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Earlier this week I posted a blog on "Why Are Home Owners Insurance Rates Rising ... AGAIN?" In that article I brought up Florida Property Bill 408. I did some research on the bill and heres what I found.

May, 2011- In an article by Joan Collier of propertycasualty360.com Governor Rick Scott signed Bill 408 , commending the legislature, specifically Senator Richter and Representative Wood. Governor Scott was quoted as saying that “A healthy, stable and competitive private insurance market is critical to the success of Florida, given the hazards we face”. The bill faced strong opposition most notably Senator Mike Fasano right up until the week before Governor Scott signed the bill.

Senator Fasano who was quoted in March, 2011 as saying that “people are being affected throughout this state because of neglect, because of the irresponsible acts by the property and casualty insurance companies”. He was also quoted in the same article as saying that “In my five years of service in legislature, I can’t recall a bill that was so obviously written by the industry.” He followed this statement up with “For insurance companies, this bill is the Holy Grail. Practically every consumer protection that currently exists in law relating to property insurance claims is under attack in this bill”.

In a synopsis written by Thomas J. Maida and Paul Lowell of Foley & Lardner LLC they detailed several significant reforms in legislation including:

1-     The exclusions were expanded from losses covered by the Florida Hurricane Catastrophe Fund to include losses caused by perils other than a covered event such as fire, theft, flood or rising water, as well as amounts paid for waivers of deductibles and bad faith awards.

2-     Limiting public adjuster compensation for reopened or supplemental claims to 20% of the claim payment (10% for Citizens Property Insurance Corp. claims) and requiring additional disclosure statements and notice to certain parties.

3-     Requiring insurers to provide two replacement cost coverage options for payment of personal property insurance claims. The first option pays the full replacement cost without reservation. The second option pays the depreciated value ad holds back the remainder of coverage until the policy holder provides receipts.

4-     Requiring a policy holder to file windstorm and hurricane claims within three years.


The bill increases the minimum surplus requirements for new residential property insurers (those approved after July 1, 2011) from $5 million to $15 million. For insurers that hold a certificate of authority prior to July 1, 2011, the surplus requirement gradually increases to $15 million over the next decade.

SB 408 also addresses sinkhole claims, which have proliferated in Florida in recent years. Carriers sought to have the mandatory coverage language deleted but settled for language specifically defining “structure damage” to narrow the definition of a sink hole loss. Additionally, the new bill required a policy holder to pay 50% of sinkhole testing after the insurer denies the sinkhole claim; sinkhole claims must be filed within 2 years of the covered loss.

Another bill heading through committees would allow insurers to increase rates by up to 15% statewide over the most recently approved rate filing without review, and up to 30% percent on an individual policyholder. At the time of posting this blog, I’m not sure where this proposed bill currently stands.

 At Birchell Insurance Company we truly try our best to offer our clients (and potential clients) the best price for the coverage they request and to do everything we can to keep you up to date on the insurance industry as it pertains to you. If you have any questions, feel free to call us at  Birchell Insurance Agency (800) 978-8813.

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