Florida Senate - 2013                                    SB 1498
       
       
       
       By Senator Brandes
       
       
       
       
       22-00706-13                                           20131498__
    1                        A bill to be entitled                      
    2         An act relating to sinkhole insurance; amending s.
    3         627.706, F.S.; revising the definition of the term
    4         “structural damage”; amending s. 627.707, F.S.;
    5         providing that an insurer must pay for stabilizing a
    6         structure if a sinkhole loss is verified, using a
    7         stabilization method that includes a specified type of
    8         warranty; requiring a policyholder who is paid by an
    9         insurer to stabilize a structure to repair the
   10         sinkhole; requiring an insurer to renew a property
   11         insurance policy when certain sinkhole losses have
   12         been paid; removing a provision authorizing an insurer
   13         to nonrenew a policy when the insurer has paid the
   14         policy limits for a sinkhole loss; amending s.
   15         627.7073, F.S.; providing that a specified report to
   16         determine the presence or absence of sinkhole loss or
   17         other cause of damage is to be considered the jointly
   18         owned property of the insurer and the policyholder;
   19         requiring such reports to be provided to policyholders
   20         and insurers in a specified manner; providing
   21         requirements with respect to the form of such reports;
   22         specifying a period within which an insurer that pays
   23         a claim for sinkhole loss must file a copy of such
   24         report with the clerk of court; providing monetary
   25         penalty payable by the insurer to the clerk of court
   26         for failing to timely file such report; providing an
   27         effective date.
   28  
   29  Be It Enacted by the Legislature of the State of Florida:
   30  
   31         Section 1. Paragraph (k) of subsection (2) of section
   32  627.706, Florida Statutes, is amended to read:
   33         627.706 Sinkhole insurance; catastrophic ground cover
   34  collapse; definitions.—
   35         (2) As used in ss. 627.706-627.7074, and as used in
   36  connection with any policy providing coverage for a catastrophic
   37  ground cover collapse or for sinkhole losses, the term:
   38         (k) “Structural damage” means a covered building,
   39  regardless of the date of its construction, has experienced the
   40  following:
   41         1. Interior floor displacement or deflection in excess of
   42  acceptable variances as defined in ACI 117-90 or the Florida
   43  Building Code, which results in settlement-related damage to the
   44  interior such that the interior building structure or members
   45  become unfit for service or represents a safety hazard as
   46  defined within the 2007 Florida Building Code;
   47         2. Foundation displacement or deflection in excess of
   48  acceptable variances as defined in ACI 318-95 or the Florida
   49  Building Code, which results in settlement-related damage to the
   50  primary structural members or primary structural systems that
   51  prevents those members or systems from supporting the loads and
   52  forces they were designed to support to the extent that stresses
   53  in those primary structural members or primary structural
   54  systems exceeds one and one-third the nominal strength allowed
   55  under the Florida Building Code for new buildings of similar
   56  structure, purpose, or location;
   57         3. Damage that results in listing, leaning, or buckling of
   58  the exterior load-bearing walls or other vertical primary
   59  structural members to such an extent that a plumb line passing
   60  through the center of gravity does not fall inside the middle
   61  one-third of the base as defined within the Florida Building
   62  Code;
   63         4. Damage that results in the building, or any portion of
   64  the building containing primary structural members or primary
   65  structural systems, being significantly likely to imminently
   66  collapse because of the movement or instability of the ground
   67  within the influence zone of the supporting ground within the
   68  sheer plane necessary for the purpose of supporting such
   69  building as defined within the Florida Building Code; or
   70         5. Damage occurring on or after October 15, 2005, that
   71  qualifies as “substantial structural damage” as defined in the
   72  Florida Building Code.
   73         Section 2. Subsections (5) and (7) of section 627.707,
   74  Florida Statutes, are amended to read:
   75         627.707 Investigation of sinkhole claims; insurer payment;
   76  nonrenewals.—Upon receipt of a claim for a sinkhole loss to a
   77  covered building, an insurer must meet the following standards
   78  in investigating a claim:
   79         (5) If a sinkhole loss is verified, the insurer shall pay
   80  to stabilize the structure land and building and repair the
   81  foundation in accordance with the recommendations of a the
   82  professional engineer retained pursuant to subsection (2), using
   83  a stabilization method that is warranted for the lifetime of the
   84  structure, with notice to the policyholder, subject to the
   85  coverage and terms of the policy. A policyholder who is paid by
   86  the insurer to stabilize the structure must also repair the
   87  sinkhole. The insurer shall pay for other repairs to the
   88  structure and contents in accordance with the terms of the
   89  policy. If a covered building suffers a sinkhole loss or a
   90  catastrophic ground cover collapse, the insured must repair such
   91  damage or loss in accordance with the insurer’s professional
   92  engineer’s recommended repairs. However, if the insurer’s
   93  professional engineer determines that the repair cannot be
   94  completed within policy limits, the insurer must pay to complete
   95  the repairs recommended by the insurer’s professional engineer
   96  or tender the policy limits to the policyholder.
