HB 0557 2004
1	A bill to be entitled
2	An act relating to insurance; amending s. 20.121, F.S.;
3	requiring the Division of Consumer Services of the
4	Department of Financial Services to designate an employee
5	as primary contact for consumers on issues involving
6	sinkholes; amending s. 626.9541, F.S.; specifying
7	additional circumstances as unfair methods of competition
8	and unfair or deceptive acts or practices; creating s.
9	626.9742, F.S.; requiring insurers to provide certain
10	information to consumers upon refusing to insure due to
11	adverse underwriting information; creating s. 626.9743,
12	F.S.; specifying claim settlement practice requirements
13	for motor vehicle insurance claims; authorizing the
14	department to adopt certain rules; creating s. 626.9744,
15	F.S.; specifying claims settlement practice requirements
16	for property insurance claims; authorizing the department
17	to adopt certain rules; amending s. 627.4133, F.S.;
18	requiring insurers to notify a mortgage company for
19	failure to timely pay a homeowner's premium pursuant to an
20	escrow agreement; providing for mortgage company
21	responsibility for certain costs relating to policy lapse
22	or reinstatement and for losses to the insured property
23	during the period of lapse; prohibiting cancellation or
24	nonrenewal of property insurance as a result of certain
25	claims for water damage under certain conditions;
26	providing severability; providing an effective date.
27
28	Be It Enacted by the Legislature of the State of Florida:
29
30	Section 1. Paragraph (h) of subsection (2) of section
31	20.121, Florida Statutes, is amended to read:
32	20.121 Department of Financial Services.--There is created
33	a Department of Financial Services.
34	(2) DIVISIONS.--The Department of Financial Services shall
35	consist of the following divisions:
36	(h) The Division of Consumer Services, which shall include
37	a Bureau of Funeral and Cemetery Services.
38	1. The Division of Consumer Services shall perform the
39	following functions concerning products or services regulated by
40	the Department of Financial Services or by either office of the
41	Financial Services Commission:
42	a. Receive inquiries and complaints from consumers.;
43	b. Prepare and disseminate such information as the
44	department deems appropriate to inform or assist consumers.;
45	c. Provide direct assistance and advocacy for consumers
46	who request such assistance or advocacy.;
47	d. With respect to apparent or potential violations of law
48	or applicable rules by a person or entity licensed by the
49	department or by either office of the commission, report such
50	apparent or potential violation to the appropriate division of
51	the department or office of the commission, which may take such
52	further action as it deems appropriate.
53	e. Designate an employee of the division as primary
54	contact for consumers on issues relating to sinkholes.
55	2. Any person licensed or issued a certificate of
56	authority by the department or by the Office of Insurance
57	Regulation shall respond, in writing, to the Division of
58	Consumer Services within 20 days after receipt of a written
59	request for information from the division concerning a consumer
60	complaint. The response must address the issues and allegations
61	raised in this complaint. The division may, in its discretion,
62	impose an administrative penalty for failure to comply with this
63	subparagraph in an amount up to $2,500 per violation upon any
64	entity licensed by the department or the Office of Insurance
65	Regulation and $250 for the first violation, $500 for the second
66	violation and up to $1,000 per violation thereafter upon any
67	individual licensed by the department or the Office of Insurance
68	Regulation.
69	3. The department may adopt rules to implement the
70	provisions of this paragraph.
71	4. The powers, duties, and responsibilities expressed or
72	granted in this paragraph shall not limit the powers, duties,
73	and responsibilities of the Department of Financial Services,
74	the Financial Services Commission, the Office of Insurance
75	Regulation, or the Office of Financial Regulation set forth
76	elsewhere in the Florida Statutes.
77	Section 2. Paragraphs (i) and (x) of subsection (1) of
78	section 626.9541, Florida Statutes, are amended to read:
79	626.9541 Unfair methods of competition and unfair or
80	deceptive acts or practices defined.--
81	(1) UNFAIR METHODS OF COMPETITION AND UNFAIR OR DECEPTIVE
82	ACTS.--The following are defined as unfair methods of
83	competition and unfair or deceptive acts or practices:
84	(i) Unfair claim settlement practices.--
85	1. Attempting to settle claims on the basis of an
86	application, when serving as a binder or intended to become a
87	part of the policy, or any other material document which was
88	altered without notice to, or knowledge or consent of, the
89	insured;
90	2. A material misrepresentation made to an insured or any
91	other person having an interest in the proceeds payable under
92	such contract or policy, for the purpose and with the intent of
93	effecting settlement of such claims, loss, or damage under such
94	contract or policy on less favorable terms than those provided
95	in, and contemplated by, such contract or policy; or
96	3. Committing or performing with such frequency as to
97	indicate a general business practice any of the following:
98	a. Failing to adopt and implement standards for the proper
99	investigation of claims;
100	b. Misrepresenting pertinent facts or insurance policy
101	provisions relating to coverages at issue;
102	c. Failing to acknowledge and act promptly upon
103	communications with respect to claims;
104	d. Denying claims without conducting reasonable
105	investigations based upon available information;
106	e. Failing to affirm or deny full or partial coverage of
107	claims, and, as to partial coverage, the dollar amount or extent
108	of coverage, or failing to provide a written statement that the
109	claim is being investigated, upon the written request of the
110	insured within 30 days after proof-of-loss statements have been
111	completed;
112	f. Failing to promptly provide a reasonable explanation in
113	writing to the insured of the basis in the insurance policy, in
114	relation to the facts or applicable law, for denial of a claim
115	or for the offer of a compromise settlement;
116	g. Failing to promptly notify the insured of any
117	additional information necessary for the processing of a claim;
118	or
119	h. Failing to clearly explain the nature of the requested
120	information and the reasons why such information is necessary;
121	or
122	4. Mandating arbitration in an insurance contract or
123	policy with the intent of effecting settlement of claims,
124	losses, or damages under such contract, unless the company
125	offers the consumer the ability to enter into a contract without
126	this provision.
