How Florida’s Recent Changes in Property Insurance Law Affect the Handling and Litigation of Claims
Updated: Sep 14, 2021
June 14, 2021
If you are involved in Florida’s property insurance industry, you are probably acutely aware that changes are heading our way with the Legislature’s passing and the Governor’s subsequent approval of SB 76 (the “act”). This article outlines the act's changes to laws that affect the handling and litigation of property insurance claims, which will take effect on July 1, 2021.
Attorney's Fees and Costs Awards Impacted
Sections 627.428 and 626.9373, Florida Statutes, are well-known to all attorneys who handle property damage insurance claims in Florida. The two laws have been valuable to policyholders, because they provide a mechanism for their attorneys to recover their fees and costs directly from their insurance company where there has been a wrongfully denied or underpaid property damage insurance claim. This assists greatly in leveling the playing field with powerful insurance companies, who are equipped with attorneys on speed dial and the resources to pay them following a claim dispute.
The act amends these policyholder-friendly laws to include reference to a newly created Section 627.70152, Florida Statutes. Now, in a lawsuit arising under a residential or commercial property insurance policy brought by a policyholder, attorneys need to whip out their calculators to determine what amount, if any, will be awarded for attorney's fees and costs when the policyholder recovers insurance monies. Fair warning to readers who chose the legal profession because they hated math class -- avoid handling property damage insurance claims. The act sets forth the amount of reasonable attorney’s fees and costs awarded are now governed by dividing the policyholder’s recovery above the insurer’s pre-suit settlement offer by the disputed amount. The disputed amount is the difference between the policyholder’s and the insurer’s pre-suit settlement offers (not including any attorney’s fees and costs).
If the percentage recovered is greater than 50%, then the policyholder will recover all its attorney's fees and costs. If the percentage recovered is greater than 20% but less than 50%, then the policyholder will recover its attorney's fees and costs equal to the percentage of the disputed amount obtained times the total attorney's fees and costs. If the percentage recovered is less than 20%, then the policyholder will not recover its attorney's fees and costs. The table below outlines how this new law will play out based on various scenarios.
Examples in Assessing Award of Attorney’s Fees and Costs
New Condition Precedent: Notice of Intent to Initiate Litigation
Section 627.70152, Florida Statutes, has been created, which outlines a condition precedent to filing a lawsuit under a property insurance policy. Before a lawsuit may be filed by a policyholder, notice must be provided to Florida’s Department of Financial Services (the “department”) setting forth written notice of intent to initiate litigation on a form provided by the department. This notice must be given at least 10 business days before filing suit under the policy and may not be given before the insurer has made a coverage determination under Section 627.70131, Florida Statutes.
The notice must state all of the following:
Notice is provided pursuant to Section 627.70152, Florida Statutes.
Alleged acts or omissions of the insurer giving rise to the suit, which can include a denial of coverage.
If the notice is written by an attorney or other representative, that a copy of the notice was provided to the policyholder.
If the notice is provided following a denial of coverage, an estimate of damages, if known.
If the notice is provided following acts or omissions by the insurer other than a denial: (i) pre-suit settlement demand which must itemize the damages, attorney fees and costs; and (ii) the disputed amount.
Supporting documentation of the foregoing information may be provided along with the notice to the insurer.
Insurer’s Response to Notice of Intent
Upon receipt of the foregoing notice by a policyholder, the insurer must respond as follows:
In writing within 10 business days after receiving the notice. Note, the insurer must provide the response by e-mail if the insured has designated an e-mail address in the notice.
If the claim was denied, the insurer must respond to the notice by either accepting coverage, continuing to deny coverage, or asserting the right to reinspect the damaged property.
o If the insurer asserts the right to reinspect, it must either accept coverage or continue to deny coverage within 14 days after its response to the notice.
o Where the insurer continues to deny coverage, the claimant may file suit without providing additional notice to the insurer.
If the claim was not denied, the insurer must respond to the notice by making a settlement offer or requiring the claimant to participate in appraisal or another method of alternative dispute resolution.
o If the appraisal or alternative dispute resolution is demanded but has not been concluded within 90 days after the expiration of the 10-day notice of intent to initiate litigation, the claimant may immediately file suit without providing the insurer additional notice.
Failing to Comply with Condition Precedent
Where the policyholder fails to comply with the above notice requirement or if suit is filed before the expiration of time as it relates to the insurer’s duty to respond to the notice, the court will dismiss the suit without prejudice, forcing the policyholder to comply with the condition precedent and re-file the suit, if and when thereafter appropriate. Further, attorney’s fees may not be awarded for those fees incurred before a suit is dismissed for failure to provide the notice of intent to initiate litigation.
