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Significant Changes to Florida’s Property Insurance Laws Will Severely Limit Homeowner’s Rights Tampa,  Florida
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More drastic changes have been made to property insurance in the State of Florida. These changes will severely limit the rights of homeowners. The changes will also provide insurance companies with significant discretion and safeguards regarding their payment of claims. The new law now severely restricts a homeowner’s right to attorney’s fees for the successful prosecution of a legitimate claim. Insurance companies are also now allowed to include mandatory, binding arbitration provisions in their insurance policies that prevent a homeowner from accessing the courts of this state should an insurance company’s conduct require them to do so. Furthermore, homeowners are now specifically prohibited from transferring their rights under their insurance policy to a service provider, thus putting all of the burden on the homeowner should the insurance company fail to honor the terms of their insurance policy. The new law also makes it extremely difficult for homeowners to hold insurance companies accountable for bad faith conduct. There have also been changes to Citizens Property Insurance Corporation that will have a significant impact on policyholders. The new law does provide tighter time deadlines for insurance companies to process claims. However, homeowners now have tighter deadlines as well. In the end, these changes reduce the rights that are available to homeowners in this state.

Your Right to Attorney’s Fees for Property Insurance Claims Has Been Severely Limited

Just this year, lawmakers altered the ability to obtain attorney’s fees in lawsuits regarding property insurance. Those changes prevented a homeowner from transferring their right to attorney’s fees to a service provider in exchange for repairs to the home. This essentially left the homeowner with the burden of bringing a lawsuit against their insurance company if the insurance company failed to properly pay what was required under the terms of the insurance policy.

The recent changes now completely take away anyone’s automatic right to attorney’s fees in a successful lawsuit against a property insurance company. You, the homeowner, no longer have the automatic right to your attorney’s fees if you win your case against your property insurer for their failure to comply with the terms of the insurance policy. This inevitably means that you, the homeowner, will have to bear the cost and expense of initially bringing a court action against your insurance company. Even if you are successful in your court action, you will not be automatically entitled to have the insurance company pay your attorney’s fees for their failure to abide by the policy.

Once a lawsuit is filed, a homeowner can make an offer to settle the case with an insurance company. If the insurance company does not agree to accept the offer, and a judgment for at least twenty-five (25) percent more than the offer is later entered by the court, the homeowner can be entitled to its attorney’s fees and costs from the date that the offer was made. However, the offer cannot be made before ninety 90 days has elapsed after the insurance company is served with the lawsuit. This essentially means that even if the homeowner were to later obtain a judgment that was twenty-five (25) percent more than their offer, the homeowner would not be able to recover any fees or costs resulting from the first ninety (90) days of the lawsuit.

The recent changes severely discourage homeowners from bringing lawsuits against their property insurer because the homeowners will have to pay an attorney to bring a lawsuit. The changes will likely make it uneconomical and cost prohibitive for most homeowners to enforce their rights under their property insurance policy.

New Law Allows for Binding Arbitration in Property Insurance Policies and Limits Your Access to Courts

The new legislation also now allows your insurance company to include mandatory, binding arbitration within the insurance policies that they offer. If included within your policy, this would require you to resolve any disputes regarding your property insurance policy with arbitration instead of a court or jury deciding your case. Essentially, an arbitrator, who may or may not be neutral, would determine the outcome of your case instead of a judge or jury. The new law does require insurance companies to include the binding arbitration requirements in a separate endorsement that is attached to the policy and also requires that the insurance company obtain the policy holder’s signature on a form accepting binding arbitration. Also, any policy that requires binding arbitration must include a discount on the premium that the homeowner must pay. However, the insurance company must also offer the homeowner a policy that does not require the homeowner to participate in binding arbitration in order to be able to offer one that does require mandatory, binding arbitration.

The practical effect of these new requirements is that homeowners will have to pay more in premiums for access to courts. Most homeowners will opt for the lower premium and forego their right to bring a lawsuit should their insurance company fail to properly pay their claim. This will likely allow insurance companies to make lower claim payments to homeowners as they will not have to worry about having a lawsuit filed against them should they not properly pay the claim.

New Law Now Specifically Prohibits the Transfer of Rights Under a Property Insurance Policy

The new law now specifically prevents homeowners from transferring their rights under the property insurance policy. This means that homeowners cannot transfer any right under a property insurance policy to a service provider in exchange for services or repairs. There will now likely be a delay for the homeowner in having the necessary repairs made to their home. Now the homeowner, and not any service provider, will carry the burden of contesting any underpayment or nonpayment that fails to comply with the insurance policy. This also makes it easier for insurance companies to underpay claims as service providers are more likely to hold insurance companies accountable for underpayment and also have more experience and knowledge regarding what the proper claim payment should be to make the necessary repairs. Furthermore, homeowners will also want their claims payments quickly as they will need to pay service providers to make the necessary repairs. This may cause homeowners to be more willing to accept whatever the insurance company is willing to provide, no matter how low the offer, in order to get the necessary repairs done quickly and without further hardship to the homeowner. This may result in lower quality repairs and even the homeowner having to come out of pocket for some repairs if the claim payment does not adequately cover all the costs to make the necessary repairs.

