Florida Senate - 2018                             CS for SB 1168
       By the Committee on Banking and Insurance; and Senator Steube
       597-02386-18                                          20181168c1
    1                        A bill to be entitled                      
    2         An act relating to insurance; amending s. 627.062,
    3         F.S.; providing that certain attorney fees and costs
    4         paid by property insurers may not be included in the
    5         property insurer’s rate base and may not be used to
    6         justify a rate increase or rate change; amending s.
    7         627.409, F.S.; adding and revising conditions under
    8         which certain misrepresentations, omissions,
    9         concealments of fact, or incorrect statements may
   10         prevent recovery under an insurance policy or annuity
   11         contract; amending s. 627.422, F.S.; providing that
   12         personal lines residential and commercial residential
   13         property insurance policies may not restrict the
   14         assignment of post-loss benefits; amending s.
   15         627.7011, F.S.; prohibiting specified acts by insurers
   16         relating to certain losses under homeowners’ insurance
   17         policies; creating s. 627.7152, F.S.; providing that
   18         an agreement to assign post-loss benefits of a
   19         residential homeowner’s property insurance is not
   20         valid unless specified conditions are met; requiring
   21         the assignee, under certain circumstances, to provide
   22         a copy of the assignment agreement and a specified
   23         written estimate to the insurer within a specified
   24         timeframe; requiring the estimate to be timely updated
   25         if conditions require a change in scope; providing
   26         construction relating to failure to comply with such
   27         requirement; authorizing an insurer to inspect the
   28         property at any time; providing that an insurer’s
   29         failure to make a certain attempt to inspect the
   30         property and deliver a certain notice, under certain
   31         circumstances, may estop certain assertions by the
   32         insurer; providing that a person’s acceptance of an
   33         assignment agreement constitutes a waiver by the
   34         assignee or transferee, or any subcontractor of the
   35         assignee or transferee, of certain claims against
   36         named insureds, except under specified circumstances;
   37         providing construction relating to such waiver;
   38         requiring an assignee, before initiating certain
   39         litigation against an insurer, to provide a certain
   40         invoice and estimate to the insurer within a specified
   41         timeframe; providing that certain offers of settlement
   42         in certain civil actions may not be made until after a
   43         specified timeframe; requiring the Office of Insurance
   44         Regulation to require each insurer to annually report
   45         specified data relating to certain claims paid
   46         pursuant to assignment agreements; authorizing the
   47         Financial Services Commission to adopt rules;
   48         providing applicability; providing an effective date.
   50  Be It Enacted by the Legislature of the State of Florida:
   52         Section 1. Subsection (11) is added to section 627.062,
   53  Florida Statutes, to read:
   54         627.062 Rate standards.—
   55         (11) Attorney fees and costs paid by a property insurer
   56  pursuant to s. 627.428 may not be included in the property
   57  insurer’s rate base and may not be used to justify a rate
   58  increase or rate change.
   59         Section 2. Subsection (1) of section 627.409, Florida
   60  Statutes, is amended to read:
   61         627.409 Representations in applications; warranties.—
   62         (1) Any statement or description made by or on behalf of an
   63  insured or annuitant in an application for an insurance policy
   64  or annuity contract, or in negotiations for a policy or
   65  contract, is a representation and not a warranty. Except as
   66  provided in subsection (3), a misrepresentation, omission,
   67  concealment of fact, or incorrect statement may prevent recovery
   68  under the contract or policy only if the misrepresentation,
   69  omission, concealment of fact, or incorrect statement directly
   70  relates to the cause of the claim being made and any of the
   71  following apply:
   72         (a) The misrepresentation, omission, concealment, or
   73  statement is fraudulent or is material to the acceptance of the
   74  risk or to the hazard assumed by the insurer.
   75         (b) If the true facts relative to the loss claimed had been
   76  known to the insurer pursuant to a policy requirement or other
   77  requirement, the insurer in good faith would not have:
   78         1. Issued the policy or contract;, would not have
   79         2. Issued the policy or contract it at a the same premium
   80  rate at least 20 percent higher than the rate actually charged;,
   81  would not have
   82         3. Issued a policy or contract in as large an amount;, or
   83         4.would not have Provided coverage with respect to the
   84  hazard resulting in the loss.
   85         Section 3. Section 627.422, Florida Statutes, is amended to
   86  read:
   87         627.422 Assignment of policies or post-loss benefits.—A
   88  policy may be assignable, or not assignable, as provided by its
   89  terms.
   90         (1) LIFE OR HEALTH INSURANCE POLICIES.—Subject to its terms
   91  relating to assignability, any life or health insurance policy
   92  under the terms of which the beneficiary may be changed upon the
   93  sole request of the policyowner may be assigned either by pledge
   94  or transfer of title, by an assignment executed by the
   95  policyowner alone and delivered to the insurer, whether or not
   96  the pledgee or assignee is the insurer. Any such assignment
   97  shall entitle the insurer to deal with the assignee as the owner
   98  or pledgee of the policy in accordance with the terms of the
   99  assignment, until the insurer has received at its home office
  100  written notice of termination of the assignment or pledge or
  101  written notice by or on behalf of some other person claiming
  102  some interest in the policy in conflict with the assignment.
  104  POLICIES.-A personal lines residential property insurance policy
  105  or a commercial residential property insurance policy may not
  106  restrict the assignment of post-loss benefits.
