Florida Legislature Passes Property Insurance Reform and Repeals PIP on Last Day of 2021 Session
May 1, 2021
The last bill passed by the Florida Legislature during its 2021 session amends Florida’s century-old attorney fee statute to provide for recovery of attorney fees in property cases based on the amount recovered by the claimant. Additionally, the 2021 Legislature repealed Florida’s “No-Fault” automobile insurance law and replaced it with a mandatory bodily injury requirement. The Legislature also passed legislation allowing for auto insurers to exclude certain drivers from policy coverages and passed legislation supported by CFO Jimmy Patronis intended to protect insurance consumers.
Property Insurance Reform
SB 76 by Senator Jim Boyd in the Senate and Representative Bob Rommel:
- Restricts the ability of contractors and public adjusters to provide incentives for consumers to file insurance claims for roof damage.
- Provides that the OIR may examine the affiliates of insurers under certain conditions.
- Requires insurers to annually provide property insurance claims litigation data to the OIR.
- Revises the eligibility for residential property owners to obtain coverage from Citizens. A person is not eligible for Citizens coverage if coverage can be obtained from private insurers that is less than 20 percent greater than the premium for comparable coverage from Citizens.
- Provides that Citizens’ may add 1 percent per year to its cap on rate increases until it reaches a maximum of a 15 percent rate cap on increases in 2026.
- Provides that if Citizens does not buy reinsurance to cover its projected 100-year probable maximum loss, it must still include the cost of such reinsurance in its rate calculations.
- Changes the notice of claim deadlines so that notice of any property insurance claim or reopened claim must be provided to an insurer within two years of the date of loss.
- Requires a ten-day presuit notice before an insured can bring a lawsuit related to a residential or commercial property claim.
- Requires the insured to make a presuit settlement demand and the insurer to make a presuit settlement offer.
- Provides that insureds who prevail in a lawsuit against a residential or commercial property insurer can recover attorney fees based on a statutory formula tied to the difference between the amount obtained and the presuit settlement offer.
The bill passed the Senate 35-5 and passed the House 75-41.
Repeal of PIP and Replacement with Mandatory Bodily Injury
SB 64 by Senator Danny Burgess and Representative Erin Grall repeals Florida’s automobile “No-Fault” law. The repeal of the No-Fault Law eliminates the limitations on recovering pain and suffering damages from PIP insureds, which currently require bodily injury that causes death or significant and permanent injury. Under the bill, the legal liability of an uninsured motorist insurer includes damages in tort for pain, suffering, disability or physical impairment, disfigurement, mental anguish, inconvenience, and the loss of past and future capacity for the enjoyment of life.
The bill creates the following financial responsibility requirements:
- $25,000 for bodily injury (BI) or death of one person in any one crash
- $50,000 for BI or death of two or more people in any one crash.
- $10,000 for property damage.
MedPay Coverage Requirements
The bill provides for MedPay coverage at a limit of at least $5,000. The coverage must provide an additional death benefit of at least $5,000. The insurer must offer MedPay coverage at limits of $5,000 and $10,000 and may offer MedPay coverage at any limit greater than $5,000. The insurer must offer MedPay coverage with no deductible. The insurer may offer MedPay coverage with a deductible not to exceed $500. A policy is deemed to have:
- MedPay coverage to a limit of $10,000 unless the insurer obtains a named insured’s written refusal of coverage or written selection of coverage at a limit other than $10,000. The rejection or selection of coverage must be made on a form approved by the OIR.
- No MedPay deductible, unless the insurer obtains a named insured’s written selection of a deductible up to $500. The selection of a deductible must be made on a form approved by the OIR.
Bad Faith Reform
The bill creates a new framework to govern all third-party claims against motor vehicle insurers for bad faith failure to settle. The bill requires the third-party claimant in a bad faith failure to settle action to show the insurer violated its duty of good faith to the insured and in bad faith failed to settle the claim. The bill requires motor vehicle insurers to follow claims handling best practices standards based on duties related to claims handling, claims investigation, defense of the insured, and settlement negotiations.
The bill requires the insurer to meet specified best practices standards and requires insurers to communicate specified information to insureds. It creates a duty for insureds to cooperate with their insurer in the defense of the claim and requires insureds to execute financial affidavits. It allows the insurer to terminate the defense of the claim under certain conditions.
The bill creates a condition precedent to filing an action against an insurer for bad faith failure to settle a third-party claim. The third-party claimant must have obtained a final judgment exceeding policy limits against the insured unless the insurer expressly waived the requirement of a final excess judgment or wrongfully breached its duty to defend the insured.
The bill provides “safe harbors” if the insurer complies with the best practices standards. The bill provides that an insurer is not under any circumstances liable for the failure to accept a settlement offer within 45 days after receiving actual notice of the loss if:
- The settlement offer provides the insurer fewer than 15 days for acceptance; or
- The settlement offer provides the insurer fewer than 30 days for acceptance where the offer contains conditions for acceptance other than the insurer’s disclosure of its policy limits.
