HB 1317

1	A bill to be entitled
2	An act relating to personal lines residential insurance
3	policies; creating s. 627.40951, F.S.; providing
4	legislative findings; providing purpose and intent;
5	requiring the Chief Financial Officer to appoint an
6	advisory committee for certain purposes; providing for
7	membership; requiring the committee to report certain
8	recommendations to the Office of Insurance Regulation;
9	providing for the Commissioner of Insurance Regulation to
10	approve standard personal lines residential insurance
11	policies and a checklist for each type of such policy;
12	requiring insurers to offer such standard policies under
13	certain circumstances; authorizing the commissioner to
14	modify such policies under certain circumstances;
15	authorizing the Financial Services Commission to adopt
16	rules; providing a definition; amending s. 627.4143, F.S.;
17	requiring personal lines property insurance policies to
18	contain an outline of coverage and a checklist of items
19	contained in the policies; specifying checklist contents;
20	specifying outline contents; requiring the checklist and
21	outline of insurance coverage to be sent with each renewal
22	of personal lines residential insurance policies;
23	clarifying that homeowners' insurance includes mobile
24	homeowners' and condominium unit owners' insurance for
25	purposes of the outline of coverage; amending s. 627.701,
26	F.S.; excluding wind losses from certain provisions
27	specifying liability of insureds; deleting a provision
28	specifying contents of certain notices; requiring insurers
29	to provide written notice explaining to policyholders
30	hurricane deductible options for residential property
31	insurance policies; specifying form and contents of the
32	notice; providing a presumption for a signed notice;
33	providing an effective date.
34
35	Be It Enacted by the Legislature of the State of Florida:
36
37	Section 1.  Section 627.40951, Florida Statutes, is created
38	to read:
39	627.40951  Legislative findings; purpose and intent;
40	standard personal lines residential insurance policy.--
41	(1)  The Legislature finds that many consumers who filed
42	property loss claims as a result of the hurricanes that struck
43	this state in 2004 were inadequately insured due to the
44	difficulty consumers encounter in trying to understand the
45	complex nature of property insurance policies. The purpose and
46	intent of this section is to have property and casualty insurers
47	offer standard personal lines residential property insurance
48	policies and standard checklists of policy contents, in
49	accordance with s. 627.4143, to consumers and that these
50	policies and checklists be written in a format and with
51	simplified, readable language that will enable most consumers to
52	understand the principal benefits and coverage provided in the
53	policy, the principal exclusions, and limitations or reductions
54	contained in the policy, including, but not limited to,
55	deductibles, coinsurance, and any other limitations or
56	reductions, any additional coverage provided through any rider
57	or endorsement which accompanies the policy, and renewal or
58	cancellation provisions.
59	(2)  The Chief Financial Officer shall appoint an advisory
60	committee composed of the Chief Financial Officer, two
61	representatives of insurers currently selling personal lines
62	residential property insurance coverage, two representatives of
63	property and casualty agents, two representatives of consumers,
64	two representatives of the Commissioner of Insurance Regulation,
65	and the Insurance Consumer Advocate or his or her designee. The
66	Chief Financial Officer or her or his designee shall serve as
67	chair of the committee. The committee shall develop policy
68	language for coverage that represents general industry standards
69	in the market for comprehensive coverage under personal lines
70	residential insurance policies and shall develop a checklist to
71	be used with each type of personal lines residential property
72	insurance policy. The committee shall review policies and
73	related forms written by Insurance Services Office, Inc. The
74	committee shall file a report containing its recommendations to
75	the Office of Insurance Regulation by January 1, 2006.
76	(3)  If the Commissioner of Insurance Regulation accepts
77	the recommendations of the committee, the commissioner shall
78	issue an order approving standard personal lines residential
79	insurance policies and a checklist for each type of personal
80	lines residential insurance policy.
81	(4)  Within 12 months after the effective date of the
82	order, each insurer offering similar coverage shall offer the
83	standard plan in addition to other products the insurer is
84	authorized to offer. This requirement does not preclude insurers
85	from underwriting risks to determine eligibility of an applicant
86	in accordance with the insurer's underwriting guidelines.