Tolling Statute of Limitations for Pre-Suit Notice Process
Service of a notice of intent to initiate litigation tolls the time limits provided in Section 95.11, Florida Statutes (the “time limits”) for 10 business days if such time limits will expire before the end of the 10-day notice period. Additionally, where the insurer asserts the right to reinspect the property, the time limits are tolled during the reinspection period if such time limits expire before the end of the reinspection period. Likewise, where appraisal or other alternative dispute resolution is ongoing, the time limits are tolled where they would otherwise expire during the appraisal process or dispute resolution process.
Further, the act tolls the time limits for 30 days if (1) the claim is not resolved in the pre-suit notice process; and (2) the statute of limitations expires within 30 days of the conclusion of the pre-suit notice process.
Two-Year Requirement for Notice of Property Insurance Claims
Importantly, the act sets forth notice of all property insurance claims—initial and reopened claims—must be made within 2 years of the date of loss, while supplemental claims must be made within 3 years after the date of loss. This reduces the amount of time from the current law being 5 years for all claims except 3 years for hurricane or windstorm and 2 years for sinkhole. The act defines the terms reopened and supplemental:
A reopened claim is a claim that was previously closed but has been reopened upon an insured’s request for additional costs for loss or damage previously disclosed to the insurer.
A supplemental claim is a claim for additional loss or damage from the same peril the insurer has previously adjusted or for which costs have been incurred while completing repairs or replacement pursuant to an open claim for which timely notice was previously provided to the insurer.
Consolidation of Multiple Actions
Where a party is aware of ongoing multiple actions involving coverage provided under the same residential property insurance policy for the same property with the same owners, it must provide written notice to the court of the multiple actions. Upon this notification, the court has the discretion to order the actions be consolidated and transferred to the court having jurisdiction based on the total amount in controversy of all consolidated claims. If multiple cases are pending in circuit courts, the cases may be consolidated based on the date on which the first case was filed.
Prohibits Certain Practices by Contractors
The act creates Section 489.147, Florida Statutes, which outlines prohibitions contractors must comply with, otherwise they face (1) license discipline by the Florida Department of Business and Professional Regulation (“DBPR”); and (2) a $10,000 fine per violation.
These prohibitions include:
1. Soliciting residential property owners through prohibited advertisements, defined as communications to a consumer that encourage, instruct, or induce a consumer to contact a contractor (or a public adjuster) to file an insurance claim for roof damage.
These prohibited advertisements include door hangers, business cards, magnets, flyers, pamphlets, and e-mails.
However, except as outlined above, this prohibition against solicitation does not prevent a contractor from suggesting or otherwise recommending to consumers that they consider contacting their insurance company to determine if the proposed repair is covered under their policy of insurance.
2. Offering the residential property owner consideration (a rebate, gift, gift card, cash, coupon, waiver of any insurance deductible, or any other thing of value) to (i) perform a roof inspection; or (ii) file an insurance claim.
Importantly, the contractor must provide the residential property owner of these two prohibitions in any contract to repair or replace a roof. Failure to do so permits the residential property owner to void the contract within 10 days after signature.
3. Offering or receiving any compensation, inducements, or rewards for referrals when property insurance proceeds are payable.
However, compensation for a referral does not include payment by a residential property owner or insurer for roofing services rendered by the contractor.
4. Participating in unlicensed public adjusting or interpreting insurance policy provisions or advising an insured regarding coverages or duties under the insured’s property insurance policy.
5. Providing an authorization agreement to the insured to conduct repairs without providing a good faith estimate itemizing the costs of services and materials for repairs.
Note, there is no violation if the actual cost of repairs differs from the initial estimate.
Prohibits Certain Acts by Public Adjusters
The act addresses amendments and additions relating to a public adjuster, public adjuster apprentice, or a person acting on behalf of either. This is set forth in the creation of Section 626.854, Florida Statutes. Specifically, the following acts are prohibited:
Offering a residential property owner a rebate, gift, gift card, cash, coupon, waiver of any insurance deductible, or any other thing of value in exchange for (i) permitting an inspection of the residential property owner’s roof; or (ii) making a roof claim with insurer.
Offering or accepting any compensation, inducement or reward from anyone for referral of any services for which insurance proceeds would be used for roofing repairs/replacement.
Similar to contractors, a public adjuster can be subjected to a fine for up to $10,000 for each violation. Persons who are unlicensed public adjusters but commit any of the abovementioned prohibited acts are subject to a $10,000 fine per act and the criminal penalty for unlicensed activity, which is a third-degree felony.
Supporters of the act believe the new law will control insurance premiums and reduce the amount of litigation that ensues surrounding these claims. However, it is clear the act provides less protections to policyholders when their claims are wrongfully denied and underpaid and emboldens insurance companies to double down.
Amanda Qadri is a Florida attorney specializing in property damage insurance claims. She currently represents home and business owners who demand to be properly compensated for their claims. Previously, Amanda previously defended insurers; therefore, she promises to fight for the best possible recovery.
The Law Offices of Amanda Qadri, PLLC
(954) 501- 0211