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Politics / Issues
Get the latest coverage of the 2021 Florida legislative session in Tallahassee from our coverage partners and WUSF.

Property Insurance Changes Head To Full Florida Senate

Estimated insured losses from Hurricane Michael top $6.9 billion. The Category 5 storm made landfall Oct. 10 in Mexico Beach and caused massive damage as it roared north into Georgia. NEWS SERVICE OF FLORIDA
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The Senate bill includes a limit on the amount homeowners could receive for roof damage.

The Florida Senate could be poised to take up a plan that would make far-reaching changes in the state’s property-insurance system, including allowing insurers to limit amounts paid for roof damage and placing new restrictions on attorney fees in insurance disputes.

The Senate Rules Committee on Thursday approved the plan (SB 76), positioning it to go to the full Senate. The measure is dramatically different from a House property-insurance bill that, for example, does not include the proposed limits on payments for roof damage.

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 Thursday’s meeting that the Senate should not back away from its proposal.

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

But some Democrats criticized the Senate bill, saying it would lead to increased out-of-pocket costs for homeowners who sustain roof damage. Also, they said the proposed restrictions on attorney fees would make it harder for policyholders to get representation to challenge insurers over claims.

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

The debate in the Senate and House comes after state insurance regulators last year signed off on dozens of rate increases topping 10%. Also, as the market has tightened, the state-backed Citizens Property Insurance Corp., which was created as an insurer of last resort, has gained more than 100,000 policies during the past year.

One of the issues that could have the most direct impact on consumers involves claims for roof damage. The insurance industry contends that questionable or fraudulent roof-damage claims are driving up costs and that some contractors try to inappropriately entice homeowners to file claims.

The Senate bill would create what is described as a “reimbursement schedule” that would allow insurers to sell policies that would provide reduced payments for repairing or replacing roofs over 10 years old.

For example, insurers could reimburse 70% of the costs for metal roofs over 10 years old and 40% of the costs for concrete-tile and clay-tile roofs.

The change would effectively shift more costs to many homeowners when they have roof damage. Boyd said customers would be able to buy additional coverage for roof damage and that the proposal takes into account that roofs have life expectancies.

But Democrats said the proposal could lead to homeowners facing thousands of dollars in additional costs if their roofs are damaged.

“The roofing provisions of this bill are just going to have a dramatic impact on consumers,” Farmer said.

The House bill (HB 305), which was approved this week by the House Insurance & Banking Subcommittee, does not include the reimbursement schedule. It would seek to address roof issues by preventing contractors and public adjusters from soliciting or providing incentives for homeowners to file claims.

House sponsor Bob Rommel, R-Naples, said the intent is to "stop the bad actors."

The Senate bill also would go further than the House measure in trying to reduce litigation against property insurers, at least in part by limiting fees paid to attorneys who represent plaintiffs.

Florida allows plaintiffs to collect attorney fees when they prevail in cases against insurance companies, with the amounts typically set by a calculation of the number of hours spent on a case and a reasonable hourly rate.

But courts also can approve what are known as “contingency risk multipliers” that increase the fees. Under the Senate bill, however, contingency risk multipliers could only be awarded “in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner.”

Farmer, a plaintiffs’ attorney, said the change could make it hard for homeowners to find attorneys to represent them in difficult cases.

But backers of the Senate bill say attorney fees play a major role in increasing litigation --- and, as a result, insurance costs.

“We are facing a litigation crisis in Florida,” Michael Carlson, president and CEO of the Personal Insurance Federation of Florida, an industry group, 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.”

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