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Florida Property Insurance Reforms Seek to Curtail Litigation

June 18, 2021

Effective July 1, 2021, Florida Senate Bill 76 reforms property insurance claims by seeking to reduce litigation by way of new pre-suit notice requirements, a new attorney fee schedule, creating time limits for notice of claims, and placing new restrictions on soliciting property owners in regard to roof claims. Florida insurance practitioners should take note of these quickly approaching changes as they move forward in their businesses. We are also closely monitoring the Governor’s review of SB1598.

New Pre-Suit Requirements for Claimants

Perhaps the most notable piece of the new Florida law is the pre-suit notice process and the new attorneys’ fee schedule. These changes apply to both admitted and surplus lines carriers. The aim of this legislation is to reduce the number of lawsuits surrounding the property insurance industry. Claimants are now required to do the following before filing a lawsuit:

  • Claimant must provide written notice of their intent to initiate litigation on a standard form supplied by the Department of Financial Services.
  • The intent to litigate form must be sent to the insurer at least 10 days before filing suit under the insurance policy at issue.
  • The form may not be submitted until after the insurer has made a determination of coverage.
  • Pre-suit demand must itemize damages, including attorney fees and costs.
  • A claimant’s failure to comply with this new requirement may result in the court dismissing the action without prejudice.

Insurer Responsibilities in Response to the Intent To Litigate Notice by Claimant

As part of the pre-suit process, all residential and commercial property insurers must have a procedure for the prompt investigation, review, and evaluation of the dispute stated in the notice and must investigate each claim contained in the notice in accordance with the Florida Insurance Code. Insurers should be ready to do the following:

  • Insurer must respond in writing within 10 business days after receiving the notice specified above.
  • Insurer must provide the response via email if insured has designated an email address in the notice.
  • If an insurer is responding to a notice following a denial of coverage, the insurer can respond with any of the below options:

    1. Changing course and accepting coverage.
    2. Continuing to deny coverage; or
    3. Assert the right to reinspect the damaged property. If insurer takes this option it has 14 business days after the response to reinspect the property or continue to deny coverage. If the insurer continues to deny coverage, the claimant may file suit without providing additional notice to the insurer.
  • If the insurer is responding to a notice other than denial of coverage, the insurer must respond by making a settlement offer, or requiring claimant to participate in an appraisal, or other method of ADR. If the appraisals or ADR has not been concluded within the 90 days after the expiration of the 10 day notice of intent to initiate litigation, the claimant may immediately file suit without providing the insurer further notice.

Attorney Fee Changes

The new law does not change current law on the contingency risk multiplier, however, it changes the ability to recover one-way attorney fees in residential or commercial property cases not brought by assignees and allows fees only under the new fee system detailed below. The new fee statute relies on information exchanged during the pre-suit notice requirement, and considers the disputed amount remaining if a claim is not settled during that period to decide if a claimant can recover attorneys fees if they prevail in the litigation. There are arguments that this also abolishes the ability for either the claimant or insurer to use a Proposal for Settlement/Offer of Judgment. More to follow on that issue.

New Attorney Fee Calculator

  • If the difference between the amount obtained by the claimant and the pre-suit settlement offer, excluding reasonable attorney fees and costs, is less than 20% of the disputed amount, each party pays its own attorney fees and costs.
  • If the difference is at least 20% but less than 50% of the disputed amount, the insurer pays the claimant’s attorney fees and costs equal to the percentage of the disputed amount obtained times the total attorney fees and costs.
  • If the difference is at least 50% of the disputed amount, the insurer pays the claimant’s full attorney fees and costs.

Timing and Supplemental Claims

A claim or re-opened claim under a property insurance policy must be reported to the insurer, including surplus lines insurers, within two years of the date of loss. Supplemental claims are not permitted unless notice was given to the insurer within 3 years of the date of loss. We anticipate challenges to the definitions of reopened versus supplemental claims. Please let us know if you would like to discuss strategy for handling this change.

Significant Developments in Regard to Roof Claims & Solicitation

  • The new statute prohibits a contractor from using a written or electronic advertisement that “encourages, instructs, or induces a consumer” to contact a contractor or public adjuster for the purpose of making a roof damage claim.
  • Repair agreement with insured must include a good faith estimate of the itemized and detailed costs of services and materials.
  • Contract must contain a clause stating that the contractor cannot engage in solicitation restrictions listed above. If this clause is not included, the insured may void the contract within 10 days.
  • New prohibitions on incentives such as rebates, gift cards, coupons, deductible waivers to property owners seeking a roof inspection or estimates.

The attorneys at WSHB stand ready to advise and assist our carrier clients with these reforms as businesses move forward in this new landscape of property insurance claims in Florida.


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