HB 1745

CS

CHAMBER ACTION

1	The Commerce Council recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to residential property insurance;
7	amending s. 215.555, F.S.; revising provisions relating to
8	calculation of an insurer's retention for purposes of
9	reimbursement from the Florida Hurricane Catastrophe Fund;
10	amending s. 627.4133, F.S.; prohibiting insurers from
11	canceling or nonrenewing residential property insurance
12	policies under certain emergency circumstances; providing
13	exceptions; providing notice requirements; providing
14	application to personal residential and commercial
15	residential policies covering certain damaged property;
16	prohibiting an insurer from canceling or nonrenewing
17	certain property insurance policies covering certain
18	property; providing an exception; amending s. 627.4143,
19	F.S.; requiring private passenger motor vehicle insurance
20	policies to contain an outline of coverage; prohibiting
21	delivery or issuance of basic homeowner's, mobile home
22	owner's, condominium unit owner's, and dwelling policies
23	without a comprehensive checklist and outline of coverage;
24	specifying checklist and outline of coverage contents;
25	requiring the checklist and outline of coverage to be sent
26	with each renewal of personal lines residential insurance
27	policies; specifying application of the checklist and
28	outline of coverage to basic homeowner's, mobile home
29	owner's, condominium unit owner's, and dwelling policies;
30	amending s. 627.701, F.S.; revising a limitation on a
31	deductible amount attributable to hurricane or wind
32	losses; providing for computation and display of the
33	dollar value of hurricane deductibles; requiring insurers
34	to compute and display actual dollar values of certain
35	riders for certain policies; providing additional notice
36	requirements for certain deductible amounts; requiring
37	insurers to notify applicants or policyholders of the
38	availability and amounts of certain discounts, credits,
39	rate differentials, or reductions in deductibles for
40	properties on which certain fixtures have been installed
41	or construction techniques have been implemented;
42	requiring insurers to provide qualifying information;
43	authorizing the Financial Services Commission to adopt
44	rules; providing for application of hurricane deductibles
45	for certain personal lines residential property insurance
46	policies; requiring insurers to offer commercial
47	residential property insurance policyholders certain
48	alternative hurricane deductibles; providing effective
49	dates.
50
51	Be It Enacted by the Legislature of the State of Florida:
52
53	Section 1.  Paragraph (e) of subsection (2) of section
54	215.555, Florida Statutes, is amended to read:
55	215.555  Florida Hurricane Catastrophe Fund.--
56	(2)  DEFINITIONS.--As used in this section:
57	(e)  "Retention" means the amount of losses below which an
58	insurer is not entitled to reimbursement from the fund. An
59	insurer's retention shall be calculated as follows:
60	1.  The board shall calculate and report to each insurer
61	the retention multiples for that year. For the contract year
62	beginning June 1, 2005 2004, the retention multiple shall be
63	equal to $4 $4.5 billion divided by the total estimated
64	reimbursement premium for the contract year; for subsequent
65	years, the retention multiple shall be equal to $4 $4.5 billion,
66	adjusted based upon the reported exposure from the prior
67	contract year to reflect the percentage growth in exposure to
68	the fund for covered policies since 2004 2003, divided by the
69	total estimated reimbursement premium for the contract year.
70	Total reimbursement premium for purposes of the calculation
71	under this subparagraph shall be estimated using the assumption
72	that all insurers have selected the 90-percent coverage level.
73	2.  The retention multiple as determined under subparagraph
74	1. shall be adjusted to reflect the coverage level elected by
75	the insurer. For insurers electing the 90-percent coverage
76	level, the adjusted retention multiple is 100 percent of the
77	amount determined under subparagraph 1. For insurers electing
78	the 75-percent coverage level, the retention multiple is 120
79	percent of the amount determined under subparagraph 1. For
80	insurers electing the 45-percent coverage level, the adjusted
81	retention multiple is 200 percent of the amount determined under
82	subparagraph 1.
83	3.  An insurer shall determine its provisional retention by
84	multiplying its provisional reimbursement premium by the
85	applicable adjusted retention multiple and shall determine its
86	actual retention by multiplying its actual reimbursement premium
87	by the applicable adjusted retention multiple.
