm or firearm collection where the value exceeds standard coverage.
- Also makes it an unfair method of competition and unfair or deceptive act for an insurer to disclose the lawful ownership of a firearm by an applicant, insured, or a household member of an applicant or insured to a third-party unless (1) insurer discloses “the specific need” and obtains express consent of insured or applicant; or (2) “disclosure is necessary to quote or bind coverage, continue coverage, or adjust a claim.”
Senate Bill 1524
- Creates Fla. Stat. §501.171, regarding the security of personal information held by a “covered entity.” “Covered entity” is a company “that acquires maintains, stores, or uses personal information.” “Personal information” includes a person’s name combined with a Social Security Number, driver license number, or a financial account number such as checking account or credit card numbers.
- Requires covered entities to “take reasonable measures to protect and secure data in electronic form containing personal information.”
- If a breach of an electronic system affecting over 500 people occurs or there is reason to believe a breach occurred, specific actions must be taken. The failure to take these actions could result in penalties.
FULL TEXT OF THE REQUIRED NOTICE