Senate Bill 408 proposes new Florida insurance laws that harm all policyholders. Florida businesses and homeowners will receive fewer benefits, and insurers will be encouraged to delay, deny and defend claims if this bill becomes law. It takes away a lot of financial peace of mind that insurance currently provides.

Senate Bill 408 is lengthy and covers many topics. Here is a summary of some key provisions:



amending s. 626.854, F.S.;

·        providing limitations on the amount of compensation that may be received by a public adjuster for a reopened or supplemental claim; (20% of the reopened or supplemental claim payment) p. 13

·        providing statements that may be considered deceptive or misleading if made in any public adjuster’s advertisement or solicitation;

·        providing a definition for the term “written advertisement”;

·        requiring that a disclaimer be included in any public adjuster’s written advertisement;

·        providing requirements for such disclaimer;

·        requiring certain persons who act on behalf of an insurer to provide notice to the insurer, claimant, public adjuster, or legal representative for an onsite inspection of the insured property;

·        authorizing the insured or claimant to deny access to the property if notice is not provided;

·        requiring the public adjuster to ensure prompt notice of certain property loss claims; p.19 (& give a copy of PA contract to ins. co. including % of PA compensation)

·        providing that an insurer be allowed to interview the insured directly about the loss claim;

·        prohibiting the insurer from obstructing or preventing the public adjuster from communicating with the insured;

·        requiring that the insurer communicate with the public adjuster in an effort to reach an agreement as to the scope of the covered loss under the insurance policy;

·        prohibiting a public adjuster from restricting or preventing persons acting on behalf of the insured from having reasonable access to the insured or the insured’s property;

·        prohibiting a public adjuster from restricting or preventing the insured’s adjuster from having reasonable access to or inspecting the insured’s property;

·        authorizing the insured’s adjuster to be present for the inspection; prohibiting a licensed contractor or subcontractor from adjusting a claim on behalf of an insured if such contractor or subcontractor is not a licensed public adjuster;

·        providing an exception;


amending s. 626.8651, F.S.; requiring that a public adjuster apprentice complete a minimum number of hours of continuing education to qualify for licensure; 


amending s. 626.8796, F.S.; providing requirements for a public adjuster contract; (Must include percentage of compensation)




creating s. 626.70132, F.S.;

·        requiring that notice of a claim, supplemental claim, or reopened claim be given to the insurer within a specified period after a windstorm or hurricane occurs; (3 year)

·        providing a definition for the terms “supplemental claim” or “reopened claim”; providing applicability;


amending s. 627.351, F.S.; providing that members of the Citizens Property Insurance Corporation Board of Governors are not prohibited from practicing in a certain profession if not prohibited by law or ordinance;




creating s. 627.43141, F.S.;

·        providing definitions; requiring the delivery of a “Notice of Change in Policy Terms” under certain circumstances;

·        specifying requirements for such notice; (must be sent with renewal) specifying actions constituting proof of notice; (placing it in the U.S. mail is proof of notice) authorizing policy renewals to contain a change in policy terms;

·        providing that receipt of payment by an insurer is deemed acceptance of new policy terms by an insured;




amending s. 627.7011, F.S.;

·        requiring that an insurer pay the actual cash value of an insured loss for a dwelling, less any applicable deductible, under certain circumstances;

·        requiring that a policyholder enter into a contract for the performance of building and structural repairs;

·        requiring that an insurer pay certain remaining amounts; (as repairs are made)

·        restricting insurers and contractors from requiring advance payments for certain repairs and expenses;

·        authorizing an insured to make a claim for replacement costs within a certain period after the insurer pays actual cash value to make a claim for replacement costs; (1 year)

·        requiring an insurer to pay the replacement costs if a total loss occurs;

·        allowing an insurer to limit its initial payment for losses to personal property; (ACV or 50% of RCV, whichever is greater, and pay holdback with receipt of purchase)


SINKHOLE: (p. 91)


amending s. 627.70131, F.S.;

·        specifying application of certain time periods to initial or supplemental property insurance claim notices and payments; (90 days)

·        providing legislative findings with respect to 2005 statutory changes relating to sinkhole insurance coverage and statutory changes in this act;


amending s. 627.706, F.S.;

·        authorizing an insurer to limit coverage for catastrophic ground cover collapse to the principal building (so no outlying buildings, sheds, etc.) and to have discretion to provide additional coverage;

·        allowing the deductible to include costs relating to an investigation of whether sinkhole activity is present;

·        revising definitions; (“covered building” – seems to exclude driveways, pools, etc.)