88	4.  For insurers who experience multiple covered events
89	causing loss during the contract year, beginning June 1, 2005,
90	each insurer's full retention shall be applied to the two
91	largest losses from the covered events for that insurer. For all
92	other covered events resulting in losses, the insurer's
93	retention shall be reduced to one-third of the full retention.
94	The reimbursement contract shall provide for the reimbursement
95	of losses for each covered event based on the full retention
96	with adjustments made to reflect the reduced retentions after
97	January 1 of the contract year provided the insurer reports its
98	losses as specified in the reimbursement contract.
99	Section 2.  Paragraphs (d) and (e) are added to subsection
100	(2) of section 627.4133, Florida Statutes, to read:
101	627.4133  Notice of cancellation, nonrenewal, or renewal
102	premium.--
103	(2)  With respect to any personal lines or commercial
104	residential property insurance policy, including, but not
105	limited to, any homeowner's, mobile home owner's, farmowner's,
106	condominium association, condominium unit owner's, apartment
107	building, or other policy covering a residential structure or
108	its contents:
109	(d)1.  Upon a declaration of an emergency pursuant to s.
110	252.36 and the filing of an order by the Commissioner of
111	Insurance Regulation, an insurer may not cancel or nonrenew a
112	personal residential or commercial residential property
113	insurance policy covering a dwelling or residential property
114	located in this state that has been damaged as a result of a
115	hurricane or wind loss that is the subject of the declaration of
116	emergency for a period of 90 days after the dwelling or
117	residential property has been repaired. A structure is deemed to
118	be repaired when substantially completed and restored to the
119	extent that it is insurable by another authorized insurer that
120	is writing policies in this state.
121	2.  However, an insurer or agent may cancel or nonrenew
122	such a policy prior to the repair of the dwelling or residential
123	property:
124	a.  Upon 10 days' notice for nonpayment of premium; or
125	b.  Upon 45 days' notice:
126	(I)  For a material misstatement or fraud related to the
127	claim;
128	(II)  If the insurer can demonstrate that the insured has
129	unreasonably caused a delay in the repair of the dwelling; or
130	(III)  If the insurer has paid policy limits.
131	3.  If the insurer elects to nonrenew a policy covering a
132	property that has been damaged, the insurer shall provide at
133	least 90 days' notice to the insured that the insurer intends to
134	nonrenew the policy 90 days after the dwelling or residential
135	property has been repaired. Nothing in this paragraph shall
136	prevent the insurer from canceling or nonrenewing the policy 90
137	days after the repairs are complete for the same reasons the
138	insurer would otherwise have canceled or nonrenewed the policy
139	but for the limitations of subparagraph 1. The Financial
140	Services Commission may adopt rules, and the Commissioner of
141	Insurance Regulation may issue orders, necessary to implement
142	this paragraph.
143	4.  This paragraph shall also apply to personal residential
144	and commercial residential policies covering property that was
145	damaged as the result of Tropical Storm Bonnie, Hurricane
146	Charley, Hurricane Frances, Hurricane Ivan, or Hurricane Jeanne.
147	(e)  Upon declaration of a hurricane by the National
148	Hurricane Center of the National Weather Service for the time
149	period specified in s. 627.4025(2)(c), an insurer may not cancel
150	or nonrenew a personal residential or commercial residential
151	property insurance policy covering a dwelling or residential
152	property located in this state except that an insurer or agent
153	may cancel or nonrenew such a policy upon 10 days' notice, as
154	evidenced by certified restricted delivery, for nonpayment of
155	premium.
156	Section 3.  Effective October 1, 2005, section 627.4143,
157	Florida Statutes, is amended to read:
158	627.4143  Outline of coverage.--
159	(1)  No private passenger automobile or basic homeowner's
160	policy shall be delivered or issued for delivery in this state
161	unless an appropriate outline of coverage has been delivered
162	prior to issuance of the policy or accompanies the policy when
163	issued.
