Florida Senate - 2011                        COMMITTEE AMENDMENT
       Bill No. SB 408
                                Barcode 599640                          
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                   Comm: WD            .                                
                  02/22/2011           .                                

       The Committee on Banking and Insurance (Fasano) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete lines 2790 - 2929
    4  and insert:
    5         627.707 Standards for Investigation of sinkhole claims by
    6  insurers; insurer payment; nonrenewals.—Upon receipt of a claim
    7  for a sinkhole loss to a covered building or other structure, an
    8  insurer must meet the following standards in investigating a
    9  claim:
   10         (1) The insurer must inspect make an inspection of the
   11  policyholder’s insured’s premises to determine if there is
   12  structural has been physical damage that to the structure which
   13  may be the result of sinkhole activity.
   14         (2) If the insurer confirms that structural damage exists
   15  but is unable to exclude sinkhole activity as a contributing
   16  cause of the structural damage Following the insurer’s initial
   17  inspection, the insurer shall engage a professional engineer or
   18  a professional geologist to conduct testing as provided in s.
   19  627.7072 to determine the cause of the loss within a reasonable
   20  professional probability and issue a report as provided in s.
   21  627.7073, only if sinkhole loss is covered under the policy.
   22  Except as provided in subsection (6), the fees and costs of the
   23  professional engineer or professional geologist shall be paid by
   24  the insurer.:
   25         (a) The insurer is unable to identify a valid cause of the
   26  damage or discovers damage to the structure which is consistent
   27  with sinkhole loss; or
   28         (b) The policyholder demands testing in accordance with
   29  this section or s. 627.7072.
   30         (3) Following the initial inspection of the policyholder’s
   31  insured premises, the insurer shall provide two copies of the
   32  signed and sealed engineer’s or geologist’s report, if any, and
   33  written notice to the policyholder disclosing the following
   34  information:
   35         (a) What the insurer has determined to be the cause of
   36  damage, if the insurer has made such a determination.
   37         (b) A statement of the circumstances under which the
   38  insurer is required to engage a professional engineer or a
   39  professional geologist to verify or eliminate sinkhole loss and
   40  to engage a professional engineer to make recommendations
   41  regarding land and building stabilization and foundation repair.
   42         (c) A statement regarding the right of the policyholder to
   43  request testing by a professional engineer or a professional
   44  geologist and the circumstances under which the policyholder may
   45  demand certain testing.
   46         (4) If the insurer determines that there is no sinkhole
   47  loss, the insurer may deny the claim. If coverage for sinkhole
   48  loss is available and If the insurer denies the claim, without
   49  performing testing under s. 627.7072, the policyholder may
   50  demand testing by the insurer under s. 627.7072. The
   51  policyholder’s demand for testing must be communicated to the
   52  insurer in writing within 90 days after the policyholder’s
   53  receipt of the insurer’s denial of the claim. The policyholder
   54  may, at the policyholder’s expense, retain a qualified
   55  professional engineer or professional geologist to conduct such
   56  testing in order to dispute the findings of the professional
   57  engineer or professional geologist retained by the insurer as to
   58  the presence or absence of a sinkhole loss, or to render such
   59  findings if the insurer denied the claim without performing
   60  testing.
   61         (5)(a)Subject to paragraph (b), If a sinkhole loss is
   62  verified, the insurer shall pay to stabilize the land and
   63  building and repair the foundation in accordance with the
   64  recommendations of the professional engineer retained pursuant
   65  to subsection (2), as provided under s. 627.7073, and in
   66  consultation with notice to the policyholder, subject to the
   67  coverage and terms of the policy. The insurer shall pay for
   68  other repairs to the structure and contents in accordance with
   69  the terms of the policy. The policyholder may, at the
   70  policyholder’s expense, retain a qualified professional engineer
   71  to dispute the findings of the professional engineer retained by
   72  the insurer as to the appropriate and structurally necessary
   73  method of land and building stabilization and foundation repair.
   74         (a)(b) The insurer may limit its total claims payment to
   75  the actual cash value of the sinkhole loss, which does not
   76  include including underpinning or grouting or any other repair
   77  technique performed below the existing foundation of the
   78  building, until the policyholder enters into a contract for the
   79  performance of building stabilization or foundation repairs in
   80  accordance with the recommendations set forth in s. 627.7073.
   81         (b) In order to prevent additional damage to the building
   82  or structure, the policyholder shall enter into a contract for
   83  the performance of building stabilization or foundation repairs
   84  within 90 days after the insurance company confirms coverage for
   85  sinkhole loss and notifies the policyholder of such confirmation
   86  and the time limitations of this paragraph. The time period is
   87  tolled if either party invokes the neutral evaluation process or
   88  if the policyholder takes reasonable steps toward retaining a
   89  qualified professional engineer to dispute the findings of the
   90  professional engineer retained by the insurer. Under such
   91  circumstances, the policyholder has 90 days to enter into the
   92  contract for repairs after the date the insurer agrees in
   93  writing to authorize the repairs recommended by the professional
   94  engineer retained by the policyholder or after the date any
   95  resulting dispute is resolved by litigation or appraisal.