   97         (a) The insurer may limit its total claims payment to the
   98  actual cash value of the sinkhole loss, which does not include
   99  underpinning or grouting or any other repair technique performed
  100  below the existing foundation of the building, until the
  101  policyholder enters into a contract for the performance of
  102  building stabilization or foundation repairs in accordance with
  103  the recommendations set forth in the insurer’s report issued
  104  pursuant to s. 627.7073.
  105         (b) In order to prevent additional damage to the building
  106  or structure, the policyholder must enter into a contract for
  107  the performance of building stabilization and foundation repairs
  108  within 90 days after the insurance company confirms coverage for
  109  the sinkhole loss and notifies the policyholder of such
  110  confirmation. This time period is tolled if either party invokes
  111  the neutral evaluation process, and begins again 10 days after
  112  the conclusion of the neutral evaluation process.
  113         (c) After the policyholder enters into the contract for the
  114  performance of building stabilization and foundation repairs,
  115  the insurer shall pay the amounts necessary to begin and perform
  116  such repairs as the work is performed and the expenses are
  117  incurred. The insurer may not require the policyholder to
  118  advance payment for such repairs. If repair covered by a
  119  personal lines residential property insurance policy has begun
  120  and the professional engineer selected or approved by the
  121  insurer determines that the repair cannot be completed within
  122  the policy limits, the insurer must complete the professional
  123  engineer’s recommended repair or tender the policy limits to the
  124  policyholder without a reduction for the repair expenses
  125  incurred.
  126         (d) The stabilization and all other repairs to the
  127  structure and contents must be completed within 12 months after
  128  entering into the contract for repairs described in paragraph
  129  (b) unless:
  130         1. There is a mutual agreement between the insurer and the
  131  policyholder;
  132         2. The claim is involved with the neutral evaluation
  133  process;
  134         3. The claim is in litigation; or
  135         4. The claim is under appraisal or mediation.
  136         (e) Upon the insurer’s obtaining the written approval of
  137  any lienholder, the insurer may make payment directly to the
  138  persons selected by the policyholder to perform the land and
  139  building stabilization and foundation repairs. The decision by
  140  the insurer to make payment to such persons does not hold the
  141  insurer liable for the work performed.
  142         (f) The policyholder may not accept a rebate from any
  143  person performing the repairs specified in this section. If a
  144  policyholder receives a rebate, coverage is void and the
  145  policyholder must refund the amount of the rebate to the
  146  insurer. Any person performing the repairs specified in this
  147  section who offers a rebate commits insurance fraud punishable
  148  as a third degree felony as provided in s. 775.082, s. 775.083,
  149  or s. 775.084. As used in this paragraph, the term “rebate”
  150  means a remuneration, payment, gift, discount, or transfer of
  151  any item of value to the policyholder by or on behalf of a
  152  person performing the repairs specified in this section as an
  153  incentive or inducement to obtain repairs performed by that
  154  person.
  155         (7) An insurer shall renew may not nonrenew any policy of
  156  property insurance on the basis of filing of claims for sinkhole
  157  loss if the total of such payments does not equal or exceed the
  158  policy limits of coverage for the policy in effect on the date
  159  of loss, for property damage to the covered building, as set
  160  forth on the declarations page, or if the policyholder repaired
  161  the structure in accordance with the engineering recommendations
  162  made pursuant to subsection (2) upon which any payment or policy
  163  proceeds were based. If the insurer pays such limits, it may
  164  nonrenew the policy.
  165         Section 3. Section 627.7073, Florida Statutes, is amended
  166  to read:
  167         627.7073 Sinkhole reports.—
  168         (1) Upon completion of testing as provided in s. 627.7072,
  169  the professional engineer or professional geologist shall issue
  170  a report and certification, which shall be considered as
  171  property jointly owned by the insurer and the policyholder, to
  172  the insurer and the policyholder as provided in this section.
  173         (a) Sinkhole loss is verified if, based upon tests
  174  performed in accordance with s. 627.7072, a professional
  175  engineer or a professional geologist issues a written report and
  176  certification stating:
  177         1. That structural damage to the covered building has been
  178  identified within a reasonable professional probability.
  179         2. That the cause of the structural damage is sinkhole
  180  activity within a reasonable professional probability.