87	(5)  After approval of the standard policies, the
88	commissioner may make modifications to a policy as he or she
89	finds appropriate as market conditions change and as experience
90	with issues involving standard policies that have been issued.
91	The commissioner may determine that modifications are necessary
92	if he or she finds that any of the standard policies are
93	providing coverage that is significantly different than what the
94	market has available. Modifications shall be made by order of
95	the commissioner.
96	(6)  The Financial Services Commission may adopt rules to
97	implement the provisions of this section.
98	(7)  For purposes of this section, personal lines
99	residential property insurance includes homeowners', mobile
100	homeowners', dwelling, and condominium unit owners' insurance.
101	Section 2.  Section 627.4143, Florida Statutes, is amended
102	to read:
103	627.4143  Outline of coverage.--
104	(1)  No private passenger motor vehicle automobile or basic
105	homeowner's policy shall be delivered or issued for delivery in
106	this state unless an appropriate outline of coverage has been
107	delivered prior to issuance of the policy or accompanies the
108	policy when issued.
109	(2)  The outline of coverage for a private passenger motor
110	vehicle insurance policy shall contain all of the following:
111	(a)  A brief description of the principal benefits and
112	coverage provided in the policy, broken down by each class or
113	type of coverage provided under the policy for which a premium
114	is charged, and itemization of the applicable premium.
115	(b)  A summary statement of the principal exclusions and
116	limitations or reductions contained in the policy by class or
117	type, including, but not limited to, deductibles, coinsurance,
118	and any other limitations or reductions.
119	(c)  A summary statement of any renewal or cancellation
120	provisions.
121	(d)  A description of the credit or surcharge plan that is
122	being applied. The description may display numerical or
123	alphabetical codes on the declarations page or premium notice to
124	enable the insured to determine the reason or reasons why her or
125	his policy is being surcharged or is receiving a credit.
126	(e)  A list of any additional coverage provided through any
127	rider or endorsement which accompanies the policy. The list
128	shall contain a descriptive reference to each additional
129	coverage, rather than solely a reference to a form or code
130	number.
131	(f)  For a private passenger motor vehicle insurance
132	policy, The extent of coverage provided to the insured in the
133	event of collision damage to a rental vehicle rented by the
134	insured. The proof-of-insurance card required by s. 316.646 must
135	also specify whether rental car coverage is provided, and may
136	refer to the outline of coverage as to the details or extent of
137	coverage.
138	(3)  No basic homeowners', mobile homeowners', dwelling, or
139	condominium unit owners' policy shall be delivered or issued for
140	delivery in this state unless a checklist of coverage and an
141	appropriate outline of coverage has been delivered prior to
142	issuance of the policy or accompanies the policy when issued.
143	Insurers shall use the checklists developed pursuant to s.
144	627.40951.
145	(a)  The checklist shall contain a list of the standard
146	provisions and elements that may typically be included in such
147	policies, whether or not they are included in the particular
148	policy being issued, in a format that allows the insurer to
149	place a check mark next to the provision's elements that are
150	included so that the consumer can see what is included and what
151	is not included in the policy. Limits of liability shall be
152	listed for each item. The checklist shall include, but is not
153	limited to, the following:
154	1.  Covered real property. Items for this category shall be
155	broader than simply listing "dwelling." It shall include
156	references to specific property in the category of attached and
157	unattached structures that may be covered in a typical policy.
158	It shall include references to whether coverage for damaged
159	property is based on replacement cost coverage or actual cash
160	value coverage. Primary exclusions from real property coverage
161	shall be listed after the real property coverage items.
162	2.  Personal property coverage. Primary exclusions from
163	personal property coverage items shall be listed after the
164	personal property coverage.
165	3.  Personal liability coverage. Primary exclusions from
166	personal liability coverage shall be listed after the personal
167	liability coverage items.
168	4.  Medical payments coverage.
169	5.  Primary discounts that are available.