164	(2)  The outline of coverage for a private passenger motor
165	vehicle insurance policy shall contain all of the following:
166	(a)  A brief description of the principal benefits and
167	coverage provided in the policy, broken down by each class or
168	type of coverage provided under the policy for which a premium
169	is charged, and itemization of the applicable premium.
170	(b)  A summary statement of the principal exclusions and
171	limitations or reductions contained in the policy by class or
172	type, including, but not limited to, deductibles, coinsurance,
173	and any other limitations or reductions.
174	(c)  A summary statement of any renewal or cancellation
175	provisions.
176	(d)  A description of the credit or surcharge plan that is
177	being applied. The description may display numerical or
178	alphabetical codes on the declarations page or premium notice to
179	enable the insured to determine the reason or reasons why her or
180	his policy is being surcharged or is receiving a credit.
181	(e)  A list of any additional coverage provided through any
182	rider or endorsement which accompanies the policy. The list
183	shall contain a descriptive reference to each additional
184	coverage, rather than solely a reference to a form or code
185	number.
186	(f)  For a private passenger motor vehicle insurance
187	policy, The extent of coverage provided to the insured in the
188	event of collision damage to a rental vehicle rented by the
189	insured. The proof-of-insurance card required by s. 316.646 must
190	also specify whether rental car coverage is provided, and may
191	refer to the outline of coverage as to the details or extent of
192	coverage.
193	(3)  A basic homeowner's, mobile home owner's, condominium
194	unit owner's, or dwelling policy may not be delivered or issued
195	for delivery in this state unless a comprehensive checklist of
196	coverage, on a form adopted by the commission, and an
197	appropriate outline of coverage have been delivered prior to
198	issuance of the policy or accompanies the policy when issued.
199	The commission shall, by rule, adopt a form for the checklist
200	for each type of policy to which this subsection applies. Each
201	form shall indicate that it was adopted by the commission.
202	(a)  The checklist must contain a list of the standard
203	provisions and elements that may typically be included in such
204	policies, whether or not they are included in the particular
205	policy being issued, in a format that allows the insurer to
206	place a check mark next to the provision's elements that are
207	included so the consumer can see what is included and what is
208	not included in the policy. As an alternative to checking the
209	boxes on the checklist, an insurer may delete the check boxes
210	from the form and replace them with text indicating whether the
211	provision's elements are included or not. Limits of liability
212	shall be listed for each item. The checklist must include, but
213	is not limited to, the following:
214	1.  Property coverage for the principal premises shown in
215	the declarations.
216	2.  Property coverage for other structures on the residence
217	premises.
218	3.  Whether the principal premises and other structures are
219	insured against the following perils:
220	a.  Fire.
221	b.  Lightning.
222	c.  Explosion.
223	d.  Hurricane loss.
224	e.  Nonhurricane wind loss.
225	f.  Collapse.
226	g.  Mold.
227	h.  Sinkhole loss.
228	i.  Vandalism.
229	4.  Personal property coverage.
230	5.  Whether personal property is insured against the
231	following perils:
232	a.  Fire.
233	b.  Lightning.
234	c.  Hurricane loss.
235	d.  Nonhurricane wind loss.
236	e.  Collapse.
237	f.  Mold.
238	g.  Sinkhole loss.
239	h.  Theft.
240	6.  The following additional coverages:
241	a.  Debris removal.
242	b.  Loss assessment.
243	c.  Additional living expenses.
244	7.  Personal liability coverage.
245	8.  Medical payments coverage.
246	9.  Discounts applied to the premium.
247	10.  Deductibles for loss due to hurricane and loss to
248	other perils.
249	11.  Building ordinance or law coverage.
250	12.  Replacement cost coverage.
251	13.  Actual cash value coverage.
252	(b)  The forms shall allow insurers to place other
253	coverages on the checklists which may or may not be included in
254	the insurer's policies.
255	(c)  The outline of coverage must contain:
256	1.  A brief description of the principal benefits and
257	coverage provided in the policy, itemized by each class or type
258	of coverage provided under the policy for which a premium is
259	charged, and itemization of the applicable premium.
260	2.  A summary statement of the principal exclusions and
261	limitations or reductions contained in the policy by class or
262	type, including, but not limited to, deductibles, coinsurance,
263	and any other limitations or reductions.