127	(x) Refusal to insure.--In addition to other provisions of
128	this code, the refusal to insure, or continue to insure, any
129	individual or risk solely because of:
130	1. Race, color, creed, marital status, sex, or national
131	origin;
132	2. The residence, age, or lawful occupation of the
133	individual or the location of the risk, unless there is a
134	reasonable relationship between the residence, age, or lawful
135	occupation of the individual or the location of the risk and the
136	coverage issued or to be issued;
137	3. The insured's or applicant's failure to agree to place
138	collateral business with any insurer, unless the coverage
139	applied for would provide liability coverage which is excess
140	over that provided in policies maintained on property or motor
141	vehicles;
142	4. The insured's or applicant's failure to purchase
143	noninsurance services or commodities, including automobile
144	services as defined in s. 624.124;
145	5. The fact that the insured or applicant is a public
146	official; or
147	6. The fact that the insured or applicant had been
148	previously refused insurance coverage by any insurer, when such
149	refusal to insure or continue to insure for this reason occurs
150	with such frequency as to indicate a general business practice;
151	7. The existence of any water damage loss that occurred
152	prior to the current or prospective ownership of a private
153	residence and was subsequently repaired at the property prior to
154	the current or prospective ownership of the property; or
155	8. Prior claims resulting from an act of God.
156	Section 3. Section 626.9742, Florida Statutes, is created
157	to read:
158	626.9742 Reporting by insurers related to loss
159	underwriting.--When an insurer refuses to provide coverage to an
160	applicant due to adverse underwriting information, the insurer
161	shall:
162	(1) Provide to the applicant specific information
163	regarding the reasons for the refusal to insure.
164	(2) If the reason for the refusal to insure is based on a
165	loss underwriting history or report, upon request by the
166	applicant, provide the applicant with a copy of the loss
167	underwriting history or report at no cost to the applicant.
168	Section 4. Section 626.9743, Florida Statutes, is created
169	to read:
170	626.9743 Claim settlement practices relating to motor
171	vehicle insurance.--
172	(1) This section applies to the adjustment and settlement
173	of both first-party and third-party personal and commercial
174	motor vehicle insurance claims.
175	(2) If liability and damages owed under a policy are
176	reasonably clear, an insurer may not recommend that a third-
177	party claimant make a claim under his or her own policy solely
178	to avoid paying the claim under the policy issued by that
179	insurer.
180	(3) Each insurer that elects to repair a motor vehicle and
181	designates a specific repair shop for such repairs shall cause
182	the damaged vehicle to be restored to its physical condition
183	prior to the loss at no additional cost to the insured or third-
184	party claimant other than as stated in the policy.
185	(4) No insurer shall require the use of replacement parts
186	in the repair of a motor vehicle unless the parts are at least
187	equal in kind and quality to the original parts in terms of fit,
188	quality, and performance.
189	(5) The department may adopt rules establishing
190	requirements applicable to the adjustment and settlement of
191	motor vehicle insurance claims. The rules may include, but need
192	not be limited to:
193	(a) Descriptions of methods that may be used by insurers
194	to adjust and settle motor vehicle total losses, including cash
195	settlements or replacement motor vehicles.
196	(b) Standards to require that replacement motor vehicles
197	be comparable to the damaged motor vehicle, including, but not
198	limited to, such factors as manufacturer, model type, model
199	year, options, mileage, and availability.
200	(c) Descriptions of methods that may be used by insurers
201	to derive the cost of cash settlements for purposes of adjusting
202	and settling motor vehicle total losses, including, but not
203	limited to, the consideration of cost of comparable motor
204	vehicles in the applicable area, the cost as determined by an
205	applicable source for motor vehicle valuation, and the cost as
206	determined by licensed dealer quotes in the applicable area.