·        defining the term “structural damage”; p.94 (1. foundation movement outside of acceptable variance of applicable building code; 2. damage which “prevents the primary structural members or primary structural systems from supporting the loads and forces they were designed to support”)

·        placing a 2-year statute of repose on claims for sinkhole coverage; (from the time insured “knew or reasonably should have known about sinkhole loss”)


amending s. 627.707, F.S.;

·        revising provisions relating to the investigation of sinkholes by insurers;

·        deleting a requirement that the insurer provide a policyholder with a statement regarding testing for sinkhole activity;

·        providing a time limitation for demanding sinkhole testing by a policyholder (60 days from denial of claim) and entering into a contract for repairs (within 90 days);

·        requiring all repairs to be completed within a certain time; (within 12 months)

·        providing exceptions to the time to complete repairs; (mutual agreement between policyholder and insurance company or the claim is in litigation, appraisal or neutral evaluation)

·        providing a criminal penalty on a policyholder for accepting rebates from persons performing repairs;


amending s. 627.7073, F.S.;

·        revising provisions relating to inspection reports;

·        providing that the presumption that the report is correct shifts the burden of proof;

·        requiring the policyholder to file certain reports as a precondition to accepting payment;

·        requiring a seller of real property to provide a buyer with a copy of any inspection reports and certifications;


amending s. 627.7074, F.S.;

·        revising provisions relating to neutral evaluation;

·        requiring evaluation in order to make certain determinations;

·        requiring that the neutral evaluator be allowed access to structures being evaluated;

·        providing grounds for disqualifying an evaluator;

·        allowing the Department of Financial Services to appoint an evaluator if the parties cannot come to agreement;

·        revising the timeframes for scheduling a neutral evaluation conference; authorizing an evaluator to enlist another evaluator or other professionals;

·        providing a time certain for issuing a report;

·        providing that certain information is confidential; p. 110 (oral, written statements or non-verbal conduct, other than “expressly required to be admitted by this subsection, are confidential” and can be disclosed only to the parties – i.e., can’t be admitted in court)

·        revising provisions relating to compliance with the evaluator’s recommendations;

·        providing that the evaluator is an agent of the department for the purposes of immunity from suit;

·        requiring the department to adopt rules;

Changes regarding insurance law seem much more frequent than they were a decade ago. The financially endowed insurance corporations have professional lobbyists that are peddling their economic desires on a full time basis to our elected officials and insurance regulators. These same insurance corporations often are behind the propaganda to vote against judges who don’t rule for the insurance industry’s agenda or position in cases. Florida Senate Bill 408 is substantially law that only helps insurance companies and does little for policyholders. It does not take a genius to figure out who first drafted the proposed bill.

Many of Florida’s elected leaders were financially supported by this very strong insurance lobby. As a result, many of the changes proposed in the legislation may become law. In a very perverse and counterintuitive way of thinking, this law will probably result in more business for me because insurers have more reasons not to timely pay property insurance claims.

Here’s hoping that future insurance law changes will eventually help policyholders rather than increase insurance company executives’ salaries and woe to those suffering catastrophe. Since we are speaking of changes, one singer personifies how much change can happen over a period of time and the music may help those reading through this bill:

  • Brian Hunter


    I’m not sure what part of the proposed bill is so “draconian.” Since, if memory serves, a previous article on this blog was devoted to extolling the virtues of legislation requiring the immediate payment of replacement cost coverage, I assume the word “draconian” refers to the threatened rollback of this legislation. If so, there is nothing draconian about it. It is what replacement cost policies historically provided before the legislature began to re-write the policies. To suggest this is unduly harsh, i.e., draconian, is hyperbolic.

    The requirement that insurers pay replacement cost without necessity of the insured actually incurring this loss has contributed greatly to the insurance problems in Florida. “Replacement cost” in insurance parlance has become detached from the the concept of “what it really costs to fix the property in real life.” The term “replacement cost” as it currently is used is a fantasy number; at best it’s an honest but unreliable estimate. Frequently, it is an umpire’s determination roughly equivalent to the sum of insurer’s payment and the public adjuster’s demand divided by two.

    Much of the bill is even-handed, e.g., requiring that the insurer give reasonable notice of an inspection; requiring public adjusters to act diligently for their clients by requiring them to provide the insurer prompt notice after signing them up for 20% of their claim; prohibiting insurers and public adjusters from obstructing each other from communication with the insured and accessing the property, etc.

    If we consider that the purpose of insurance is indemnity for actual loss, and not windfall profits, then the bill seems not so draconian at all. True, it ain’t the “Lawyer and Public Adjuster Trust Fund” bill, but that doesn’t make it unfair.

    Brian C. Hunter, Esq.

  • Chip Merlin


    Thanks for your thoughts. You are an excellent counsel for insurers. Upon reflection, you may have a point about the term “Draconian” although that was my initial impression.

    To be fair and balanced, everybody knows that I represent policyholders. Your firm represents the following:

    “Allstate Floridian Insurance Company; First Professionals Insurance Co., Inc.; Florida Insurance Guaranty Association; LitNeutral, LLC; ProAssurance Corporation; Sheridan Healthcorp, Inc.; State Farm Fire & Casualty Company; State Farm Florida Insurance Company; State of Florida-Department of Insurance; The Doctors Company; U.S. Security Insurance Company; Western Litigation Specialists, Inc.; U.S. Security Insurance Company; RAC Insurance Partner; Strax Rejuvenation; Sedgwick Claims Management Services; Hudson Insurance Company; Pediatrix Medical Group”

    So, the fact that my policyholder clients get paid less and your insurance clients hold onto money they would otherwise have to pay probably causes you to think this is not so bad and causes me to say it is “Draconian.”