264	3.  A summary statement of any renewal or cancellation
265	provisions.
266	4.  A description of the credit or surcharge plan that is
267	being applied. The description may display numerical or
268	alphabetical codes on the declarations page or premium notice to
269	enable the insured to determine the reason or reasons why her or
270	his policy is being surcharged or is receiving a credit.
271	5.  A summary of any additional coverage provided through
272	any rider or endorsement that accompanies the policy.
273	(4)(3)  The outline of coverage for a private passenger
274	motor vehicle policy is required only on the initial policy
275	issued by an insurer. The outline of coverage and the checklist
276	for a basic homeowner's, mobile home owner's, condominium unit
277	owner's, or dwelling policy are required on the initial policy
278	and each renewal thereof issued by an insurer.
279	(5)(4)  An insurer must insert the following language on
280	the outline of coverage:
281
282	"The following outline of coverage or checklist is for
283	informational purposes only. Florida law prohibits this outline
284	or checklist from changing any of the provisions of the
285	insurance contract which is the subject of this outline. Any
286	endorsement regarding changes in types of coverage, exclusions,
287	limitations, reductions, deductibles, coinsurance, renewal
288	provisions, cancellation provisions, surcharges, or credits will
289	be sent separately."
290
291	(7)(5)  Neither this section nor the outline of coverage or
292	checklist mandated by this section alters or modifies the terms
293	of the insurance contract, creates a cause of action, or is
294	admissible in any civil action.
295	Section 4.  Paragraph (a) of subsection (3) and subsection
296	(4) of section 627.701, Florida Statutes, are amended to read:
297	627.701  Liability of insureds; coinsurance; deductibles.--
298	(3)(a)  A policy of residential property insurance shall
299	include a deductible amount applicable to hurricane or wind
300	losses no lower than $500 and no higher than 2 percent of the
301	policy dwelling limits with respect to personal lines
302	residential risks, and no higher than 3 percent of the policy
303	limits with respect to commercial lines residential risks;
304	however, if a risk was covered on August 24, 1992, under a
305	policy having a higher deductible than the deductibles allowed
306	by this paragraph, a policy covering such risk may include a
307	deductible no higher than the deductible in effect on August 24,
308	1992. Notwithstanding the other provisions of this paragraph, a
309	personal lines residential policy covering a risk valued at
310	$50,000 or less may include a deductible amount attributable to
311	hurricane or wind losses no lower than $250, and a personal
312	lines residential policy covering a risk valued at $100,000 or
313	more may include a deductible amount attributable to hurricane
314	or wind losses no higher than 10 5 percent of the policy limits
315	unless subject to a higher deductible on August 24, 1992;
316	however, no maximum deductible is required with respect to a
317	personal lines residential policy covering a risk valued at more
318	than $500,000. An insurer may require a higher deductible,
319	provided such deductible is the same as or similar to a
320	deductible program lawfully in effect on June 14, 1995. In
321	addition to the deductible amounts authorized by this paragraph,
322	an insurer may also offer policies with a copayment provision
323	under which, after exhaustion of the deductible, the
324	policyholder is responsible for 10 percent of the next $10,000
325	of insured hurricane or wind losses.
326	(4)(a)  Any policy that contains a separate hurricane
327	deductible must on its face include in boldfaced type no smaller
328	than 18 points the following statement: "THIS POLICY CONTAINS A
329	SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN
330	HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy containing a
331	coinsurance provision applicable to hurricane losses must on its
332	face include in boldfaced type no smaller than 18 points the
333	following statement: "THIS POLICY CONTAINS A CO-PAY PROVISION
334	THAT MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU."
335	(b)  Beginning October 1, 2005, for any personal lines
336	residential property insurance policy containing a separate
337	hurricane deductible, the insurer shall compute and prominently
338	display the actual dollar value of the hurricane deductible on
339	the declarations page of the policy at issuance and, for
340	renewal, on the renewal declarations page of the policy or on
341	the premium renewal notice.
