Florida Senate - 2014 COMMITTEE AMENDMENT
Bill No. SB 416
Senate . House
Comm: RCS .
1 Senate Amendment (with title amendment)
3 Delete everything after the enacting clause
4 and insert:
5 Section 1. Paragraph (ee) of subsection (6) of section
6 627.351, Florida Statutes, is amended, present paragraphs (ff)
7 through (hh) of that subsection are redesignated as paragraphs
8 (gg) through (ii), respectively, and new paragraphs (ff) is
9 added to that subsection, to read:
10 627.351 Insurance risk apportionment plans.—
11 (6) CITIZENS PROPERTY INSURANCE CORPORATION.—
12 (ee) At least once every 6 months, the corporation shall
13 submit a report to the office disclosing:
14 1. The total number of requests received for residential
15 sinkhole loss coverage;
16 2. The total number of policies issued for residential
17 sinkhole loss coverage;
18 3. The total number of requests declined for residential
19 sinkhole loss coverage; and
20 4. The reasons for declining requests for residential
21 sinkhole loss coverage
The office may establish a pilot program
22 to offer optional sinkhole coverage in one or more counties or
23 other territories of the corporation for the purpose of
24 implementing s. 627.706, as amended by s. 30, chapter 2007-1,
25 Laws of Florida. Under the pilot program, the corporation is not
26 required to issue a notice of nonrenewal to exclude sinkhole
27 coverage upon the renewal of existing policies, but may exclude
28 such coverage using a notice of coverage change .
29 (ff) The Legislature finds that providing a program to
30 repair property damaged by sinkholes safeguards the public’s
31 health, safety, and welfare and that it is in the public’s
32 interest for sinkhole loss claims to be resolved by stabilizing
33 the land and structure and repairing the foundation of the
34 damaged structure. The Legislature further finds that, in the
35 past, many homeowners who obtained payouts from the corporation
36 for a sinkhole claim did not use the funds to repair or
37 remediate the claimed damage, thereby harming the real estate
38 marketability of their homes and the valuation of other homes in
39 the area. Therefore, the corporation shall establish a Citizens
40 Sinkhole Stabilization Repair Program to promote the repair and
41 remediation of sinkhole damage to homes. By March 31, 2015, any
42 claim against a corporation policy that covers residential
43 sinkhole loss for which it is determined that a covered sinkhole
44 loss has occurred must be included in and governed by the repair
45 program for the purpose of making stabilization repairs. The
46 determination of whether a policyholder has a covered sinkhole
47 loss will be made by the corporation or through neutral
48 evaluation, judicial decree, or final judgment.
49 1. As used in this paragraph, the term:
50 a. “Engineering report” means the report issued pursuant to
51 s. 627.7073(1).
52 b. “Neutral evaluation” and “neutral evaluator” have the
53 same meanings as provided in s. 627.706(2).
54 c. “Recommendation of the engineer” means the
55 recommendation of the professional engineer engaged by the
56 corporation and included in the report pursuant to s.
58 d. “Sinkhole loss” has the same meaning as provided in s.
60 e. “Stabilization repair” means stabilizing the land and
61 structure caused by sinkhole activity and repairing the damaged
63 f. “Stabilization repair contractor” means a contractor who
64 makes stabilization repairs.
65 2. The repair program shall be managed by the corporation
66 and must include the following components:
67 a. The policyholder may not be required to advance payment
68 for stabilization repairs.
69 b. Stabilization repairs must be conducted by a
70 stabilization repair contractor selected from an approved
71 stabilization repair contractor pool procured by the corporation
72 pursuant to an open and transparent process. Each contractor
73 within the pool must be qualified and approved by the
74 corporation based on criteria that include the following
76 (I) The stabilization repair contractor corporate entity
77 must demonstrate experience in the stabilization of sinkhole
78 activity pursuant to requirements established by the
80 (II) The stabilization repair contractor must be certified
81 as a contractor pursuant to s. 489.113(1).
82 (III) The stabilization repair contractor must demonstrate
83 capacity to be bonded and provide performance, surety, or other
84 bonds as described in this section, which may be supplemented by
85 additional requirements as determined by the corporation.
86 (IV) The stabilization repair contractor must demonstrate
87 that it meets insurance coverage requirements, including, but
88 not limited to, commercial general liability and workers’
89 compensation, established by the corporation.
90 (V) The stabilization repair contractor must maintain a
91 valid drug-free workplace program.
