The vast majority of property owners have never read the dozens (sometimes hundreds) of pages that comprise their property insurance policy. For most, the contents of the policy read like a foreign language, and how the conditions, exclusions, and other provisions could potentially apply to a future loss is not easily understandable.

Reading the policy renewal documentation can be just as important as reading and understanding the policy. Section 627.43141, Florida Statutes, provides requirements for insurance companies when making changes to the policy through the renewal process. Last week in People’s Trust Insurance Company v. Nakia de las Mercedes Lavadie,1 Florida’s Third District Court of Appeal held that People’s Trust Insurance Company (“PTIC”) complied with statutory notice requirements despite PTIC’s failure to provide an explanation of the specific change to the policyholder.

The court’s reasoning is concerning for policyholders across the state:

The Policy’s preferred contractor endorsement specified that, if PTIC invoked its right to repair a covered loss claimed by the Insureds, either party could demand an appraisal to resolve any failure to agree on the scope of repairs to be performed by PTIC’s designated contractor(s).”

* * *

Section 627.43141 as in effect at the time PTIC provided its Notice of Change in Policy Terms…required the insurer to notify the insured and the insured’s agent in writing that the policy for the new policy period would be different, but it did not require the insurer to identify every amendment to the form. . . .

Nothing precluded the insurer from highlighting one or more individual changes, but neither did anything require the insurer to provide such highlights or a more generic summary of a particular change. . . .

[PTIC’s] notice advised the Insureds that the new policy would be changed: ‘If you choose to accept our renewal offer, you should carefully review the changes described below along with the enclosed policy,’ and ‘Receipt by People’s Trust Insurance Company (PTIC) of the premium payment for your renewal policy will be deemed acceptance of the new policy terms by the named insured.’

* * *

Under current law, a policy that is being renewed may contain a change in policy terms, in which case the insurer must give the insured advance written ‘notice’ of the change. However, this notice is not explicitly required to contain any summary or explanation of the change.

The lack of specificity required by the Florida legislature and permitted by Florida courts is concerning for policyholders. This is why the best practice for business and homeowners is to meet with their insurance agent each year to discuss in detail what changes are being proposed in the renewal and how those changes could impact coverage for a future loss.
1 People’s Trust Insurance Company v. Lavadie, No 3D19-962, — So. 3d — (Fla. 3d DCA June 24, 2020).