HB 1297

CS

CHAMBER ACTION

1	The Committee on Insurance recommends the following:
2
3	Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to insurance payments from escrow
7	accounts; amending s. 501.137, F.S.; requiring an insurer
8	to reinstate, under certain circumstances, an insurance
9	policy that is cancelled due to failure of the lender to
10	pay a premium for which sufficient escrow funds are on
11	deposit; requiring that the lender reimburse the property
12	owner for any penalties or fees paid for purposes of
13	reinstating the policy; requiring a lender to pay certain
14	policy cost differentials under certain circumstances;
15	amending s. 627.4133, F.S.; requiring property insurers to
16	reinstate pursuant to law a canceled property insurance
17	policy secured by a mortgage for failure by a lender to
18	timely pay premium; providing an effective date.
19
20	Be It Enacted by the Legislature of the State of Florida:
21
22	Section 1.  Section 501.137, Florida Statutes, is amended
23	to read:
24	501.137  Mortgage lenders; tax and insurance payments from
25	escrow accounts; duties.--
26	(1)  Every lender of money, whether a natural person or an
27	artificial entity, whose loans are secured by a mortgage on real
28	estate located within the state and who receives funds
29	incidental thereto or in connection therewith for the payment of
30	property taxes or hazard insurance premiums when the such funds
31	are held in escrow by or on behalf of the lender, shall promptly
32	pay the such taxes or insurance premiums when the such taxes or
33	premiums become due and adequate escrow funds are deposited, so
34	that the maximum tax discount available may be obtained with
35	regard to the taxable property and so that insurance coverage on
36	the property does not lapse.
37	(2)  If an escrow account for the such taxes or insurance
38	premiums is deficient, the lender shall notify the property
39	owner within 15 days after the lender receives the notification
40	of taxes due from the county tax collector or receives the
41	notification from the insurer that a premium is due.
42	(3)(a)  If the lender, as a result of neglect, fails to pay
43	any tax or insurance premium when the tax or premium is due and
44	there are sufficient escrow funds on deposit to pay the tax or
45	premium, and if the property owner suffers a loss as a result of
46	this such failure, then the lender is will be liable for the
47	such loss; except, however, that with respect to any loss that
48	which would otherwise have been insured, the extent of the such
49	liability shall not exceed the coverage limits of any insurance
50	policy that which has lapsed.
51	(b)  If the premium payment is not more than 90 days
52	overdue, the insurer shall reinstate the insurance policy,
53	retroactive to the date of cancellation, and the lender shall
54	reimburse the property owner for any penalty or fees imposed by
55	the insurer and paid by the property owner for purposes of
56	reinstating the policy.
57	(c)  If the premium payment is more than 90 days overdue or
58	if the insurer refuses to reinstate the insurance policy, the
59	lender shall pay the difference between the cost of the previous
60	insurance policy and a new, comparable insurance policy for a
61	period of 2 years.
62	(4)  At the expiration of the annual accounting period, the
63	lender shall issue to the property owner an annual statement of
64	the escrow account.
65	Section 2.  Subsection (4) is added to section 627.4133,
66	Florida Statutes, to read:
67	627.4133  Notice of cancellation, nonrenewal, or renewal
68	premium.--
69	(4)  An insurer that cancels a property insurance policy on
70	property secured by a mortgage due to the failure of the lender
71	to timely pay the premium when due shall reinstate the policy as
72	required by s. 501.137.
73	Section 3.  This act shall take effect July 1, 2004.

CODING: Words stricken are deletions; words underlined are additions.