92 (VI) Such other requirements as may be established by the
94 c. Stabilization repair contractors selected from the
95 approved stabilization repair contractor pool shall conduct
96 stabilization repairs pursuant to a contract between the
97 contractor and the corporation. Such contract is not subject to
98 paragraph (e) or s. 287.057. Pursuant to the terms of the
99 contract, the selected contractor is solely responsible for the
100 performance of all necessary stabilization repairs specified in
101 the engineering report and the recommendations of the engineer.
102 d. The corporation shall develop a standard stabilization
103 repair contract for the purpose of conducting stabilization
104 repairs on all properties within the repair program. At a
105 minimum, the contract must require:
106 (I) The assigned stabilization repair contractor to
107 complete all stabilization repairs identified in the engineering
108 report based on line-item prices developed by the corporation
109 which reasonably reflect actual market prices for sinkhole
110 stabilization activities.
111 (II) Each stabilization repair contractor to post a payment
112 bond in favor of the corporation as obligee for each project
113 assigned and to post a performance bond, secured by a third
114 party surety, in favor of the corporation as obligee, in a
115 principal amount equal to the total cost of all contracts
116 annually awarded to that contractor.
117 (III) The stabilization repair contractor to provide a
118 warranty to the policyholder which covers all repairs provided
119 by the stabilization repair contractor for at least 5 years
120 after completion of the stabilization repairs. The corporation
121 shall also provide a warranty to the policyholder which covers
122 all repairs provided by the stabilization repair contractor for
123 at least 5 years if the stabilization repair contractor is
124 unable to provide a remedy required under the warranty it
125 provided to the policyholder.
126 (IV) That, throughout the course of the stabilization
127 repairs performed by the contractor, the engineer monitor the
128 property and confirm that stabilization has been satisfactorily
129 completed and that no further stabilization is necessary to
130 remedy the damage identified in the engineering report and the
131 recommendations of the engineer.
132 (V) That the stabilization repair contractor notify the
133 corporation if the engineer concludes that additional
134 stabilization repairs are necessary to complete the repairs
135 specified in the engineering report and the recommendations of
136 the engineer. If repairs can be completed within policy limits,
137 the stabilization repair contractor shall complete the
138 additional repairs based on the line-item prices developed by
139 the corporation. The contract must also contain provisions
140 specifying the remedy and sanctions for failing to perform the
141 additional repairs.
142 e. The corporation shall enter into contracts with
143 qualified stabilization repair contractors to perform repairs
144 pursuant to a process that requires all of the following
146 (I) Within 30 days after the completion of the engineering
147 report, the report must be posted on a list that is made
148 available to all stabilization repair contractors within the
150 (II) The corporation shall select a stabilization repair
151 contractor from the pool pursuant to a selection process
152 established by the corporation for assigning a stabilization
153 repair contractor to perform stabilization repairs for each
154 property within the program. The selection process must include
155 all of the following:
156 (A) All stabilization repair contractors within the pool
157 are provided an opportunity to submit an offer to perform the
158 stabilization repairs recommended in the engineering report.
159 Such offer must include an itemized statement of work based on
160 line-item prices developed by the corporation.
161 (B) The corporation shall review the offers and provide the
162 policyholder with a list of all stabilization repair contractors
163 that submit an offer under sub-sub-sub-subparagraph (A).
164 (C) The policyholder has up to 30 days to select a
165 stabilization repair contractor from the list. If the
166 policyholder fails to make a selection within 30 days, the
167 corporation shall make the selection. The corporation may
168 reserve the right to select a stabilization repair contractor on
169 the list based upon quality, cost-effectiveness, and such other
170 criteria as the corporation determines appropriate.
171 (D) If no stabilization repair contractor submits an offer
172 to perform the stabilization repairs for a property within the
173 program or if all offers are above the policyholder’s policy
174 limit, the corporation may enter the property into the selection
175 process again or may pay the policyholder an amount up to the
176 policy limits on the structure. If the property is entered into
177 the selection process three times and no stabilization repair
178 contractor submits an offer to repair the property or all offers
179 are above the policyholder’s policy limit, the corporation shall
180 elect to pay for stabilization repairs above the policyholder’s
181 policy limit or pay the policyholder an amount up to the policy
182 limits on the structure.
183 3. The corporation is not responsible for serving as a
184 stabilization repair contractor. The corporation’s obligations
185 under the repair program are not an election to repair by the
186 corporation and therefore do not imply or create a new
187 contractual relationship with the policyholder.
188 4. The corporation’s liability related to stabilization
189 repair activity pursuant to the repair program and all other
190 repairs to the structure conducted in accordance with the terms
191 of the policy may not be greater than the policy limits on the
193 5. The corporation shall pay for other repairs to the
194 structure and contents in accordance with the terms of the
196 6. If the professional engineer engaged by the corporation
197 determines that the stabilization repair cannot be completed
198 within policy limits, the corporation must pay to complete the
199 stabilization repair recommended by the corporation’s
200 professional engineer or tender the policy limits to the
202 7. If a dispute arises between the corporation and the
203 policyholder under this paragraph, under the policy, or under s.