170	6.  Hurricane deductibles that are available. The notice to
171	consumers set forth in s. 627.701(5) shall be set forth
172	immediately following the list of deductibles.
173	7.  References to specific additional property coverage
174	that may be provided through any rider or endorsement. This
175	shall include building ordinance or law coverage, personal
176	injury endorsements, motor vehicle endorsements, jewelry, furs,
177	and communication property endorsements, home business
178	endorsements, and replacement cost endorsement for contents.
179	8.  Covered perils.
180	9.  Excluded perils.
181	(b)  The outline of coverage shall contain:
182	1.  A brief description of the principal benefits and
183	coverage provided in the policy, broken down by each class or
184	type of coverage provided under the policy for which a premium
185	is charged, and itemization of the applicable premium.
186	2.  A summary statement of the principal exclusions and
187	limitations or reductions contained in the policy by class or
188	type, including, but not limited to, deductibles, coinsurance,
189	and any other limitations or reductions.
190	3.  A summary statement of any renewal or cancellation
191	provisions.
192	4.  A description of the credit or surcharge plan that is
193	being applied. The description may display numerical or
194	alphabetical codes on the declarations page or premium notice to
195	enable the insured to determine the reason or reasons why his or
196	her policy is being surcharged or is receiving a credit.
197	5.  A summary of any additional coverage provided through
198	any rider or endorsement which accompanies the policy.
199	(4)(3)  The outline of coverage for a private passenger
200	motor vehicle policy is required only on the initial policy
201	issued by an insurer. The outline of coverage and the checklist
202	for a basic homeowners', mobile homeowners', dwelling, or
203	condominium unit owners' policy is required on the initial
204	policy and each renewal thereof issued by an insurer.
205	(5)(4)  An insurer must insert the following language on
206	the outline of coverage and the checklist:
207
208	"The following outline of coverage or checklist is for
209	informational purposes only. Florida law prohibits this outline
210	or checklist from changing any of the provisions of the
211	insurance contract which is the subject of this outline. Any
212	endorsement regarding changes in types of coverage, exclusions,
213	limitations, reductions, deductibles, coinsurance, renewal
214	provisions, cancellation provisions, surcharges, or credits will
215	be sent separately."
216
217	(6)(5)  Neither this section nor the outline of coverage or
218	checklist mandated by this section alters or modifies the terms
219	of the insurance contract, creates a cause of action, or is
220	admissible in any civil action.
221	Section 3.  Subsection (3) of section 627.701, Florida
222	Statutes, is amended, subsections (5), (6), (7), and (8) of
223	section 627.701, Florida Statutes, are renumbered as subsections
224	(6), (7), (8), and (9), respectively, and a new subsection (5)
225	is added to said section, to read:
226	627.701  Liability of insureds; coinsurance; deductibles.--
227	(3)(a)  A policy of residential property insurance shall
228	include a deductible amount applicable to hurricane or wind
229	losses no lower than $500 and no higher than 2 percent of the
230	policy dwelling limits with respect to personal lines
231	residential risks, and no higher than 3 percent of the policy
232	limits with respect to commercial lines residential risks;
233	however, if a risk was covered on August 24, 1992, under a
234	policy having a higher deductible than the deductibles allowed
235	by this paragraph, a policy covering such risk may include a
236	deductible no higher than the deductible in effect on August 24,
237	1992. Notwithstanding the other provisions of this paragraph, a
238	personal lines residential policy covering a risk valued at
239	$50,000 or less may include a deductible amount attributable to
240	hurricane or wind losses no lower than $250, and a personal
241	lines residential policy covering a risk valued at $100,000 or
242	more may include a deductible amount attributable to hurricane
243	or wind losses no higher than 5 percent of the policy limits
244	unless subject to a higher deductible on August 24, 1992;
245	however, no maximum deductible is required with respect to a
246	personal lines residential policy covering a risk valued at more
247	than $500,000. An insurer may require a higher deductible,
248	provided such deductible is the same as or similar to a
249	deductible program lawfully in effect on June 14, 1995. In
250	addition to the deductible amounts authorized by this paragraph,
251	an insurer may also offer policies with a copayment provision
252	under which, after exhaustion of the deductible, the
253	policyholder is responsible for 10 percent of the next $10,000
254	of insured hurricane or wind losses.
