How to Prepare for SB 2A: The Legislative Overhaul of Florida’s Property Insurance Laws

By: Aaron Warner on behalf of Warner & Fitzmartin, PLLC

The 105 page bill referred to as SB 2A was introduced on Friday, December 9, 2022 ahead of a special legislative session for the Florida House and Senate. On December 14, 2022, the bill was approved with ease after majority voting but not without opposition as proponents of the bill rejected every proposed amendment. SB 2A was signed into law on December 16, 2022.

The state’s top insurance regulator Altmaier submitted his resignation the previous day. Deputy Commissioner Susanne Murphy had also just announced that she would be stepping down from her position with the Office of Insurance Regulation. Former Insurance Commissioner, David Altmaier, supported this legislation despite being unable to answer some questions due to outstanding reports and data required from insurance companies that supposedly is due this spring as part of SB 76 passed in 2021.

Like many things with politics, some applauded the signing of SB 2A while others expressed deep concerns. Some Florida lawmakers believe that Floridians may expect to see the cost of property insurance reduce in 18 months or 2 years as they expect SB 2A will reduce litigation exposure, create a better market for insurers, and increase competition by offering additional options for insureds. Others have shown their disappointment that this legislation stripped away rights and failed to provide any relief for homeowners, despite providing another $1 billion of taxpayer funds to insurance companies after the approval of a $2 billion during 2022’s regular session. Some homeowners and families felt betrayed due to their nightmarish insurance claim experiences while speaking to Florida lawmakers during the 3 day special session as SB 2A would have prohibited their ability to recover after disaster.

There’s no sugarcoating the fact that SB 2A is tort reform that reduces and eliminates rights Florida policyholders had before 2023. SB 2A and other recent legislation will eliminate access to courts for many Florida homeowners and families depending on the claim and policy provisions. More of Florida’s insurance claims will be shifted to appraisal and arbitration, which are expensive, time-consuming, and difficult. To make matters worse, SB 2A strips away the rights Florida policyholders previously had to expose bad-faith insurer conduct and recover the extra expenses they were forced to spend to prevail in their claim dispute.

Florida Senator Lori Berman proposed an amendment to SB 2A that would have required informing Florida homeowners of the changes made by this legislation and how the new laws will affect them in the event of a claim. The Florida Senator who introduced the bill opposed this amendment.

Below are some of SB 2As provisions and changes to Florida Law that policyholders should be aware of to adapt and prepare:

• Assignment of benefits are eliminated for any property insurance policy issued on or after January 1, 2023.
• Florida policyholders no longer have the right to recover their attorney fees from a property insurance company that wrongfully denies or underpays a claim. This is a shift away from long-standing Florida law that provided a level playing field for Florida homeowners. The Florida Supreme Court once wrote, “It is an undue hardship upon beneficiaries of policies to be compelled to reduce the amount of their insurance by paying attorney’s fees when suits are necessary in order to collect that to which they are entitled.”
• Bad faith damages or extracontractual damages cannot be sought absent summary judgment or a jury verdict followed by entry of a final judgment. For the majority of property insurance claims, policyholders will no longer have the ability to prevent bad acting insurance companies who fail to follow the law or policy and delay an insurance claim. The state’s insurance regulators will now be the main individuals responsible for monitoring insurers conduct and enforcing penalties.
• Property insurance policies can now include mandatory arbitration provisions, which will eliminate policyholders access to the courts for a limited premium reduction.
• Many Citizens’ policyholders will see an increase in their property insurance rates as they will be forced to switch to a private insurer that offers premiums up to 20% more than their existing rate.
• Citizens’ policyholders will be required to obtain flood insurance as a condition of having windstorm coverage.
• The law will also apply differently for Citizens’ policyholders who will now bear a more difficult burden of proof with respect to claims involving wind damage and flood.
• Reduces the claim filing deadlines for policyholders to report a claim from 2 years to 1 year for a new or reopened claim.
• Policyholders will now have 18 months instead of 3 years to complete repairs and submit a claim supplement regardless of how the insurance company has acted or how long it took to investigate and make a claim determination.
• Reduces the time for insurance companies to pay or deny a claim from 90 to 60 days. Yet this legislation provides zero relief for policyholders if and when an insurance company takes longer. Just before resigning, Florida’s Insurance Commisioner, David Altmaier, stated he was aware of bad actor insurance companies who abuse these deadlines.
• Property insurance companies will now be allowed to investigate the entire claim remotely via electronic methods.

Understanding what’s in your insurance policy is now more important than ever with the rising price of property insurance and tricky policies that include limited caps on damages, roof schedule endorsements, exclusions and endorsements that regularly change upon renewal. With the passage of SB 2A, Florida homeowners should start saving rainy day funds in case of an emergency.