On December 14, 2022, during the Legislative Special Session, the Florida Senate passed Senate Bill 2A and then Governor Ron DeSantis signed the bill on December 16, 2022.
The primary purpose of this legislation was to address the affordability and availability of residential property insurance in Florida by removing Assignment of Benefits option for new polices and forcing each party to be responsible for attorney’s fees. The bill also requires insurers to communicate, investigate, and pay valid claims more promptly.
Here are some highlights
Claim Filing Deadline
- 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.
Prompt Pay Laws for Property Insurance
- 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.
- 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.
- 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.
- These provisions are effective March 1, 2023.
Awards of Attorney Fees in Property Insurance Lawsuits
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.
Assignments of Benefits
- 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.
Bad Faith Failure to Settle Actions Against Property Insurers
- 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.
Flood Notice
Requires the flood notice to be part of the declarations page of an insurance policy and encourages policyholders to purchase flood insurance.
Arbitration
- 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.
- 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.
To review the entire bill, follow this link:
https://flsenate.gov/Session/Bill/2022A/2A/BillText/Filed/PDF.
