HB 1745

1
A bill to be entitled
2An act relating to residential property insurance;
3amending s. 215.555, F.S.; revising provisions relating to
4calculation of an insurer's retention; amending s.
5627.4133, F.S.; prohibiting insurers from canceling or
6nonrenewing residential property insurance policies under
7certain emergency circumstances; providing exceptions;
8providing notice requirements; providing application to
9personal residential and commercial residential policies
10covering certain damaged property; amending s. 627.4143,
11F.S.; limiting certain outline of coverage requirements to
12private passenger motor vehicle insurance policies;
13providing legislative findings and intent; requiring
14personal lines property insurance policies to contain an
15outline of coverage and a checklist for disclosure of
16coverage information contained in the policies; specifying
17checklist and outline of coverage contents; requiring the
18checklist and outline of coverage to be sent with each
19renewal of personal lines residential insurance policies;
20specifying application of the checklist and outline of
21coverage to basic homeowners', mobile homeowners',
22condominium unit owners', and dwelling policies;
23authorizing the Financial Services Commission to adopt
24rules; amending s. 627.701, F.S.; providing for
25computation and display of the dollar value of hurricane
26deductibles; requiring insurers to notify applicants or
27policyholders of the availability and amounts of certain
28discounts, credits, rate differentials, or reductions in
29deductibles for properties on which certain fixtures have
30been installed or construction techniques have been
31implemented; requiring insurers to provide qualifying
32information; authorizing the Financial Services Commission
33to adopt rules; providing for approval of certain
34disclosure materials by the Office of Insurance
35Regulation; providing for application of hurricane
36deductibles for certain personal lines residential
37property insurance policies; requiring insurers to offer
38commercial residential property insurance policyholders
39certain alternative hurricane deductibles; providing
40effective dates.
41
42Be It Enacted by the Legislature of the State of Florida:
43
44     Section 1.  Paragraph (e) of subsection (2) of section
45215.555, Florida Statutes, is amended to read:
46     215.555  Florida Hurricane Catastrophe Fund.--
47     (2)  DEFINITIONS.--As used in this section:
48     (e)  "Retention" means the amount of losses below which an
49insurer is not entitled to reimbursement from the fund. An
50insurer's retention shall be calculated as follows:
51     1.  The board shall calculate and report to each insurer
52the retention multiples for that year. For the contract year
53beginning June 1, 2005 2004, the retention multiple shall be
54equal to $4 $4.5 billion divided by the total estimated
55reimbursement premium for the contract year; for subsequent
56years, the retention multiple shall be equal to $4 $4.5 billion,
57adjusted based upon the reported exposure from the prior
58contract year to reflect the percentage growth in exposure to
59the fund for covered policies since 2004 2003, divided by the
60total estimated reimbursement premium for the contract year.
61Total reimbursement premium for purposes of the calculation
62under this subparagraph shall be estimated using the assumption
63that all insurers have selected the 90-percent coverage level.
64     2.  The retention multiple as determined under subparagraph
651. shall be adjusted to reflect the coverage level elected by
66the insurer. For insurers electing the 90-percent coverage
67level, the adjusted retention multiple is 100 percent of the
68amount determined under subparagraph 1. For insurers electing
69the 75-percent coverage level, the retention multiple is 120
70percent of the amount determined under subparagraph 1. For
71insurers electing the 45-percent coverage level, the adjusted
72retention multiple is 200 percent of the amount determined under
73subparagraph 1.
74     3.  An insurer shall determine its provisional retention by
75multiplying its provisional reimbursement premium by the
76applicable adjusted retention multiple and shall determine its
77actual retention by multiplying its actual reimbursement premium
78by the applicable adjusted retention multiple.
79     4.  For insurers who experience multiple covered events
80causing loss during the contract year, beginning June 1, 2005,
81each insurer's full retention shall be applied to the two
82largest losses from the covered events for that insurer. For all
83other covered events resulting in losses, the insurer's
84retention shall be reduced to one-third of the full retention.
85The reimbursement contract shall provide for the reimbursement
86of losses for each covered event based on the full retention
87with adjustments made to reflect the reduced retentions after
88January 1 of the contract year provided the insurer reports its
89losses as specified in the reimbursement contract.
