What Does Senate Bill 2D Mean for my Restoration Company?

Senate Bill 2D was signed into effect May 26th, 2022. This new bill is going to change the way that property damage claims must be handled in the state of Florida.

It contains several provisions that aim to reduce costs and claim losses for large insurers, making invoice recovery more difficult for small business contractors in the process: limiting attorneys fee multipliers to “rare and exceptional” cases, installing an optional roof deductible for up to 2% of the home and requiring contractors soliciting customers to tell consumers the penalty for filing a fraudulent claim against an insurer. Lawyers for contractors who receive an assignment of benefits contract wouldn’t be able to receive “one-way” fees under the bill, and “bad faith” lawsuits could only proceed of an insurer was shown to break a contract.

The Supreme Court case Menendez v. Progressive Express Insurance Co Inc set a precedent in regards to retroactive application of a bill. This means that the new Senate Bill 2D reasonably is only applicable to new policies signed on or after its effective date of May 26th. In the case, the insurer contended that the claim was not covered because the 2011 Amendment retroactively narrowed the scope of sinkhole coverage provided by the Policy. In deciding against the insurer’s interpretation of the applicability of the statute, the district court relied on the Supreme Court of Florida’s adoption of a two-pronged analysis for determining when a substantive statutory amendment should be retroactively applied as set forth in Menendez v. Progressive Express Ins. Co., 35 So.3d 873, 876 (Fla. 2010). The insurer argued that the normal presumption against retroactive application of a statute did not apply because the 2011 Amendment was merely procedural or remedial, such that the 2011 Amendment was intended to "clarify" or "amend" a definitional provision in the statute.

Some of the most relevant components of the new legislation are outlined below.

Attorneys’ fees are no longer recoverable under an AOB except pursuant to Florida Statute Section 57.105. This prohibition is not limited solely to “Assignees” under § 627.7152, but also extends to “anyone other than a named or omnibus insured or a named beneficiary.” As such, in addition to impacting vendors operating under an AOB, another significant aspect of this change is this prohibition appears to include post-loss purchasers of an insured property. The relevant sections are as follows:

• Florida Statute Section 627.428 is amended to add the following language:

(4) In a suit arising under a residential or commercial property insurance policy, the right to attorney fees under this section may not be transferred to, assigned to, or acquired in any other manner by anyone other than a named or omnibus insured or a named beneficiary. *Identical language has been adopted for surplus lines’ carriers under § 626.9373(3)‍

• The “AOB Statute” - Florida Statute Section 627.7152 - has been amended to eliminate attorney fee recovery under that section stating, “attorney fees and costs may be recovered by an assignee only under s. 57.105.” ‍

See SB-2d at p. 44 of 54 striking the prior language, and 627.7152(10).‍

Pursuant to the amended language of Florida Statute Section 626.9373, the calculation of attorneys’ fees for insureds’ lawsuits against a surplus lines insurer will be awarded pursuant to the requirements of § 627.70152.

The court may now award insurers their attorney’s fees for obtaining dismissal under § 627.70152 due to the insureds’ failure to comply with the Notice of Intent requirement. See Fla Stat. § 627.70152(8)(a)(3)(b).

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In awarding attorneys’ fees pursuant to § 627.70152(8)(a), a strong presumption is created that a lodestar fee is sufficient and reasonable. Such presumption may be rebutted only in a rare and exceptional circumstance with evidence that competent counsel could not be retained in a reasonable manner. This impacts the potential for attorney fee multipliers. See Fla Stat. § 627.70152(8)(a)(3)(c).

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The definition of an “Assignment Agreement” pursuant to § 627.7152 is amended to mean “any instrument by which post-loss benefits under a residential property insurance policy or commercial property insurance policy, as that term, is defined in s. 627.0625 (1), are assigned or transferred, or acquired in any manner, in whole or in part, to or from a person providing services, including, but not limited to, inspecting, protecting, repairing, restoring, or replacing the property or mitigating against further damage to the property.” This is significant in that the definition now includes “inspecting,” which will now require engineers and diagnostic vendors to comply with the strict requirements of the AOB statute.

Section 624.1551, Florida Statutes, is created regarding Civil remedy actions against property insurers and provides that a claimant must establish that the property insurer breached the insurance contract to prevail in a claim for extracontractual damages under s. 624.155(1)(b).

Florida Statute Section 627.7011(a) is amended to state that if a roof deductible under 627.701(10) is applied to the insured loss, the insurer may limit the payment for the roof to ACV of the loss until the insurer receives reasonable proof of payment by the policyholder of the roof deductible.

• “Reasonable proof” of payment includes a canceled check, money order receipt, credit card statement, or copy of an executed installment plan contract or other financing arrangement that requires full payment of the deductible over time.

Any physical inspection of a non-hurricane claim must occur within 45 days after the insurer's receipt of the proof of loss statements. See Fla Stat. § 627.70131(b). (Effective January 1, 2023).

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Within seven days of assigning an adjuster to the claim, the insurer must inform the policyholder that he/she may request a copy of any detailed estimate of the amount of the loss generated by an insurer’s adjuster. (Effective January 1, 2023).‍

• After receiving such a request from the policyholder, the insurer must send any such detailed estimate to the policyholder within the latter of seven days after the insurer received the request or seven days after the detailed estimate of the amount of the loss is completed. See 627.70131(d)

If you have any questions about the new bill and how it may affect your restoration company’s collections process. Contact us today by email contact@precisionlegal.io or by phone (954) 361-7878 to schedule a consultation with one of our experienced and professional attorneys.