(This report is from the Senate Banking & Insurance Committee as part of the Senate’s 2006 Regular Session Summary)

PROPERTY INSURANCE
CS/CS/SB 1980 — Property and Casualty Insurance
by Ways and Means Committee; Banking and Insurance Committee; and Senator Garcia

Sinkhole Claims

• Requires the Department of Financial Services to certify engineers and geologists to serve as “neutral evaluators” of sinkhole claims disputes. This process would be mandatory if requested by either party, but nonbinding, and the costs would be paid by the insurer. If the insurer timely complies with the recommendation of the neutral evaluator, but the policyholder declines to resolve the matter in accordance with the evaluator’s recommendation, the insurer is not liable for extra-contractual (bad faith) damages related to issues determined at the neutral evaluation. Also, the insurer is not
  liable for attorney’s fees, unless the policyholder obtains a more favorable judgment at trial. OIR is appropriated funds and 2 FTEs for this purpose.
  
• Allows residential policies to provide a deductible for sinkhole losses equal to 1, 2, 5, or 10 percent of the dwelling limits.
  
• Allows the insurer to make payment directly to the persons selected by the policyholder to make the repairs, if approved by the policyholder and lien holder.
  
• Deletes the current requirement that testing by a geologist to determine the presence or absence of a sinkhole loss be conducted in compliance with a specified publication of the Florida Geological Survey.
  
• Requires OIR to calculate a presumed factor to reflect the impact on rates of the changes made by the act related to sinkhole claims and the changes made by provisions of the 2005 property insurance act related to sinkhole claims. OIR is appropriated $250,000 for the purposes of this study. Each residential property insurer must, in it next rate filing
  after October 1, 2006, reflect a rate change that takes into account the presumed factor.
  
• Requires that insurers file information regarding paid sinkhole claims with the county clerk of court, rather than the county property appraiser, and specifies that the recording of the report does not constitute a lien or restriction on the title, and does not create any cause of action or liability.
  
• Makes it unlawful for a contractor or business providing sinkhole remediation services to communicate with any attorney for the purpose of assisting the attorney in the solicitation of legal business.