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 structureland and building and repair the81foundationin accordance with the recommendations of athe82 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 renewmay not nonrenewany 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 may164nonrenew 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 no228cause of action or liability against an insurer for compliance229with 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.