Just Ask Tim - Blog
We cannot imagine there is a Florida homeowner that has not experienced the significant increase in homeowner insurance and condominium insurance premiums. Many believe these rate increases are the result of weather and hurricanes, but in the primary driver has been the increase in legal actions brought against insurance companies on behalf of homeowners. Some would say third party adjusters, roofing companies and law firms have been abusing the law while others would say the insurance companies are not paying claims fairly and yet others will say homeowners are taking advantage of the system. Regardless of the cause, (we are in no way attempting to assign blame to any party or parties) Florida homeowners are finding it difficult to afford or simply get homeowners insurance in the traditional admitted market. In 2020 alone, Citizens which is the insurance company of last resort for Florida, grew by more than 23% and added over 100,000 policies.
The purpose of Senate Bill 76 (SB 76) is to resolve some of the issues that the legislature believes is driving the increase in homeowner’s insurance and condominium insurance premiums. You can read the full bill by clicking HERE.
The following is a summary of the bill from our perspective. We are not attorneys nor are we attempting to provide a legal review or advice. This is simply our opinion after reading the bill. We strongly encourage you to read the entire bill yourself and consult a Florida licensed attorney or your state representative with any questions you might have.
Claim Notice Requirements
Today, an insured in Florida is not required to provide notice of a claim and can file a lawsuit anytime within five years from the date of loss, except when the loss is the result of a hurricane or windstorm in which case the insured has three years to submit the loss or file a lawsuit.
The bill adjusts that to require claims to be submitted within two years from the date of loss, regardless of the type of claim.
The bill also adds a new notice type. Before filing a lawsuit, the insured must first send the insurance company notice and give the insurance company 60-days to resolve the issue. At the end of the 60-day period the insured can still file a lawsuit if they are not satisfied.
Calculation of Attorney Fees
Today an attorney can request a “fee multiplier” based on attorney’s believe the insured would have had difficulty finding a law firm or attorney to take their case and convince the judge to award them a fee multiplier. These multipliers can be large with many reaching two and three times. So, if the law firm spent $50,000 dollars litigating the claim and they were awarded a 2 times multiplier by the judge then they would receive $100,000 rather than the $50,000 the law firm spent. This goes to the law firm and not the insured.
The bill places a burden on the attorney or law firm to establish that competent counsel could not be retained by the claimant in a reasonable manner. Today the attorney or law firm simply has to claim that to be the case.
The bill also changes how attorney fees are recovered. The new method is based on the final judgement amount. If the judgement is greater than or equal to 80% of the original demand, then 100% of the attorney fees can be recovered. If the judgement is less than 80% but greater than or equal to 20% then the attorney fees will be received based on that percentage. For example, if the demand were $100,000 and the final judgement was $50,000 then 50% of the attorney fees could be recovered. If the judgement is less than 20% of the demand, then 0% of the attorney fees are recoverable.
Roof Replacement Cost Reimbursement
Today, insurance companies must offer Florida homeowners replacement cost coverage for their roof. The insured can purchase actual cash value coverage for their roof, but this is optional and must be requested by the insured.
The bill would allow insurance companies to move from replacement cost coverage to a reimbursement based on the age of the roof. If the roof is no more than 10 years old, then the reimbursement would be 100% of the cost to replace or repair the roof. If the roof is more than 10 years old, then the insurance company can provide a schedule based, on the age of the roof, that sets the percentage of the cost to replace the roof the insured will be reimbursed. As an example, an insurance company might set the schedule to reduce from 100% at a set percentage point for each additional year of the roof. For example, let us say the insurance company says they will reduce the percentage of the total cost to replace the roof by 3 percentage points per year after the roof reaches 11 years old. So, if the roof were 15 years old then the 100% reimbursement would be reduced by 15 percentage points or would now reimburse the insured for 85% of the cost to replace the roof. Regardless of how the insurance company builds the schedule, the bill sets certain minimum reimbursement percentages that varies by roof type.
Replacement cost reimbursement can still be offered by the insurance companies, but it would no longer be a requirement.
Where Does This All Stand?
SB 76 was passed by the Florida Senate on April 7th, 2021. It will now head over to the Florida House for further debate. As with any bill, this back and forth between the Senate and the House can happen many times before both chambers agree and send it to the Governor for signature. That said, if the bill is not approved by both chambers before April 30th, 2021 then the bill dies. It will have to begin the entire process from the beginning during the next legislative session which is in 2022 unless the Governor were to call a special session.
Even if the bill were signed into law this year, it would not affect this year’s insurance premiums. So, we encourage you to have a Florida licensed agent shop the insurance market for you to be sure you are getting the best insurance option for your situation.
We can leverage our technology to shop multiple insurance companies in a matter of minutes. Text or call us at (954) 678-2658, email us at firstname.lastname@example.org or submit a request for one of our agents to contact you by clicking Get A Quote.