  181         3. That the analyses conducted were of sufficient scope to
  182  identify sinkhole activity as the cause of damage within a
  183  reasonable professional probability.
  184         4. A description of the tests performed.
  185         5. A recommendation by the professional engineer of methods
  186  for stabilizing the land and building and for making repairs to
  187  the foundation.
  188         (b) If there is no structural damage or if sinkhole
  189  activity is eliminated as the cause of such damage to the
  190  covered building, the professional engineer or professional
  191  geologist shall issue a written report and certification to the
  192  policyholder and the insurer stating:
  193         1. That there is no structural damage or the cause of such
  194  damage is not sinkhole activity within a reasonable professional
  195  probability.
  196         2. That the analyses and tests conducted were of sufficient
  197  scope to eliminate sinkhole activity as the cause of the
  198  structural damage within a reasonable professional probability.
  199         3. A statement of the cause of the structural damage within
  200  a reasonable professional probability.
  201         4. A description of the tests performed.
  202         (c) The respective findings, opinions, and recommendations
  203  of the insurer’s professional engineer or professional geologist
  204  as to the cause of distress to the property and the findings,
  205  opinions, and recommendations of the insurer’s professional
  206  engineer as to land and building stabilization and foundation
  207  repair set forth by s. 627.7072 shall be presumed correct.
  208         (d) The professional engineer or professional geologist
  209  shall provide by certified mail, return receipt requested, two
  210  original signed and sealed reports to the policyholder and one
  211  photocopy of the report to the insurer.
  212         (2) An insurer that has paid a claim for a sinkhole loss
  213  shall file a copy of the report and certification, prepared
  214  pursuant to subsection (1), including the legal description of
  215  the real property and the name of the property owner, the
  216  neutral evaluator’s report, if any, which indicates that
  217  sinkhole activity caused the damage claimed, a copy of the
  218  certification indicating that stabilization has been completed,
  219  if applicable, and the amount of the payment, with the county
  220  clerk of court, who shall record the report and certification.
  221  The insurer shall bear the cost of filing and recording one or
  222  more reports and certifications. If an insurer fails to file a
  223  copy of the report within 30 days after payment of a sinkhole
  224  claim, a $25 penalty shall be assessed for each day beyond the
  225  30th day that the insurer is determined to be in noncompliance
  226  with this section until the insurer is in compliance, which
  227  shall be payable to the clerk of the court. There shall be no
  228  cause of action or liability against an insurer for compliance
  229  with this section.
  230         (a) The recording of the report and certification does not:
  231         1. Constitute a lien, encumbrance, or restriction on the
  232  title to the real property or constitute a defect in the title
  233  to the real property;
  234         2. Create any cause of action or liability against any
  235  grantor of the real property for breach of any warranty of good
  236  title or warranty against encumbrances; or
  237         3. Create any cause of action or liability against any
  238  title insurer that insures the title to the real property.
  239         (b) As a precondition to accepting payment for a sinkhole
  240  loss, the policyholder must file a copy of any sinkhole report
  241  regarding the insured property which was prepared on behalf or
  242  at the request of the policyholder. The policyholder shall bear
  243  the cost of filing and recording the sinkhole report. The
  244  recording of the report does not:
  245         1. Constitute a lien, encumbrance, or restriction on the
  246  title to the real property or constitute a defect in the title
  247  to the real property;
  248         2. Create any cause of action or liability against any
  249  grantor of the real property for breach of any warranty of good
  250  title or warranty against encumbrances; or
  251         3. Create any cause of action or liability against a title
  252  insurer that insures the title to the real property.
  253         (c) The seller of real property upon which a sinkhole claim
  254  has been made by the seller and paid by the insurer must
  255  disclose to the buyer of such property, before the closing, that
  256  a claim has been paid and whether or not the full amount of the
  257  proceeds was used to repair the sinkhole damage.
  258         (3) Upon completion of any building stabilization or
  259  foundation repairs for a verified sinkhole loss, the
  260  professional engineer responsible for monitoring the repairs
  261  shall issue a report to the property owner which specifies what
  262  repairs have been performed and certifies within a reasonable
  263  degree of professional probability that such repairs have been
  264  properly performed. The professional engineer issuing the report
  265  shall file a copy of the report and certification, which
  266  includes a legal description of the real property and the name
  267  of the property owner, with the county clerk of the court, who
  268  shall record the report and certification. This subsection does
  269  not create liability for an insurer based on any representation
  270  or certification by a professional engineer related to the
  271  stabilization or foundation repairs for the verified sinkhole
  272  loss.
  273         Section 4. This act shall take effect July 1, 2013.