Florida Senate - 2014                                     SB 416
       By Senator Simpson
       18-00198C-14                                           2014416__
    1                        A bill to be entitled                      
    2         An act relating to sinkhole coverage; amending s.
    3         627.351, F.S.; requiring Citizens Property Insurance
    4         Corporation to submit a biannual report on the number
    5         of residential sinkhole policies requested, issued,
    6         and declined; providing legislative intent and
    7         establishing a Citizens Sinkhole Stabilization Repair
    8         Program for sinkhole claims; providing definitions;
    9         prohibiting the corporation from requiring a
   10         policyholder to advance payment for repairs provided
   11         under the program; providing requirements and
   12         procedures for contractors who conduct stabilization
   13         repairs; providing requirements and terms for
   14         contracts between the corporation and such
   15         contractors; specifying additional parameters with
   16         respect to the program; amending s. 627.706, F.S.;
   17         requiring policies to include specified deductible
   18         amounts for sinkhole loss coverage; providing an
   19         effective date.
   21  Be It Enacted by the Legislature of the State of Florida:
   23         Section 1. Paragraph (ee) of subsection (6) of section
   24  627.351, Florida Statutes, is amended, present paragraphs (ff)
   25  through (hh) of that subsection are redesignated as paragraphs
   26  (gg) through (ii), respectively, and a new paragraph (ff) is
   27  added to that subsection, to read:
   28         627.351 Insurance risk apportionment plans.—
   30         (ee) At least once every 6 months, the corporation shall
   31  submit a report to the office disclosing:
   32         1. The total number of requests received for residential
   33  sinkhole loss coverage;
   34         2. The total number of policies issued for residential
   35  sinkhole loss coverage;
   36         3.The total number of requests declined for residential
   37  sinkhole loss coverage; and
   38         4. The reasons for declining requests for residential
   39  sinkhole loss coverage The office may establish a pilot program
   40  to offer optional sinkhole coverage in one or more counties or
   41  other territories of the corporation for the purpose of
   42  implementing s. 627.706, as amended by s. 30, chapter 2007-1,
   43  Laws of Florida. Under the pilot program, the corporation is not
   44  required to issue a notice of nonrenewal to exclude sinkhole
   45  coverage upon the renewal of existing policies, but may exclude
   46  such coverage using a notice of coverage change.
   47         (ff)The Legislature finds that it is in the public
   48  interest that sinkhole loss claims be resolved by stabilizing
   49  the land and structure and making repairs to the foundation of
   50  the damaged structure. Therefore, the corporation shall
   51  establish the Citizens Sinkhole Stabilization Repair Program for
   52  the purpose of making stabilization repairs. By March 31, 2015,
   53  any claim against a corporation policy that covers residential
   54  sinkhole loss must be included in and governed by the repair
   55  program.
   56         1. As used in this paragraph, the term:
   57         a. “Engineering report” means the report issued pursuant to
   58  s. 627.7073(1).
   59         b. “Recommendation of the engineer” means the
   60  recommendation of the engineer engaged by the corporation and
   61  issued pursuant to s. 627.7073(1)(a)5.
   62         c. “Stabilization repairs” means stabilizing the land and
   63  structure and making repairs to the foundation of the damaged
   64  structure.
   65         d. “Stabilization repair contractor” means a contractor who
   66  makes stabilization repairs.
   67         2. The repair program shall be managed by the corporation
   68  or a third-party administrator and include the following
   69  components:
   70         a.The policyholder may not be required to advance payment
   71  for repairs.
   72         b.Stabilization repairs must be conducted by a
   73  stabilization repair contractor selected from an approved
   74  stabilization repair contractor pool procured by the corporation
   75  pursuant to an open and transparent process. Each contractor
   76  within the pool must be qualified and approved by the
   77  corporation based on criteria that include the following
   78  requirements:
   79         (I)The stabilization repair contractor corporate entity
   80  must demonstrate experience in the stabilization of sinkhole
   81  activity pursuant to requirements established by the
   82  corporation.
   83         (II) The stabilization repair contractor must be certified
   84  as a contractor pursuant to s. 489.113(1).
   85         (III)The stabilization repair contractor must demonstrate
   86  capacity to be bonded and provide performance, surety, or other
   87  bonds as described in this section which may be supplemented by
   88  additional requirements as determined by the corporation.
   89         (IV)The stabilization repair contractor must demonstrate
   90  that it meets insurance coverage requirements, including, but
   91  not limited to, commercial general liability and workers’
   92  compensation, established by the corporation.
   93         (V)The stabilization repair contractor must maintain a
   94  valid drug-free workplace program.
   95         (VI)Such other requirements as may be established by the
   96  corporation.
   97         c. Pursuant to the stabilization repair program, qualified
   98  stabilization repair contractors shall be selected from the
   99  approved stabilization contractor pool to conduct stabilization
  100  repairs pursuant to a fixed-price contract between the
  101  contractor and the corporation. Such contracts are not subject
  102  to s. 627.351(6)(e) or s. 287.057. Pursuant to the terms of the
  103  contract, the selected contractor is solely responsible for the
  104  performance of all necessary stabilization repairs specified in
  105  the engineering report and the recommendations of the engineer.