207	(d) Requirements which must be met by any source for motor
208	vehicle valuation used by insurers for purposes of adjusting and
209	settling motor vehicle total losses, including, but not limited
210	to, the relative weight given to vehicle values determined by
211	geographic area, the number or percentage of vehicles and model
212	years included in the source, and the validity of values
213	determined by comparison to actual local vehicle values.
214	(e) Standards for claim reductions based on charges for
215	betterment or depreciation or other charges.
216	(f) Standards for the settlement of partial losses based
217	on written estimates obtained by insurers and claimants,
218	including, but not limited to, options for cash settlements and
219	agreements with repair shops.
220	Section 5. Section 626.9744, Florida Statutes, is created
221	to read:
222	626.9744 Claim settlement practices relating to property
223	insurance.--Unless otherwise provided by policy, when a
224	homeowner's insurance policy provides for the adjustment and
225	settlement of first-party losses based on repair or replacement
226	cost, the following requirements apply:
227	(1) When a loss requires repair or replacement of an item
228	or part, any consequential physical damage incurred in making
229	such repair or replacement that is covered and not otherwise
230	excluded by the policy shall be included in the loss. The
231	insured shall not have to pay for betterment required by
232	ordinance or code or for any other cost except for the
233	applicable deductible, unless specifically excluded by the
234	policy.
235	(2) When a loss requires repair or replacement of portions
236	of a home, the repair or replacement shall include adjoining
237	areas to the extent necessary to achieve a reasonably uniform
238	appearance. The department may adopt rules governing the
239	determination of the area to which the uniform appearance
240	requirement applies.
241	Section 6. Paragraph (b) of subsection (2) of section
242	627.4133, Florida Statutes, is amended, and subsection (4) is
243	added to said section, to read:
244	627.4133 Notice of cancellation, nonrenewal, or renewal
245	premium.--
246	(2) With respect to any personal lines or commercial
247	residential property insurance policy, including, but not
248	limited to, any homeowner's, mobile home owner's, farmowner's,
249	condominium association, condominium unit owner's, apartment
250	building, or other policy covering a residential structure or
251	its contents:
252	(b) The insurer shall give the named insured written
253	notice of nonrenewal, cancellation, or termination at least 90
254	days prior to the effective date of the nonrenewal,
255	cancellation, or termination. The notice must include the reason
256	or reasons for the nonrenewal, cancellation, or termination,
257	except that:
258	1.a.When cancellation is for nonpayment of premium, at
259	least 10 days' written notice of cancellation accompanied by the
260	reason therefor shall be given.
261	b. When a mortgage company is responsible for making a
262	residential property insurance premium payment pursuant to an
263	escrow agreement and fails to pay the premium in a timely
264	manner, the insurer shall mail the written notice required by
265	sub-subparagraph a. to the mortgage company, with a copy to the
266	insured, notifying the mortgage company that the policy will
267	lapse. Upon receiving such notice, the mortgage company shall
268	make the required premium payment and the insurer shall
269	reinstate the policy upon receipt of the required premium.
270	During any period of time in which property insurance coverage
271	has lapsed due to the failure of a mortgage company to remit
272	such escrowed premium payments, the mortgage company is
273	responsible for any loss to the insured property. All additional
274	costs or fees to reinstate insurance coverage as the result of a
275	failure of a mortgage company to remit such escrowed premium
276	payments shall be the sole responsibility of the mortgage
277	company and shall not be passed on to the insured mortgagee.
278	2. When such cancellation or termination occurs during the
279	first 90 days during which the insurance is in force and the
280	insurance is canceled or terminated for reasons other than
281	nonpayment of premium, at least 20 days' written notice of
282	cancellation or termination accompanied by the reason therefor
283	shall be given except where there has been a material
284	misstatement or misrepresentation or failure to comply with the
285	underwriting requirements established by the insurer.
286
287	After the policy has been in effect for 90 days, the policy
288	shall not be canceled by the insurer except when there has been
289	a material misstatement, a nonpayment of premium, a failure to
290	comply with underwriting requirements established by the insurer
291	within 90 days of the date of effectuation of coverage, or a
292	substantial change in the risk covered by the policy or when the
293	cancellation is for all insureds under such policies for a given
294	class of insureds. This paragraph does not apply to individually
295	rated risks having a policy term of less than 90 days.
296	(4) Claims on property insurance policies that are the
297	result of water damage may not be used as a cause for
298	cancellation or nonrenewal unless the insurer can demonstrate,
299	by claims frequency or otherwise, that the insured has failed to
300	take action reasonably necessary as requested by the insurer to
301	prevent recurrence of damage to the insured property.
302	Section 7. If any provision of this act or the application
303	thereof to any person or circumstance is held invalid, the
304	invalidity does not affect other provisions or applications of
305	the act which can be given effect without the invalid provision
306	or application, and to this end the provisions of this act are
307	declared severable.
308	Section 8. This act shall take effect July 1, 2004.