  107         Section 4. Paragraph (a) of subsection (3) of section
  108  627.7011, Florida Statutes, is amended to read:
  109         627.7011 Homeowners’ policies; offer of replacement cost
  110  coverage and law and ordinance coverage.—
  111         (3) In the event of a loss for which a dwelling or personal
  112  property is insured on the basis of replacement costs:
  113         (a) For a dwelling:,
  114         1. The insurer must initially pay at least the actual cash
  115  value of the insured loss, less any applicable deductible. The
  116  insurer shall pay any remaining amounts necessary to perform
  117  such repairs as work is performed and expenses are incurred. If
  118  a total loss of a dwelling occurs, the insurer shall pay the
  119  replacement cost coverage without reservation or holdback of any
  120  depreciation in value, pursuant to s. 627.702.
  121         2. The insurer may not require that a particular vendor
  122  make repairs to such dwelling.
  123         3. The insurer may not, unless expressly requested by the
  124  insured, recommend or suggest a particular vendor for repairs to
  125  be made to such dwelling.
  126         Section 5. Section 627.7152, Florida Statutes, is created
  127  to read:
  128         627.7152 Assignment of residential homeowner’s property
  129  insurance post-loss benefits; prelitigation invoice; offer of
  130  settlement; annual reporting.—
  131         (1)An agreement to assign post-loss benefits of a
  132  residential homeowner’s property insurance policy is not valid
  133  unless the agreement:
  134         (a)Is in writing;
  135         (b)Is limited to claims for work performed or work to be
  136  performed by the assignee;
  137         (c)Contains an accurate and up-to-date statement of the
  138  scope of work to be performed;
  139         (d)Allows the insured to rescind the assignment within 7
  140  days after the execution of the assignment without a penalty or
  141  fee;
  142         (e) Prohibits any check or mortgage processing fee or
  143  administrative fee;
  144         (f)Provides that the insured may be responsible for
  145  payment for any work performed before the rescission of the
  146  assignment; and
  147         (g)Contains a provision, in 14-point boldfaced type, which
  148  allows the insured to rescind the agreement within 7 days after
  149  execution of the assignment, and with a notice that if the
  150  assignment is rescinded, the homeowner is responsible to pay for
  151  the work done up to the date of the rescission and that the
  152  homeowner is not otherwise responsible to pay for the work
  153  covered by the assignment.
  154         (2)(a) The assignee shall provide a copy of the assignment
  155  agreement to the insurer within 7 days after execution of the
  156  agreement, or within 48 hours after beginning nonemergency work,
  157  whichever is earlier, if the insurer has a facsimile number and
  158  e-mail address on its website designated for the delivery of
  159  such documents. This assignment agreement must be accompanied by
  160  a written estimate of the work to be done, with unit prices
  161  indicated where appropriate, and the basis for calculating lump
  162  sum fees if unit prices are inappropriate. The estimate must be
  163  timely updated if conditions require a change in scope. The
  164  failure to comply with this requirement constitutes a defense to
  165  any payment obligation under the policy or the assignment, if
  166  the insurer can establish prejudice resulting from the failure.
  167         (b) The insurer may inspect the property at any time. If
  168  the insurer fails to attempt in good faith to do so within 7
  169  days after learning of the loss and promptly deliver to the
  170  assignee written notice of any perceived deficiency in the
  171  assignee’s notice or the work being performed, the failure may
  172  be raised to estop the insurer from asserting that work done was
  173  not reasonably necessary or that the notice was insufficient to
  174  comply with this section.
  175         (3)Notwithstanding any other law, the acceptance by a
  176  person of any assignment agreement constitutes a waiver by the
  177  assignee or transferee, and any subcontractor of the assignee or
  178  transferee, of any and all claims against all named insureds for
  179  payment arising from the specified loss, except that all named
  180  insureds remain responsible for the payment of any deductible
  181  amount provided for by the terms of the insurance policy and for
  182  the cost of any betterment ordered by all named insureds. This
  183  waiver remains in effect notwithstanding any subsequent
  184  determination that the assignment agreement is invalid or
  185  notwithstanding the rescission of the assignment agreement by
  186  all named insureds, except that the assignee is entitled to
  187  payment for the reasonable cost of any contracted work performed
  188  before the assignor rescinded the assignment agreement.
  189         (4)No later than 30 days before an assignee initiates
  190  litigation against an insurer relating to a residential
  191  homeowner’s property insurance claim, the assignee must provide
  192  the insurer an invoice for all work that has been performed and
  193  a current estimate of work remaining to be performed.
  194         (5) In a civil action relating to a residential homeowner’s
  195  property insurance claim under a policy in which an assignment
  196  agreement under this section was executed, an offer of
  197  settlement under s. 768.79 by any party may be made no earlier
  198  than 30 days after the civil action has commenced.
  199         (6) The office shall require each insurer to report by
  200  January 30, 2021, and each year thereafter, data on each
  201  residential property insurance claim paid in the prior calendar
  202  year pursuant to an assignment agreement. Such data must
  203  include, but are not limited to, specific data about claims
  204  adjustment and settlement timeframes and trends grouped by
  205  whether litigated or not litigated, by loss adjustment expenses,
  206  and by the amount and type of attorney fees incurred or paid.
  207  The commission may adopt rules to administer this subsection.
  208         (7)This section does not apply to:
  209         (a)An assignment, transfer, or conveyance granted to a
  210  subsequent purchaser of the property with an insurable interest
  211  in the property following a loss; or
  212         (b)A power of attorney under chapter 709 which grants to a
  213  management company, family member, guardian, or similarly
  214  situated person of an insured the authority to act on behalf of
  215  an insured as it relates to a property insurance claim.
  216         Section 6. The amendment made by this act to s. 627.422,
  217  Florida Statutes, and the creation by this act of s. 627.7152,
  218  Florida Statutes, apply to assignment agreements executed on or
  219  after July 1, 2018.
  220         Section 7. This act shall take effect July 1, 2018.