90     Section 2.  Paragraph (d) is added to subsection (2) of
91section 627.4133, Florida Statutes, to read:
92     627.4133  Notice of cancellation, nonrenewal, or renewal
93premium.--
94     (2)  With respect to any personal lines or commercial
95residential property insurance policy, including, but not
96limited to, any homeowner's, mobile home owner's, farmowner's,
97condominium association, condominium unit owner's, apartment
98building, or other policy covering a residential structure or
99its contents:
100     (d)1.  Upon a declaration of an emergency pursuant to s.
101252.36 and the filing of an order by the Commissioner of
102Insurance Regulation, an insurer may not cancel or nonrenew a
103personal residential or commercial residential property
104insurance policy covering a dwelling or residential property
105located in this state that has been damaged as a result of a
106hurricane or wind loss that is the subject of the declaration of
107emergency for a period of 60 days after the dwelling or
108residential property has been repaired. A structure is deemed to
109be repaired when substantially completed and restored to the
110extent that it is insurable by another authorized insurer that
111is writing policies in this state.
112     2.  However, an insurer or agent may cancel or nonrenew
113such a policy prior to the repair of the dwelling or residential
114property:
115     a.  Upon 10 days' notice for nonpayment of premium; or
116     b.  Upon 45 days' notice:
117     (I)  For a material misstatement or fraud related to the
118claim;
119     (II)  If the insurer can demonstrate that the insured has
120unreasonably caused a delay in the repair of the dwelling; or
121     (III)  If the insurer has paid policy limits, provided the
122insurer has offered the insured a builder's risk or similar
123policy that would cover the property until completion of
124repairs.
125     3.  If the insurer elects to nonrenew a policy covering a
126property that has been damaged, the insurer shall provide at
127least 60 days' notice to the insured that the insurer intends to
128nonrenew the policy 60 days after the dwelling or residential
129property has been repaired. Nothing in this paragraph shall
130prevent the insurer from canceling or nonrenewing the policy 60
131days after the repairs are complete for the same reasons the
132insurer would otherwise have canceled or nonrenewed the policy
133but for the limitations of subparagraph 1. The Financial
134Services Commission may adopt rules, and the Commissioner of
135Insurance Regulation may issue orders, necessary to implement
136this paragraph.
137     4.  This paragraph shall also apply to personal residential
138and commercial residential policies covering property that was
139damaged as the result of Tropical Storm Bonnie, Hurricane
140Charley, Hurricane Frances, Hurricane Ivan, or Hurricane Jeanne.
141     Section 3.  Effective October 1, 2005, section 627.4143,
142Florida Statutes, is amended to read:
143     627.4143  Outline of coverage.--
144     (1)  No private passenger motor vehicle automobile or basic
145homeowner's policy shall be delivered or issued for delivery in
146this state unless an appropriate outline of coverage has been
147delivered prior to issuance of the policy or accompanies the
148policy when issued.
149     (2)  The outline of coverage for a private passenger motor
150vehicle insurance policy shall contain all of the following:
151     (a)  A brief description of the principal benefits and
152coverage provided in the policy, broken down by each class or
153type of coverage provided under the policy for which a premium
154is charged, and itemization of the applicable premium.
155     (b)  A summary statement of the principal exclusions and
156limitations or reductions contained in the policy by class or
157type, including, but not limited to, deductibles, coinsurance,
158and any other limitations or reductions.
159     (c)  A summary statement of any renewal or cancellation
160provisions.
161     (d)  A description of the credit or surcharge plan that is
162being applied. The description may display numerical or
163alphabetical codes on the declarations page or premium notice to
164enable the insured to determine the reason or reasons why her or
165his policy is being surcharged or is receiving a credit.
166     (e)  A list of any additional coverage provided through any
167rider or endorsement which accompanies the policy. The list
168shall contain a descriptive reference to each additional
169coverage, rather than solely a reference to a form or code
170number.
171     (f)  For a private passenger motor vehicle insurance
172policy, The extent of coverage provided to the insured in the
173event of collision damage to a rental vehicle rented by the
174insured. The proof-of-insurance card required by s. 316.646 must
175also specify whether rental car coverage is provided, and may
176refer to the outline of coverage as to the details or extent of
177coverage.