   96         (c) After the policyholder enters into the contract for the
   97  performance of building stabilization or foundation repairs, the
   98  insurer shall pay the amounts necessary to begin and perform
   99  such repairs as the work is performed and the expenses are
  100  incurred. The insurer may not require the policyholder to
  101  advance payment for such repairs. If repair covered by a
  102  personal lines residential property insurance policy has begun
  103  and the professional engineer selected or approved by the
  104  insurer determines that the repair cannot be completed within
  105  the policy limits, the insurer must either complete the
  106  professional engineer’s recommended repair or tender the policy
  107  limits to the policyholder without a reduction for the repair
  108  expenses incurred.
  109         (d) The stabilization and all other repairs to the
  110  structure and contents must be completed within 12 months after
  111  entering into the contract for repairs described in paragraph
  112  (b) unless:
  113         1. There is a mutual agreement between the insurer and the
  114  policyholder;
  115         2. The claim is involved with the neutral evaluation
  116  process;
  117         3. The claim is in litigation; or
  118         4. The claim is under appraisal.
  119         (e)(c) Upon the insurer’s obtaining the written approval of
  120  all named policyholders and the policyholder and any other
  121  lienholder, the insurer may make payment directly to the persons
  122  selected by the policyholder to perform the land and building
  123  stabilization and foundation repairs. The decision by the
  124  insurer to make payment to such persons does not hold the
  125  insurer liable for the work performed. The policyholder may not
  126  accept a rebate from any person performing the repairs specified
  127  in this section. If a policyholder does receive a rebate,
  128  coverage is void ab initio and the policyholder must refund any
  129  payments made under such coverage. Any person making the repairs
  130  specified in this section who offers a rebate, or any
  131  policyholder who accepts a rebate for such repairs, commits
  132  insurance fraud, punishable as a third-degree felony as provided
  133  in s. 775.082, s. 775.083, or s. 775.084.
  134         (6) Except as provided in subsection (7), the fees and
  135  costs of the professional engineer or the professional geologist
  136  shall be paid by the insurer.
  137         (6)(7) If the insurer obtains, pursuant to s. 627.7073,
  138  written certification that there is no sinkhole loss and the
  139  policyholder does not subsequently obtain a contrary written
  140  certification from a neutral evaluator or other qualified
  141  professional engineer or professional geologist or that the
  142  cause of the damage was not sinkhole activity, and if the
  143  policyholder has submitted the sinkhole claim without good faith
  144  grounds for submitting such claim, the policyholder shall
  145  reimburse the insurer for 50 percent of the actual costs of the
  146  analyses and services provided under ss. 627.7072 and 627.7073;
  147  however, a policyholder is not required to reimburse an insurer
  148  more than the deductible or $2,500, whichever is greater, with
  149  respect to any claim. A policyholder is required to pay
  150  reimbursement under this subsection only if the insurer, before
  151  prior to ordering the analysis under s. 627.7072, informs the
  152  policyholder in writing of the policyholder’s potential
  153  liability for reimbursement and gives the policyholder the
  154  opportunity to withdraw the claim.
  155         (7)(8)An No insurer may not shall nonrenew any policy of
  156  property insurance on the basis of filing of claims for partial
  157  loss caused by sinkhole damage or clay shrinkage if as long as
  158  the total of such payments does not equal or exceed the current
  159  policy limits of coverage for the policy in effect on the date
  160  of loss, for property damage to the covered building, as set
  161  forth on the declarations page, or if and provided the
  162  policyholder insured has repaired the structure in accordance
  163  with the engineering recommendations made pursuant to subsection
  164  (2) upon which any payment or policy proceeds were based. If the
  165  insurer pays such limits, it may nonrenew the policy.
  166         (8)(9) The insurer and policyholder may engage a
  167  professional structural engineer to make recommendations as to
  168  the repair of the structure.
  170         Delete line 2967
  171  and insert:
  172         (c) If the policyholder disagrees with the findings,
  173  opinions, or recommendations of the professional engineer or
  174  professional geologist retained by the insurer, the policyholder
  175  may, at the policyholder’s expense, retain a qualified
  176  professional engineer or professional geologist to conduct
  177  testing under s. 627.7072 and render independent findings,
  178  opinions, and recommendations as to the cause of the distress to
  179  the property and the appropriate method of land and building
  180  stabilization and foundation repair.
  181         (d) Unless the policyholder engages another qualified
  182  professional engineer or professional geologist as described in
  183  paragraph (c), the respective findings, opinions, and
  184  recommendations
  186  ================= T I T L E  A M E N D M E N T ================
  187         And the title is amended as follows:
  188         Delete lines 166 - 176
  189  and insert:
  190         investigation of sinkholes by insurers; providing a
  191         time limitation for demanding sinkhole testing by a
  192         policyholder and entering into a contract for repairs;
  193         authorizing a policyholder to retain a professional
  194         engineer or geologist at the policyholder’s expense to
  195         conduct testing or dispute findings; requiring all
  196         repairs to be completed within a certain time;
  197         providing exceptions; providing a criminal penalty for
  198         offering a rebate or for accepting a rebate from
  199         persons performing repairs; amending s. 627.7073,
  200         F.S.; revising provisions relating to inspection
  201         reports; authorizing a policyholder to retain a
  202         professional engineer or geologist at the
  203         policyholder’s expense to render independent findings;
  204         providing that the