Florida Senate passes legislation to reform the Carlton Fields property insurance coverage litigation

Towards the end of the Florida legislature in 2021, the Florida Senate passed Senate Law 76, which focuses on reducing litigation related to property insurance claims and imposing restrictions on companies requiring insured parties to submit umbrella claims.

The focus of SB 76 is the implementation of a preliminary complaint, according to which every applicant (who is not an assignee of the policy) must submit a written declaration of intent to initiate a legal dispute to the insurer at least 10 working days before filing the complaint under the policy. The letter of intent obliges the applicant to state the alleged acts or omissions of the insurer. If the claim concerns a denial of coverage by the insurer, the claimant must provide an estimate of the damage, if known. If the insurer’s alleged acts or omissions do not constitute a denial of coverage, the applicant must file an advance notice. In the forecast, the compensation, the legal fees and costs as well as the amount in dispute must be stated.

SB 76 also requires that insurers have a process in place to promptly investigate, review and evaluate the letters of intent. Legislation requires an insurer to respond within 10 working days of receiving the notification. If the letter of intent claims a refusal to cover, the insurer must either accept the cover, continue to refuse cover, or exercise the right to re-inspect the property. If the insurer chooses the latter, they will have to re-inspect the property within 14 working days and then indicate whether they continue to refuse coverage or accept coverage. For claims for which the dispute is not a refusal of cover, SB 76 requires the insurer to submit a settlement offer or the applicant to participate in an alternative dispute resolution. If the alternative dispute resolution is not completed within 90 days after the end of the 10-day letter of intent, the applicant can file a lawsuit without further notification to the insurer.

The procedure introduced in SB 76 is not optional for applicants. According to legal provisions, a court must dismiss a lawsuit without prejudice if the insurer has not received a letter of intent or if the preparation period has not been properly completed.

In addition to the new litigation process for claims on residential and commercial real estate, the Florida Senate has also implemented reforms to the legal allocation of legal fees in such litigation. Previously, if an applicant had reclaimed only a small portion of the amount they requested, the applicant would still have previously reimbursed all reasonable attorney fees and expenses. Under the new legislation, the amount collected from the applicant determines the amount of legal fees and fees that the applicant could reclaim from the insurer. The changes only affect actions in which the applicant is not a legal successor to the policy.

The changes to the granting of legal attorney’s fees and costs are as follows: If the difference between the amount collected from the applicant and the offer to settle legal disputes is less than 20% of the amount in dispute, the applicant will not be entitled to a refund of such amount Legal fees and expenses as each party would be responsible for its own fees and expenses. If the recovery is more than 20% but less than 50% of the amount in dispute, the insurer will pay the applicant’s legal fees and fees equal to the percentage of the amount in dispute. In cases where the applicant gets back more than 50% of the amount in dispute, the insurer would have to pay all of the applicant’s legal fees and costs.

In addition to the reforms mentioned above, SB 76 addresses several issues specifically related to umbrella claims. In particular, legislation prohibits advertising by contractors who encourage, instruct, or induce a consumer to contact a contractor or public expert to make a roof damage insurance claim. SB 76 also prohibits contractor advertising, including personal and electronic advertising (phone, email, text, etc.). In addition, legislation prohibits contractors from offering incentives to residential property owners (gift cards, cash, discounts, vouchers) to allow the contractor to inspect the roof or to file a roof claim with the owner’s insurer.

In addition, SB 76 prohibits a contractor from interpreting a property owner’s insurance policy or advising a property owner about insurance coverage under the insurance policy. An exception to these prohibitions in legislation exists in situations where the contractor is also a licensed public expert. Finally, SB 76 prohibits contractors from performing repairs for an insured owner without first providing the owner with a detailed estimate. The law states that any umbrella contractor (either directly or through their employees and agents) can be fined up to $ 10,000 for violations.

Florida Governor Ron DeSantis is expected to sign Act SB 76, which will come into effect July 1, 2021.