Legislation clarifies roof coverage options, creates two-year filing period for claims
The Florida Senate today passed Senate Bill 76, Property Insurance, by Senator Jim Boyd (R-Bradenton). The legislation addresses several issues surrounding the rising cost of property insurance in Florida. Specifically, the bill clarifies options for insurance coverage related to roof damage and replacement, creates a uniform period for filing a property insurance claim, requires that the insured party provide notice to the insurance company before filing a lawsuit, and changes how attorney fees are awarded in property insurance litigation.
“We want to make certain that Floridians have access to property insurance that is both reliable and affordable. Right now we have a situation in our state where homeowners are paying more for their property insurance, and yet insurance companies are suffering massive losses,” said Senator Boyd. “One of the biggest drivers of rate increases is the extraordinary number of roofing claims in Florida. This bill provides a needed update to roofing policies to both protect homeowners and prevent the abuse of claims by predatory attorneys and contractors.”
“This legislation ensures there is a clear understanding between homeowners and their insurance companies regarding when a roof replacement will be covered in full and establishes a clear and reasonable two-year time period for filing a claim,” said Senate President Wilton Simpson (R-Trilby). “These reforms seek to reduce frivolous claims by those who take advantage of areas that were affected by hurricanes when claims spike at the end of the three-year claim window and often have no damage related to the hurricane.”
With the rising cost of property insurance in Florida, Senate Bill 76 aims to provide fair and reasonable guidelines for both the insurer and the insured during the claims process. Specifically, the bill allows property insurers to only offer homeowner’s policies that adjust roof claims to actual cash value if the roof is older than 10 years. The bill also allows property insurers to offer homeowners the option of purchasing a stated value limit for roof coverage. A homeowner that is offered such a policy would receive a disclosure that their insurance policy does not provide replacement cost coverage insurance for the roof. In a total loss of the primary structure, a reimbursement schedule and stated value sublimit do not apply and the insurer’s liability will be for the total amount of insured property as provided in the policy. The bill also creates a uniform 2-year period for filing a property insurance claim, supplemental claim, or reopened claim.
To address the proliferation of litigation that has driven up the cost of property insurance across the state, the bill requires detailed notice of property insurance claims prior to litigation and changes how attorney fees are awarded. Before a lawsuit is filed, the insurer must be notified of the claim in detail and be given sufficient time to inspect the property before a lawsuit is filed.
Currently, an insurer must pay a reasonable attorney fee to the insured’s attorney, even if the insured only recovers a small amount in the litigation. Under this legislation the insurers’ obligation to pay the insured’s attorney fees will be directly related to how successful the insured was in recovering the amount demanded in the litigation. If the claimant recovers at least 80 percent, the insurance company must pay all reasonable attorney fees. If the claimant recovers 20 percent or more of the demand but less than 80 percent, the insurer will be required to pay the same percentage of fees related to the recovery that the claimant recovered in the action. For example, if the claimant demanded $20,000 and recovered $10,000, the insurer will pay 50 percent of the claimant’s attorney fees because the claimant’s recovery was 50 percent of the demand. If the claimant recovers less than 20 percent of the demand, the insurer has no obligation to pay the claimant’s attorney fees.
The bill also adopts the federal court standard for awarding attorney fee multipliers in claims arising under property insurance policies and directs courts to presume that the Lodestar fee is reasonable and provides that multipliers will only be awarded in rare and exceptional circumstances.