  106         d. The corporation shall develop a standard stabilization
  107  repair contract for the purpose of conducting stabilization
  108  repairs on all properties within the program. At a minimum, the
  109  contract must require:
  110         (I) The assigned stabilization repair contractor to
  111  complete all stabilization repairs identified in the engineering
  112  report based on a fixed price.
  113         (II)Each stabilization repair contractor to post a payment
  114  bond in favor of the corporation as obligee for each project
  115  assigned and to post a performance bond, secured by a third
  116  party surety, in favor of the corporation as obligee, in a
  117  principal amount equal to the total cost of all fixed-price
  118  contracts annually awarded to that contractor.
  119         (III)The stabilization repair contractor to provide a
  120  warranty, secured by a third-party surety, to the policyholder
  121  which covers all repairs provided by the stabilization repair
  122  contractor for at least 5 years after completion of the
  123  stabilization repairs.
  124         (IV)That, throughout the course of the stabilization
  125  repairs performed by the contractor, the engineer monitor the
  126  property and confirm that stabilization has been satisfactorily
  127  completed and that no further stabilization is necessary to
  128  remedy the damage identified in the engineering report and the
  129  recommendations of the engineer.
  130         (V)That, if the engineer concludes that additional
  131  stabilization repairs are necessary to complete the repairs
  132  specified in the engineering report and the recommendations of
  133  the engineer, the stabilization repair contractor perform
  134  additional stabilization repairs at no cost to the corporation
  135  or the policyholder. The contract must also contain provisions
  136  specifying the remedy and sanctions for failing to perform the
  137  additional repairs.
  138         e.The corporation shall enter into contracts with
  139  qualified stabilization repair contractors to perform repairs
  140  pursuant to a process that requires all of the following
  141  components:
  142         (I)Within 30 days after the completion of the engineering
  143  report, the report must be identified on a list that is made
  144  available to all stabilization repair contractors within the
  145  pool.
  146         (II)The corporation shall select a stabilization repair
  147  contractor from the pool pursuant to a selection process
  148  established by the corporation for assigning a contractor to
  149  perform repairs for each property within the program. The
  150  selection process must include all of the following:
  151         (A) All stabilization repair contractors within the pool
  152  are provided an opportunity to submit an offer to perform the
  153  stabilization repairs recommended in the engineering report.
  154  Such offer must include an itemized statement of work.
  155         (B)The corporation shall review the offers and provide the
  156  policyholder with a list of stabilization repair contractors.
  157  The corporation may reserve the right to include any or all
  158  contractors on the list based upon quality, cost-effectiveness,
  159  and such other criteria as the corporation determines
  160  appropriate.
  161         (C)The policyholder has up to 30 days to select a
  162  contractor from the list. If the policyholder fails to make a
  163  selection within 30 days, the corporation shall make the
  164  selection.
  165         (D)If no stabilization repair contractor submits an offer
  166  to perform the stabilization repairs for a property within the
  167  program, or all offers are above the policyholder’s policy
  168  limit, the corporation may enter the property into the selection
  169  process again or may pay the policyholder an amount up to the
  170  policy limits on the structure.
  171         3.The corporation is not responsible for serving as a
  172  stabilization repair contractor. The corporation’s obligations
  173  under the repair program are not an election to repair by the
  174  corporation and therefore do not imply or create a new
  175  contractual relationship with the policyholder.
  176         4.The corporation’s liability related to repair activity
  177  pursuant to the sinkhole stabilization program and all other
  178  repairs to the structure conducted in accordance with the terms
  179  of the policy is no greater than the policy limits on the
  180  structure.
  181         5.This paragraph does not prohibit the corporation from
  182  establishing a managed repair program for other repairs to the
  183  structure in accordance with the terms of the policy.
  184         6.If a dispute arises between the corporation and the
  185  policyholder as to the nature or extent of stabilization repairs
  186  to be conducted under the program, the sole remedy for resolving
  187  such disputes is specific performance.
  188         7. The corporation shall pay for other repairs to the
  189  structure and contents in accordance with the terms of the
  190  policy.
  191         8. This paragraph supersedes s. 627.707(5)(a)-(d).
  192         Section 2. Subsection (1) of section 627.706, Florida
  193  Statutes, is amended to read:
  194         627.706 Sinkhole insurance; catastrophic ground cover
  195  collapse; definitions.—
  196         (1)(a)An Every insurer authorized to transact property
  197  insurance in this state must provide coverage for a catastrophic
  198  ground cover collapse.
  199         (a)(b) The insurer shall make available, for an appropriate
  200  additional premium, coverage for sinkhole losses on any
  201  structure, including the contents of personal property contained
  202  therein, to the extent provided in the form to which the
  203  coverage attaches. The insurer may require an inspection of the
  204  property before issuance of sinkhole loss coverage.
  205         (b) A policy for residential property insurance must may
  206  include a deductible for amount applicable to sinkhole loss
  207  losses equal to 1 percent, 2 percent, 5 percent, or 10 percent
  208  of the policy dwelling limits, with appropriate premium
  209  discounts offered with each deductible amount.
  210         (c) The insurer may restrict catastrophic ground cover
  211  collapse and sinkhole loss coverage to the principal building,
  212  as defined in the applicable policy.
  213         Section 3. This act shall take effect July 1, 2014.