178     (3)  It is the intent of the Legislature to assist
179policyholders in understanding policy coverage, costs, and
180property replacement options in order to enable a policyholder
181to be better prepared in case of loss. The Legislature finds
182that the implementation of a checklist for disclosure of
183coverage information for homeowners', mobile homeowners',
184condominium unit owners', or dwelling residential property
185insurance written in clear and unambiguous language will aid
186policyholders in understanding their policy coverages, limits,
187and exclusions.
188     (4)  No basic homeowners', mobile homeowners', condominium
189unit owners', or dwelling policy shall be delivered or issued
190for delivery in this state unless a checklist of coverage and an
191appropriate outline of coverage have been delivered to the
192policyholder prior to issuance of the policy or accompany the
193policy when issued.
194     (a)  The checklist shall contain a list of the standard
195provisions and elements that may typically be included in such
196policies, regardless of whether they are included in the
197particular policy being issued, in a format that allows the
198insurer to place a check mark next to the provision's elements
199that are included so the consumer may see what is included and
200what is not included in the policy. Limits of liability shall be
201listed for each item. The checklist shall include, but is not
202limited to, the following:
203     1.  Covered real property. Items for this category shall be
204broader than simply listing "dwelling." The category shall
205include references to specific property in the category of
206attached and unattached structures that may be covered in a
207typical policy. The category shall include references to whether
208coverage for damaged property is based on replacement cost
209coverage or actual cash value coverage. Primary exclusions from
210real property coverage shall be listed after the real property
211coverage items.
212     2.  Personal property coverage. Primary exclusions from
213personal property coverage shall be listed after the items
214covered by personal property coverage.
215     3.  Personal liability coverage. Primary exclusions from
216personal liability coverage shall be listed after the items
217covered by personal liability coverage.
218     4.  Medical payments coverage.
219     5.  Primary discounts that are available.
220     6.  Hurricane deductibles that are available. The notice to
221consumers set forth in s. 627.701(4)(a) shall be set forth
222immediately following the list of deductibles.
223     7.  References to specific additional property coverage
224that may be provided through any rider or endorsement. This
225shall include building ordinance or law coverage; personal
226injury endorsements; motor vehicle endorsements; jewelry, fur,
227and communication property endorsements; home business
228endorsements; and replacement cost endorsement for contents.
229     8.  Covered perils.
230     9.  Excluded perils.
231     (b)  The outline of coverage shall contain:
232     1.  A brief description of the principal benefits and
233coverage provided in the policy, itemized by each class or type
234of coverage provided under the policy for which a premium is
235charged, and itemization of the applicable premium.
236     2.  A summary statement of the principal exclusions and
237limitations or reductions contained in the policy by class or
238type, including, but not limited to, deductibles, coinsurance,
239and any other limitations or reductions.
240     3.  A summary statement of any renewal or cancellation
241provisions.
242     4.  A description of the credit or surcharge plan that is
243being applied. The description may display numerical or
244alphabetical codes on the declarations page or premium notice to
245enable the insured to determine the reason or reasons that her
246or his policy is being surcharged or is receiving a credit.
247     5.  A summary of any additional coverage provided through
248any rider or endorsement that accompanies the policy.
249     (5)(3)  The outline of coverage for a private passenger
250motor vehicle policy is required only on the initial policy
251issued by an insurer. The outline of coverage and the checklist
252for a basic homeowners', mobile homeowners', condominium unit
253owners', or dwelling policy are required on the initial policy
254and each renewal thereof issued by an insurer.
255     (6)(4)  An insurer must insert the following language on
256the outline of coverage and the checklist:
257
258"The following outline of coverage or checklist is for
259informational purposes only. Florida law prohibits this outline
260or checklist from changing any of the provisions of the
261insurance contract which is the subject of this outline. Any
262endorsement regarding changes in types of coverage, exclusions,
263limitations, reductions, deductibles, coinsurance, renewal
264provisions, cancellation provisions, surcharges, or credits will
265be sent separately."
266
267     (7)(5)  Neither this section nor the outline of coverage or
268checklist mandated by this section alters or modifies the terms
269of the insurance contract, creates a cause of action, or is
270admissible in any civil action.