The bill passed the House 100-16 and passed the Senate 37-3.
Named Driver Exclusion
CS/SB 420 by Senator Ed Hooper and Representative Scott Plakon authorizes private passenger motor vehicle policyholders to exclude identified individuals from the following coverages:
- Personal injury protection (PIP) coverage applicable to the identified individual’s injuries, lost wages, and death benefits.
- Property damage liability coverage.
- Bodily injury liability coverage, when required by law.
- Uninsured motorist coverage for any damages sustained by the excluded individual.
- Any coverage the policyholder is not required by law to purchase.
A private passenger motor vehicle policy may not exclude coverage when:
- The identified excluded individual is injured while not operating a motor vehicle;
- The exclusion is unfairly discriminatory under the Florida Insurance Code; or
- The exclusion is inconsistent with the underwriting rules filed by the insurer.
The exclusion of an identified named driver is invalid unless the named policyholder consents in writing to the exclusion of a named driver and the excluded named drivers are listed on the policy’s declarations page or policy endorsement.
DFS Consumer Protection
SB 1598 by Senator Joe Gruters and Representative Chuck Clemons modifies provisions in several areas related to insurance that are regulated by the DFS. The bill:
- Requires insurers to include information regarding the DFS’s free financial literacy programs in its notice that a consumer’s credit report or score is being requested.
- Requires an entity that is licensed or issued a certificate of authority by the DFS to respond to document requests from the DFS Division of Consumer Services.
- Eliminates the $60 fee for a new or renewal adjusting firm license.
- Specifies entities that must obtain an adjusting firm license but provides that an adjusting firm’s branch place of business does not require licensure if it meets specified requirements.
- Revises the Licensing Procedures Law’s prohibition against unlicensed activity to include knowingly aiding or abetting an unlicensed person in transacting insurance or otherwise engaging in insurance activities without a license.
- Authorizes the DFS to suspend, revoke, or refuse to issue the license of an insurance agent, adjuster, customer representative, service representative, or managing general agent that makes a consumer’s personal financial or medical information available to the public, or initiates in-person or telephone solicitation with a prospective customer after 9 p.m. or before 8 a.m., unless the customer requests otherwise.
- Prohibits the sale of industrial life insurance policies, effective July 1, 2021.
- Increases to 10 days, the cooling-off period during which a consumer may cancel his or her contract with a public adjuster.
- Requires that the public adjuster’s written estimate of loss must include an itemized, per-unit estimate of the repairs. The public adjuster must provide the estimate to the claimant or insured within 60 days after the execution of the public adjuster contract.
- Prohibits a licensed contractor or subcontractor from advertising, soliciting, offering to handle, handling, or performing public adjuster services unless licensed as a public adjuster.
- Prohibits persons other than a licensed public adjuster or attorney from offering to initiate or negotiate on behalf of an insured or advertising services that require a public adjuster license.
- Prohibits a public adjuster, public adjuster apprentice, or public adjusting firm, who solicits a claim and does not enter into a contract with an insured or third-party claimant, from charging or receiving payment from an insured or a third-party claimant.
- Requires disclosure that surplus lines insurance is not covered by the FIGA before placing overage with a surplus lines insurer.
- Expands the definition of sliding to include:
- Initiating, effectuating, binding, or otherwise issuing an insurance policy without the prior informed consent of the person who owns the property that will be insured.
- Submitting an invoice for premium payment to a mortgagee or escrow agent to institute an insurance policy without the prior informed consent of the owner of the property.
- Applies the property insurance claim investigation and communication requirements of s. 627.70131 to surplus lines insurers.
- Requires a residential property insurer to begin its claim investigation within 14 days of receiving a proof of loss statement.
- Requires insurers to provide to policyholders the adjuster’s name and state adjuster license number when a claim investigation involves a physical inspection of the property and maintain a record of each adjuster who communicates with the policyholder.
- Requires the insurer to provide notices that explain when the insurer is providing a preliminary or partial estimate or making a claim payment that is not the full and final payment for the claim.
- Requires insurers to provide the Homeowner Claims Bill of Rights pursuant to any personal lines residential property insurance claim and adds notice regarding the right to receive interest and the utility of taking video of damages and repairs.
- Encourages insureds, under the Homeowner Claims Bill of Rights, to file all claims directly with their insurance company.
- Removes the insured’s obligation to pay a $100 deductible to the FIGA to receive payment on their claim through the FIGA.
The bill passed the Senate 34-3 and passed the House 114-1.
Colodny Fass will continue to review and analyze the legislation that passed and will release additional analysis in the coming days, including updates regarding any action the Governor may take regarding vetoes.