255	(b)1.  Except as otherwise provided in this paragraph,
256	prior to issuing a personal lines residential property insurance
257	policy on or after April 1, 1996, or prior to the first renewal
258	of a residential property insurance policy on or after April 1,
259	1996, the insurer must offer alternative deductible amounts
260	applicable to hurricane or wind losses equal to $500 and 2
261	percent of the policy dwelling limits, unless the 2 percent
262	deductible is less than $500. The written notice of the offer
263	shall specify the hurricane or wind deductible to be applied in
264	the event that the applicant or policyholder fails to
265	affirmatively choose a hurricane deductible. The insurer must
266	provide such policyholder with notice of the availability of the
267	deductible amounts specified in this paragraph in a form
268	approved by the office in conjunction with each renewal of the
269	policy. The failure to provide such notice constitutes a
270	violation of this code but does not affect the coverage provided
271	under the policy.
272	2.  This paragraph does not apply with respect to a
273	deductible program lawfully in effect on June 14, 1995, or to
274	any similar deductible program, if the deductible program
275	requires a minimum deductible amount of no less than 2 percent
276	of the policy limits.
277	3.  With respect to a policy covering a risk with dwelling
278	limits of at least $100,000, but less than $250,000, the insurer
279	may, in lieu of offering a policy with a $500 hurricane or wind
280	deductible as required by subparagraph 1., offer a policy that
281	the insurer guarantees it will not nonrenew for reasons of
282	reducing hurricane loss for one renewal period and that contains
283	up to a 2 percent hurricane or wind deductible as required by
284	subparagraph 1.
285	4.  With respect to a policy covering a risk with dwelling
286	limits of $250,000 or more, the insurer need not offer the $500
287	hurricane or wind deductible as required by subparagraph 1., but
288	must, except as otherwise provided in this subsection, offer the
289	2 percent hurricane or wind deductible as required by
290	subparagraph 1.
291	(c)  In order to provide for the transition from wind
292	deductibles to hurricane deductibles as required by this
293	subsection, an insurer is required to provide wind deductibles
294	meeting the requirements of this subsection until the effective
295	date of the insurer's first rate filing made after January 1,
296	1997, and is thereafter required to provide hurricane
297	deductibles meeting the requirements of this subsection.
298	(5)  Prior to issuing a personal lines residential property
299	insurance policy and prior to each renewal thereof, insurers
300	shall provide each policyholder and applicant with a notice of
301	the availability of the deductible amounts that insurers are
302	required to offer and any other deductible that an insurer
303	chooses to offer that is not prohibited by this section. The
304	notice shall be on a form approved by the office. The form shall
305	fully advise the policyholder or applicant of the nature of the
306	deductible, including the fact that higher deductibles result in
307	lower premiums but will also result in higher out-of-pocket
308	expenses to the policyholder in the event of a hurricane damage
309	claim. For each percentage deductible available to the
310	policyholder or applicant, the form shall include the dollar
311	amount of deductible that will result from application of the
312	percentage deductible. The heading of the form shall be in 12-
313	point bold type and shall state:
314
315	"You are required by Florida law to choose a
316	deductible that will apply to any claims that you may
317	have with your insurer as a result of damage to your
318	residence by a hurricane. This form explains the
319	deductible options that your insurer is required or
320	permitted to offer to you. Please read carefully."
321
322	If this form is signed by a named insured, it is conclusively
323	presumed there was an informed, knowing selection of the amount
324	of the deductible. Such notice shall provide for a means to
325	allow the policyholder or applicant to select the deductible.
326	The failure to provide such notice constitutes a violation of
327	this code but does not affect the coverage provided under the
328	policy.
329	Section 4.  This act shall take effect July 1, 2005.

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