A bill which passed the Florida Senate yesterday, Senate Bill 76, Property Insurance, by Senator Jim Boyd (R-Bradenton), could drastically reduce property insurance policyowners’ ability to recover roof damages and reduces the window for filing a property insurance claim from three years to two.

A statement released following the vote said, “With the rising cost of property insurance in Florida, the bill allows property insurers to only offer homeowner’s policies that adjust roof claims to actual cash value if the roof is older than 10 years. The bill also allows property insurers to offer homeowners the option of purchasing a stated value limit for roof coverage. A homeowner that is offered such a policy would receive a disclosure that their insurance policy does not provide replacement cost coverage insurance for the roof. In a total loss of the primary structure, a reimbursement schedule and stated value sublimit do not apply and the insurer’s liability will be for the total amount of insured property as provided in the policy. The bill also creates a uniform two-year period, rather than the current three-year window, for filing a property insurance claim, supplemental claim, or reopened claim.”

Opponents call the legislation “the most anti-consumer, anti- policyholder” bill seen in quite a while.

They worry policyholders, despite the disclosure, will not realize the new limits of their property insurance and will be hit with unexpected roof damage repair bills that could cost the homeowner tens of thousands of dollars. They also say it restricts a homeowners’ ability to reclaim attorney fees if they are successful in a claim against an insurance company in property-insurance disputes and limits how much an insurer is compensated for roof damage following a storm.

But the bill’s sponsor says the bill helps policyholders by making insurance more affordable.

“We want to make certain that Floridians have access to property insurance that is both reliable and affordable. Right now we have a situation in our state where homeowners are paying more for their property insurance, and yet insurance companies are suffering massive losses,” said Boyd. “One of the biggest drivers of rate increases is the extraordinary number of roofing claims in Florida. This bill provides a needed update to roofing policies to both protect homeowners and prevent the abuse of claims by predatory attorneys and contractors.”

Senate President Wilton Simpson (R-Trilby) said “These reforms seek to reduce frivolous claims by those who take advantage of areas that were affected by hurricanes when claims spike at the end of the three-year claim window and often have no damage related to the hurricane.”

Merlin Law Group President Chip Merlin, of Tampa, specializes in the representation of policyholders in disputes with insurance companies. He said this bill will leave the homeowner holding the bag. “If the policyholder has a mortgage and needs a new roof, he’s not going to get paid back by the insurance company which violates a homeowner’s mortgage.”

Supporters of the bill say it addresses the proliferation of litigation that has driven up the cost of property insurance across the state. The bill requires detailed notice of property insurance claims prior to litigation and changes how attorney fees are awarded. Before a lawsuit is filed, the insurer must be notified of the claim in detail and be given sufficient time to inspect the property before a lawsuit is filed.

Currently, an insurer must pay a reasonable attorney fee to the insured’s attorney, even if the insured only recovers a small amount in the litigation. Under this legislation the insurers’ obligation to pay the insured’s attorney fees will be directly related to how successful the insured was in recovering the amount demanded in the litigation. If the claimant recovers at least 80 percent, the insurance company must pay all reasonable attorney fees. If the claimant recovers 20 percent or more of the demand but less than 80 percent, the insurer will be required to pay the same percentage of fees related to the recovery that the claimant recovered in the action. For example, if the claimant demanded $20,000 and recovered $10,000, the insurer will pay 50 percent of the claimant’s attorney fees because the claimant’s recovery was 50 percent of the demand. If the claimant recovers less than 20 percent of the demand, the insurer has no obligation to pay the claimant’s attorney fees.

“This bill does not help policy holders,” Merlin told The Capitolist, “however, it certainly does help the insurance company. It certainly should reduce insurance premiums if you can no longer sue your insurance company for a breach of contract.”

Merlin described SB 76 as a “very unique piece of legislation that shows these legislators are just in bed with the insurance lobbyists.”