Florida Senate to Consider Changes to Property Insurance System

The Florida Senate is considering a plan that would make dramatic changes to the property insurance system in the state. It would allow insurance companies to limit the amount paid out for roof damage while also putting new restrictions on lawyer fees during insurance disputes. 

The Senate Rules Committee approved the plan (SB 76), preparing it to go to the full Senate. This bill is a bit different than the house proposal which doesn’t include limits for payments related to roof damage. 

In a recent WUSF Public Media article, Senate bill sponsor Jim Boyd, R-Bradenton, and Sen. Jeff Brandes, R-St. Petersburg, described the property-insurance industry as being in a “crisis,” with financially strapped companies deciding not to provide coverage or substantially raising homeowners’ rates.

Brandes said during a recent Senate meeting, “If we don’t act, we’re failing our constituents,” Brandes said. “We have to stand our ground here.”

However, some Senators are not happy with the Senate bill, claiming that it will lead to higher out of pocket costs for homeowners dealing with roof damage. They also felt that the restrictions on attorney fees will make it harder for policyholders to find legal representation when dealing with insurance claims.

“I just think this legislation goes too far,” Senate Minority Leader Gary Farmer, D-Lighthouse Point, said during a recent hearing. “This is a David vs. Goliath situation, literally, and we’re taking David’s sling away.”

This bill is being considered because state insurance regulators have been receiving and approving dozens of rate increase requests of over 10%, pushing up rates for homeowners. As the insurance market has tightened due to insurers leaving certain parts of the state, homeowners have been forced to purchase policies from the state-backed Citizens Property Insurance Corporation. Citizens is the insurer of last resort in Florida, and they gained over 100,000 policies during the past year.

Roofing is big issue for homeowners

Claims for roof damage is the issue that could have the biggest direct impact on homeowners. The insurance industry claims that fraudulent roof damage claims are responsible for pushing up the cost of insurance in the state and that some less than honest contractors are enticing homeowners to file roofing claims even it is unnecessary. 

The Senate bill would address this issue by creating a “reimbursement schedule” which allows insurers to sell policies that provide reduced payments for repairing or replacing roofs that are over 10 years old.

As an example, an insurer would only be required to reimburse 70% of the costs for metal roofs that are over 10 years old and 40% of the costs for concrete-tile and clay-tile roofs, requiring the homeowner to pay the balance. 

Florida democrats have said the proposal could lead to homeowners facing thousands of dollars in additional costs if their roofs are damaged or destroyed by a covered peril. 

“The roofing provisions of this bill are just going to have a dramatic impact on consumers,” Farmer said in the WUSF Public Media article.

The House bill (HB 305) does not include the reimbursement schedule that is causing issues in the Senate. The House bill would seek to fix the roof issue by preventing contractors and public insurance adjusters from soliciting homeowners to file a roofing claim. 

The Senate version of the bill would also go further than the House bill in trying to limit legal action against insurance companies by limiting fees. Current Florida law allows plaintiffs to collect fees when they win a case against insurance companies. Typical fees are set by multiplying the number of hours spent on the case by a reasonable hourly rate. 

However, courts can approve “contingency risk multipliers” which increases the fee paid to the attorney. The Senate bill would make it so contingency risk multipliers could only be awarded in “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.”

“We are facing a litigation crisis in Florida,” Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, said in a statement Thursday. “It’s the consumers who get hit with higher insurance rates at the end of the day when insurance companies have to compensate for litigation factories who drum up lawsuits to win big attorney fee payouts.”