204 627.707 relating to the nature or extent of stabilization
205 repairs to be conducted under the repair program, the sole
206 remedy for resolving such dispute shall be to proceed with the
207 necessary stabilization repairs through the repair program
208 established under this paragraph, regardless of whether the
209 claim, judgment, or decree is for breach of contract,
210 declaratory relief, or specific performance.
211 8. If the corporation denies a policyholder’s claim for
212 sinkhole loss, the corporation or the policyholder may invoke
213 neutral evaluation by filing a request with the department
214 pursuant to s. 627.7074(7). Neutral evaluation is mandatory if
215 requested by the corporation or the policyholder.
216 a. The neutral evaluator may not directly or indirectly
217 participate in the remediation, repair, or restoration of the
218 damaged property that is the subject of the claim, have a
219 financial interest in the remediation, repair, or restoration of
220 the damaged property that is the subject of the claim, or have a
221 financial interest in any business entity that is involved in
222 the remediation, repair, or restoration of the damaged property
223 that is the subject of the claim.
224 b. The only issues to be determined by the neutral
225 evaluator, pursuant to state law and the applicable policy, are
226 whether there is sinkhole activity present as determined by a
227 qualified professional geologist and, if so, whether there is
228 sinkhole loss as determined by a qualified professional
229 engineer. The neutral evaluator’s conclusion is binding on the
230 corporation and the policyholder. If the neutral evaluator
231 determines that sinkhole loss exists, the sinkhole damage shall
232 be included in and governed by the repair program.
233 c. Filing a request for neutral evaluation tolls the
234 applicable time requirements for filing suit for 60 days
235 following the conclusion of the neutral evaluation process or
236 the time prescribed in s. 95.11, whichever is later.
237 9. This paragraph does not prohibit the corporation from
238 establishing a managed repair program for other repairs to the
239 structure in accordance with the terms of the policy.
240 10. This paragraph supersedes s. 627.7074(4) and applies
241 only to the corporation and its policyholders and does not apply
242 to any other insurer.
243 11. This paragraph supersedes s. 627.707(5)(a)-(d).
244 Section 3. By January 1, 2017, the Office of Program Policy
245 Analysis and Government Accountability shall review the Citizens
246 Sinkhole Stabilization Repair Program and submit a report to the
247 Governor, the Chief Financial Officer, the President of the
248 Senate, and the Speaker of the House of Representatives. The
249 report must:
250 (1) Analyze policyholder satisfaction with stabilization
251 repairs received through the program and the sufficiency of
252 consumer protections provided by the program.
253 (2) Analyze the timeliness of stabilization repairs, in
254 comparison with industry averages and practices. The report
255 shall evaluate the loss costs associated with sinkhole claims
256 under the program, comparing them with corporation’s loss costs
257 before the program’s creation.
258 (3) Evaluate whether disputes between stabilization repair
259 contractors and policyholders are resolved in an effective and
260 timely manner.
261 (4) Evaluate whether litigation of sinkhole claims and
262 associated costs are increasing or decreasing under the program,
263 and the causes of such litigation.
264 (5) Evaluate the cost-effectiveness of allowing the program
265 to be managed by a third-party administrator.
266 Section 4. This act shall take effect July 1, 2014.
268 ================= T I T L E A M E N D M E N T ================
269 And the title is amended as follows:
270 Delete everything before the enacting clause
271 and insert:
272 A bill to be entitled
273 An act relating to sinkhole coverage; amending s.
274 627.351, F.S.; requiring Citizens Property Insurance
275 Corporation to submit a biannual report on the number
276 of residential sinkhole policies requested, issued,
277 and declined; providing legislative intent and
278 establishing a Citizens Sinkhole Stabilization Repair
279 Program for sinkhole claims; defining terms;
280 prohibiting the corporation from requiring a
281 policyholder to advance payment for stabilization
282 repairs provided under the program; providing
283 requirements and procedures for selecting
284 stabilization repair contractors to conduct
285 stabilization repairs; providing requirements and
286 terms for contracts between the corporation and such
287 contractors; specifying additional parameters with
288 respect to the program, including provision for
289 resolving disputes between the corporation and a
290 policyholder; providing applicability; requiring the
291 Office of Program Policy Analysis and Government
292 Accountability to conduct a study of the program and
293 submit a report to the Governor, the Chief Financial
294 Officer, and the Legislature; providing an effective