    Still, some of the provisions regarding public adjusters have very valid requirements. And, as I have said, it may be that we simply cannot afford sinkhole coverage in its current form.

    Your reference to a public adjusters and lawyers trust fund is misplaced and poor propaganda. It has nothing to do with the significant changes in the proposed law. Insurance companies and their surrogates such as you seem to justify change based upon some type of “reform” or upon fraud without any verifiable basis. You line up legislators that allow you to report these unsupported allegations at a workshop or public meeting with little evidence and then have newspapers repeat what was said. It is amazing how this trick works.

    The most “Draconian” portions of the law have to do with changing insurance from a contract of indemnity into one of a repair reimmbursement policy. It perverts the notion that insurance commpanies owe money for what they sell rather than a reimmbursement for what the insured pays, which is not insurance for loss but a possible reimbursement for repair.

    Insurers should always pay for loss right away and not have mechanisms to delay paymennt which this does.

    And while we may not be able to afford it, sinkhole losses that will occur to thousands of Floridians will go unpaid. These are not fraudulent losses but slow moving cracking sinkhole losses that result in financial loss that will now be borne by individuals rather than spread out through insurance.

    Our current political leadership will cause significant financial losses to go uninsured under the current proposal and add to the foreclosure crisis. Banks will get stuck with these homes. The current legislation will make it more difficult to finance homes and business buildings because mortagees have no protection from the risk of sinkholes, except catastrophic sinnkholes.

    Would you purchase a home in these areas knowing that a slow moving sinkhole, which the vast majority are, will probably not be covered? The proposed sinkhole legislation essentially is like buying cancer coverage that only pays once the cancer is deemed terminal. What good does that do?

    Anyway, thanks for your comments. Maybe I should have used the word “harsh” because that is what it is to many consumers of insurance.

  • Melody Zehetner

    Truth or False?
    Homes will be repaired.

    False. This will only happen if you have sufficient coverage to pay for the repairs. Insurance companies often elect to pay policy limits to the homeowner because it is cost prohibitive to remediate the home. Using dollar figures provided by the OIR, underpinning and grout for a $150,000.00 home costs $110,000.00. The insurance company still incurs the inspection and engineering costs associated with the sinkhole claim, again using the OIR average $8,004.00. There are additional engineering costs for on-site monitoring by the engineer, site preparation fees, remediation permits, remediation report certification fees and mobilization fees, averaging $9,100.00. That brings the remediation costs to $127,104.00, just to stablize the home. The homeowner then has $23,000.00 remaining to repair any structural or other damage to the home.

    Homeowners are reaping high rewards by filing spurious claims.

    False. Insurance companies have to issue all checks to both the policyholder and the mortgage company if there is a mortgage on the home. The mortgage company holds all payments in escrow until repairs are intiated, or the proceeds are applied to the mortgage.

    The sinkhole endorsement is optional.

    False. Mortgage companies are force placing this endorsement to protect their investment against this highly recognized peril. The insurance company is allowed to non-renew sinkhole coverage, and then the insurance company will require homeowners to pay for an inspection of their home prior to issuance of this endorsement.

    Homeowners in low risk areas are subsidizing homeowners in high risk areas.

    False. Homeowners in high risk areas will be denied coverage.

    In summary, the new laws will decrease the insurance companies indemnity redefining the covered loss and reducing coverage to a percentage of the home only, driveways, pools and other structures will not be covered; insurance companies will inspect the property prior issuing the endorsement and are allowed to deny coverage to any home that may be at risk of incurring sinkhole loss; the cap will be removed allowing insurance companies to increase the rates for this low risk group; mortgage companies will force place this endorsement; and, there is less money to repair the home allowing insurance companies to continue to pay policy limits if it is cost prohibitive to repair the home.

    A fair comparison would be a change to automobile insurance that changes the definition of accident, increases insurance premiums and reduces coverage to a percentage of the damage caused by an accident, denies coverage to anyone that has ever had an accident, and only insure people who do not drive their automobile.

    I do not think the proposed changes are in the public’s best interest.

  • David

    Am I correct in my reading of the most recent revision (24 Jan 2011) to the proposed bill that the REQUIREMENT for insurance companies to provide sinkhole coverage be removed and replaced with MAY offer?

    Also that instead, insurance companies be required to offer catastrophic ground collapse cover, which has 4 stringent requirements that must ALL be met, including the property being declared uninhabitable?

    If so, surely this will potentially devastate communities in sinkhole prone areas where properties will become unsaleable.

  • Chip Merlin


    You hit the nail on the head in your last sentence.