271     (8)  The Financial Services Commission may adopt rules to
272implement subsection (4) and the provisions of subsection (5)
273relating to a basic homeowners', mobile homeowners', condominium
274unit owners', or dwelling policy.
275     Section 4.  Effective October 1, 2005, subsection (4) of
276section 627.701, Florida Statutes, is amended, and subsection
277(10) is added to said section, to read:
278     627.701  Liability of insureds; coinsurance; deductibles.--
279     (4)(a)  Any policy that contains a separate hurricane
280deductible must on its face include in boldfaced type no smaller
281than 18 points the following statement: "THIS POLICY CONTAINS A
282SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN
283HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy containing a
284coinsurance provision applicable to hurricane losses must on its
285face include in boldfaced type no smaller than 18 points the
286following statement: "THIS POLICY CONTAINS A CO-PAY PROVISION
287THAT MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU."
288     (b)  For any personal lines residential property insurance
289policy containing a separate hurricane deductible, the insurer
290shall compute and prominently display the actual dollar value of
291the hurricane deductible on the declarations page of the policy
292and on the premium renewal notice.
293     (10)  For any personal lines residential property insurance
294policy, the insurer shall clearly notify the applicant or
295policyholder at the time of the initial quote for the policy and
296at the time of each renewal of the policy of the availability
297and amount of the premium discounts, credits, other rate
298differentials, or reductions in deductibles for properties on
299which fixtures have been installed or construction techniques
300have been implemented that have been demonstrated to reduce the
301amount of loss in a windstorm. For properties on which fixtures
302can or have been installed or construction techniques can or
303have been implemented that have been demonstrated to reduce the
304amount of loss in a windstorm, the insurer shall provide to the
305applicant or policyholder an explanation as to the actions that
306qualify for the premium discounts, credits, other rate
307differentials, or reductions in deductibles. The Financial
308Services Commission may adopt rules to implement this
309subsection. The Office of Insurance Regulation shall approve the
310disclosure materials required by this subsection to be provided
311by insurers to applicants or policyholders.
312     Section 5.  Subsection (5) of section 627.701, Florida
313Statutes, as created by section 4 of chapter 2004-480, Laws of
314Florida, is amended to read:
315     627.701  Liability of insureds; coinsurance; deductibles.--
316     (5)(a)  The hurricane deductible of any personal lines
317residential property insurance policy issued or renewed on or
318after May 1, 2005, shall be applied as follows:
319     1.(a)  The hurricane deductible shall apply on an annual
320basis to all covered hurricane losses that occur during the
321calendar year for losses that are covered under one or more
322policies issued by the same insurer or an insurer in the same
323insurer group.
324     2.(b)  If a hurricane deductible applies separately to each
325of one or more structures insured under a single policy, the
326requirements of this paragraph subsection apply with respect to
327the deductible for each structure.
328     3.(c)  If there was a hurricane loss for a prior hurricane
329or hurricanes during the calendar year, the insurer may apply a
330deductible to a subsequent hurricane which deductible that is
331the greater of the remaining amount of the hurricane deductible
332or the amount of the deductible that applies to perils other
333than a hurricane. Insurers may require policyholders to report
334hurricane losses that are below the hurricane deductible or to
335maintain receipts or other records of such hurricane losses in
336order to apply such losses to subsequent hurricane claims.
337     4.(d)  If there are hurricane losses in a calendar year on
338more than one policy issued by the same insurer or an insurer in
339the same insurer group, the hurricane deductible shall be the
340highest amount stated in any one of the policies. If a
341policyholder who had a hurricane loss under the prior policy is
342provided or offered a lower hurricane deductible under the new
343or renewal policy, the insurer must notify the policyholder, in
344writing, at the time the lower hurricane deductible is provided
345or offered, that the lower hurricane deductible will not apply
346until January 1 of the following calendar year.
347     (b)  For any commercial residential property insurance
348policy issued or renewed on or after January 1, 2006, the
349insurer must offer the policyholder the following alternative
350hurricane deductibles:
351     1.  A hurricane deductible that applies on an annual basis
352as provided in paragraph (a).
353     2.  A hurricane deductible that applies to each hurricane.
354     Section 6.  Except as otherwise provided herein, this act
355shall take effect upon becoming a law.


CODING: Words stricken are deletions; words underlined are additions.