342	(c)  Beginning October 1, 2005, for any personal lines
343	residential property insurance policy containing an inflation
344	guard rider, the insurer shall compute and prominently display
345	the actual dollar value of the hurricane deductible on the
346	declarations page of the policy at issuance and, for renewal, on
347	the renewal declarations page of the policy or on the premium
348	renewal notice. In addition, beginning October 1, 2005, for any
349	personal lines residential property insurance policy containing
350	an inflation guard rider, the insurer shall notify the
351	policyholder of the possibility that the hurricane deductible
352	may be higher than indicated when loss occurs due to application
353	of the inflation guard rider. Such notification shall be made on
354	the declarations page of the policy at issuance and, for
355	renewal, on the renewal declarations page of the policy or on
356	the premium renewal notice.
357	Section 5.  Effective October 1, 2005, subsection (10) is
358	added to section 627.701, Florida Statutes, to read:
359	627.701  Liability of insureds; coinsurance; deductibles.--
360	(10)  Using a form prescribed by the Office of Insurance
361	Regulation, the insurer shall clearly notify the applicant or
362	policyholder of any personal lines residential property
363	insurance policy, at the time of the issuance of the policy and
364	at each renewal, of the availability and the range of each
365	premium discount, credit, other rate differential, or reduction
366	in deductibles for properties on which fixtures or construction
367	techniques demonstrated to reduce the amount of loss in a
368	windstorm can or have been installed or implemented. The
369	prescribed form shall describe generally what actions the
370	policyholders may be able to take to reduce their windstorm
371	premium. The prescribed form and a list of such ranges approved
372	by the office for each insurer licensed in the state and
373	providing such discounts, credits, other rate differentials, or
374	reductions in deductibles for properties described in this
375	subsection shall be available for electronic viewing and
376	download from the Department of Financial Services' or the
377	Office of Insurance Regulation's Internet website. The Financial
378	Services Commission may adopt rules to implement this
379	subsection.
380	Section 6.  Subsection (5) of section 627.701, Florida
381	Statutes, as created by section 4 of chapter 2004-480, Laws of
382	Florida, is amended to read:
383	627.701  Liability of insureds; coinsurance; deductibles.--
384	(5)(a)  The hurricane deductible of any personal lines
385	residential property insurance policy issued or renewed on or
386	after May 1, 2005, shall be applied as follows:
387	1.(a)  The hurricane deductible shall apply on an annual
388	basis to all covered hurricane losses that occur during the
389	calendar year for losses that are covered under one or more
390	policies issued by the same insurer or an insurer in the same
391	insurer group.
392	2.(b)  If a hurricane deductible applies separately to each
393	of one or more structures insured under a single policy, the
394	requirements of this paragraph subsection apply with respect to
395	the deductible for each structure.
396	3.(c)  If there was a hurricane loss for a prior hurricane
397	or hurricanes during the calendar year, the insurer may apply a
398	deductible to a subsequent hurricane which deductible that is
399	the greater of the remaining amount of the hurricane deductible
400	or the amount of the deductible that applies to perils other
401	than a hurricane. Insurers may require policyholders to report
402	hurricane losses that are below the hurricane deductible or to
403	maintain receipts or other records of such hurricane losses in
404	order to apply such losses to subsequent hurricane claims.
405	4.(d)  If there are hurricane losses in a calendar year on
406	more than one policy issued by the same insurer or an insurer in
407	the same insurer group, the hurricane deductible shall be the
408	highest amount stated in any one of the policies. If a
409	policyholder who had a hurricane loss under the prior policy is
410	provided or offered a lower hurricane deductible under the new
411	or renewal policy, the insurer must notify the policyholder, in
412	writing, at the time the lower hurricane deductible is provided
413	or offered, that the lower hurricane deductible will not apply
414	until January 1 of the following calendar year.
415	(b)  For any commercial residential property insurance
416	policy issued or renewed on or after January 1, 2006, the
417	insurer must offer the policyholder the following alternative
418	hurricane deductibles:
419	1.  A hurricane deductible that applies on an annual basis
420	as provided in paragraph (a).
421	2.  A hurricane deductible that applies to each hurricane.
422	Section 7.  Except as otherwise provided herein, this act
423	shall take effect upon becoming a law.

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