Recent Changes Make It Extremely Difficult to Hold Insurance Companies Accountable for Bad Faith Conduct

Lawmakers have also made it extremely difficult to hold your property insurance company accountable if they engage in any bad faith conduct in the handling of your claim. In the changes that were made earlier this year, lawmakers already established a requirement that the homeowner prove that the insurance company breached the insurance policy before the homeowner could obtain relief for any bad faith conduct on the part of the insurance company. Now, the new law requires the homeowner to obtain a judgment from a court that finds that the insurance company breached the insurance policy before the homeowner can bring an action related to bad faith conduct on the part of the insurance company. You, the homeowner, will have to bring a breach of contract lawsuit and obtain a judgment against the insurance company from a court before you can bring another action to hold an insurance company accountable for any bad faith conduct.

This will undoubtedly be extremely difficult for the homeowner. The homeowner now has the burden to pay for any lawsuit for breach of the insurance policy unless the homeowner makes an offer to settle once the lawsuit is filed, the insurance company does not accept that offer, and ultimately, the homeowner obtains a judgment for at least twenty-five (25) percent more than the offer. Even if the homeowner were to ultimately obtain a judgment for twenty-five (25) percent more than the offer like in the above scenario, the homeowner would not be able to recover any fees or costs resulting from the first ninety (90) days of the lawsuit. Thus, it is likely that the homeowner would have to come significantly out-of-pocket just to possibly obtain a judgment for breach of the insurance policy, before the homeowner could bring an action against the insurance company for any bad faith conduct. Essentially, homeowners now have to pay for their right to bring an action against their insurance company for bad faith conduct.

That is, of course, if the homeowner has the ability to bring an action for breach of contract at all. If the homeowner has opted to accept mandatory binding arbitration to settle disputes regarding the insurance policy in exchange for a lower premium, then the homeowner cannot obtain a judgment for breach of contract from a court. By accepting the mandatory binding arbitration in exchange for a lower premium, the homeowner is blocked from bringing any action against their insurance company for bad faith conduct. The new changes make it extremely difficult for a homeowner to obtain relief from any bad faith conduct on the part of their insurance company.

Changes Regarding Citizens Property Insurance Corporation

If you are insured under Citizens Property Insurance Corporation, there will also be some changes that may affect your insurance. The new law now requires homeowners that are insured under Citizens to have flood insurance. This is likely to be an unexpected expense that a homeowner with Citizens now has to pay. In some cases, it could also be an unnecessary expense if you live in a home or condominium that does not have a high chance of sustaining damage from flooding. The flood insurance must be obtained from another insurance company, as Citizens will not provide flood insurance. The only exception to the flood insurance requirement is that policy holders that do not have coverage for wind damage within their policies are exempt from the requirement to have flood insurance. Also, a policyholder that makes a claim for water damage now has the burden of proving that the damage was not caused by flooding.

Furthermore, if you have property insurance with Citizens, the new law could prevent you from renewing your policy with Citizens when your policy is up for renewal. For polices that are up for renewal on or after April 1, 2023, homeowners are not eligible for coverage with Citizens if they receive an offer for coverage from another authorized insurer with a premium that is not more than twenty (20) percent greater than the corporation’s premium for comparable coverage. This means that a homeowner with Citizens will not be able to renew their insurance with Citizens if they receive an offer for coverage from another insurer with a premium that can be up to twenty (20) percent more than the premium offered by Citizens for similar coverage. This will in effect allow insurance companies to charge twenty (20) percent more for premiums than Citizens would have charged until there is adequate competition in the market to drive rates lower. This is great for insurance companies, but bad for consumers.

Other Notable Changes

The new law does make some other notable changes to property insurance in the state of Florida. Lawmakers did give insurance companies tighter time limits to process claims. Notably, an insurer now has seven (7) days instead of fourteen (14) to review and acknowledge receipt of any communication that they receive regarding a claim. Also, insurance companies now have seven (7) days instead of fourteen (14) to begin their investigation once they receive proof-of-loss statements unless the failure to do so is due to factors beyond their control. If an insurance companies’ investigation involves a physical inspection of the property, the insurance company must conduct the physical inspection within thirty (30) days and not forty-five (45) after the insurance company receives the proof-of-loss statement. An insurance company must also now send a copy of any detailed estimate of the amount of the loss to the policyholder within seven (7) days after the estimate is generated, even if it does not receive a request to do so from the policyholder. The insurance company is also now required to maintain claim records, including certain dates related to the claim. The insurance company now has sixty (60) days and not (90) days to pay or deny a claim after it receives notice of a claim. However, many of these deadlines can be tolled if the homeowner fails to provide claims information to the insurance company or alternative dispute resolution is pending.

Homeowners must now provide the insurance company with notice of a claim within one (1) year of the date of loss and not two (2) years, or the claim is barred. Notice of any supplemental claim must now be given within eighteen (18) months and not three (3) years, or the claim is barred.

These changes require insurance companies to investigate and process claims more quickly. But they also require homeowners to make claims more quickly as well.

The Takeaway

The changes that are outlined above will have a significant impact on homeowners in the state of Florida. The changes will strictly limit the rights of homeowners. Insurance companies, however, will be provided with more protection and discretion in the handling of claims. Homeowners that are insured by Citizens may now have some unexpected expenses that they are required to pay and may not even be able to continue their coverage with Citizens when their policy is up for renewal. Homeowners will need to pay close attention to these changes and take them into account when making any decisions regarding property insurance.

The recent changes to property insurance are complex and will have a significant impact on homeowners in the state of Florida. We are here to help. If you have any questions, please contact us at (813) 254-7119.

Authored by Attorney Thomas McFadyen

Posted on behalf of Ligori & Ligori Attorneys at Law

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