As every Floridian can tell you, obtaining property insurance in recent years has been challenging. More and more insurance companies have dropped their coverage for property owners, or they have shuttered their businesses altogether. And for those home and business owners who have secured coverage, premiums have skyrocketed. 

In December, Florida lawmakers tried to address the problem by passing Senate Bill 2A, which Gov. Ron DeSantis signed on Dec. 14. The new law takes effect on Jan. 1.

The Reasoning Behind the Law

We all know that Hurricane Ian wreaked havoc on Florida this past fall, resulting in billions of dollars in damages. However, this single hurricane was not the only catalyst for the new law. Issues surrounding property insurance have plagued the state for many years. Below are some recent highlights to consider:

• Commercial rates reached a 20-year high.
• Citizens Property Insurance Corporation (CPIC) became the number one homeowner insurance carrier, even though the state-run agency was supposed to be a last resort.
• Six insurance carriers had to close up and leave Florida.
• Other carriers (27 of them) were financially downgraded.
• Nationwide, Florida is home to 76% of homeowners’ insurance lawsuits but boasts only 9% of homeowners’ insurance claims.

Hurricane threats and other severe weather will likely only increase in the years ahead, so lawmakers had to find a way to make Florida seem safe — to both residents and insurance companies. So they passed this new law to make policies more available and affordable.

What the Law States

The new law lays out new requirements and expectations for insurance carriers and property owners.

Insurance carriers are expected to be more efficient in investigating, communicating, and paying claims. 

• Based on revisions to the prompt pay statute, they are encouraged to settle claims more quickly.
• They must also include the statement “Flood Coverage Not Included” on the policy’s declarations page, ensuring that policyholders do not miss this critical detail on the other pages of the policy.
• They now may offer premium discounts to policyholders who agree to participate in mandatory binding arbitration rather than going to court to resolve a claim.

Property owners are required to abide by new timeframes and regulations.

• They cannot sue an insurer unless there is a bad faith breach of contract.
• They must provide notice of a loss to an insurer within one year (down from two years) for initial or reopened claims and within 18 months (down from three years) for supplemental claims. 

Other parts of the law will impact numerous parties.

Assignment of Benefits: This option, which transfers insurance payments directly to contractors or other third parties, has been eliminated. This means that an insurance carrier can no longer pay a plumber or roofer directly. Property owners must file their own claims and pay third parties themselves. The law bars any assignment to post-loss insurance benefits for insurance policies issued on or after Jan. 1, 2023. 

One-Way Attorney Fees: The one-way attorney fees provision is intended to shield policyholders from legal fees if they file suit against their insurance carrier. Under the new law, the one-way attorney fees, which some argue have led to unnecessary litigation, have been eliminated. 

The Florida Optional Reinsurance Assistance Program (FORA): This program has been created to address anticipated market shortages. Insurers can purchase hurricane reinsurance from FORA at near-market rates.  

The Office of Insurance Regulation (OIR): Under the new law, this office has increased authority to oversee insurers and their practices.

Citizens Property Insurance Corporation: The new law aims to reduce the risk for CPIC, and it encourages property owners to use other carriers. To that end, CPIC will be allowed to increase its rates.

Final Advice

If you are a roofing contractor, the elimination of the Assignment of Benefits provision may heavily impact your business moving forward. Remember, contractors must still comply with the requirements of Fla. Stat. 489.147 regarding advertisements and contracts for work to be performed for insurance proceeds. And if you are a property owner, you must keep the new timelines and lawsuit guidelines in mind. 

Lawmakers hope this legislation will make property insurance more manageable, but it may be confusing at first, and some changes will not be welcome for all of us. We anticipate that additional changes will occur to insurance laws that impact the storm and restoration market in 2023, not just in Florida, but in any state that has a high number or roofing-related insurance claims.

The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.