Florida Property Insurance Reform Bill signed by Florida Gov. DeSantis

Governor DeSantis signed Senate Bill 2D (“SB 2D”), relating to property insurance, and Senate Bill 4D (“SB 4D”), relating to building safety, into law on May 26, 2022.

The bill, SB 2D, enacts pro-consumer measures to help alleviate rising insurance costs, increases insurance claim transparency, and cracks down on frivolous lawsuits which drive up costs for all Floridians. It amends certain prohibited advertisement practices for contractors, and reigns in property insurance bad faith litigation and litigation by assignees.  Specific provisions include: 

RAP Program

$2 billion in reinsurance relief through the Reinsurance to Assist Policy (RAP) program to benefit policyholders over the next two years. The program requires insurance companies to file a supplemental rate filing once enrolled in the program to provide relief to policyholders.

My Safe Florida Home Program

$150 million for the My Safe Florida Home Program to provide grants to Florida homeowners for hurricane retrofitting, making homes safer and more resistant to hurricane damage, which can result in premium discounts for those who participate in the program.

Roof claims

Prohibiting insurance companies from denying coverage solely based on the age of a roof if the roof is less than 15 years old or if the roof is determined to have at least 5 years of useful life remaining. The bill further prohibits contractors from making written or electronic communications that encourage or induce a consumer to contact a contractor or public adjuster for the purposes of making a property insurance claim for roof damage unless such solicitation provides certain notices.

Adjustment of claims

The bill requires insurance companies to provide policyholders with a reasonable explanation if they deny or partially deny a claim and provides consumers with greater access to information during the claim adjustment process.  More specifically, SB D2 requires property insurers to conduct any physical inspection of the property related to a claim within 45 days of receiving proof of loss statements. This provision does not apply to hurricane claims, however.

SB D2 further requires insurers to notify policyholders of their right to receive any detailed report generated by an insurer’s adjuster that estimates the amount of the loss. The report must be provided to the requesting policyholder within the later of seven days after the policyholder requests the report or the completion of the report.

The bill also specifies that insurers must provide a reasonable explanation of the claim decision in relation to the insurance policy, facts, and law. If the insurer makes a claim payment that is less than contained in the insurer’s adjuster estimate of the loss, the insurer must explain the discrepancy.

Attorney fee multipliers

SB D2 further creates a new standard for application of attorney fee multipliers which have been liberally applied, resulting in increased costs to consumers.  Specifically, the Legislature has now amended Section 627.70152(8), Attorney’s Fees, to include:

(c) In awarding attorney fees under this subsection, a strong presumption is created that a lodestar fee is sufficient and reasonable. Such presumption may be rebutted only in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.

Assignment of attorney’s fees

The bill also limits the assignment of attorney’s fees in property insurance cases, disincentivizing frivolous claims. The Legislature prohibited the assignment of any right to attorney’s fees. By removing the potential for statutory attorney’s fee shifting, the Legislature removed a significant incentive for attorneys and contractors to file unnecessary lawsuits, to over litigate, or to litigate in a manner that is disproportionate to the value of the dispute.

Pre-suit notice of intent to litigate

In the second round of property insurance reforms, the Legislature established a procedure requiring pre-suit notice before a policyholder can file suit under a residential or commercial property insurance policy. Section 627.70152(5) provides that a court must dismiss without prejudice any claimant’s suit for which the required pre-suit notice was not given. The Legislature has now amended Section 627.70152 to permit courts to award to the insurer reasonable attorney’s fees and costs associated with securing the dismissal.

Bad faith

The Florida Legislature created Section 624.1551, which requires a claimant to establish a property insurer breached the insurance contract in order for the claimant to prevail in a bad faith claim for extracontractual damages.

The goal in enacting this new legislation is to stabilize Florida’s property insurance market, discourage frivolous litigation and ultimately reduce insurance rates over time. The anticipated effects and success of the new legislation will be determined in the upcoming months and years.