Florida Senate - 2005                        SENATOR AMENDMENT
    Bill No. CS for CS for SB 1488
                        Barcode 711894
                            CHAMBER ACTION
              Senate                               House
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       05/05/2005 08:26 PM         .                    
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11  Senator Garcia moved the following amendment:
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13         Senate Amendment (with title amendment) 
14         On page 59, line 8, through
15            page 64, line 14, delete those lines
16  
17  and insert:  sinkhole activity as well as other potential
18  geologic causes of damage to the structure.
19         (3)(4)  Every insurer authorized to transact property
20  insurance in this state shall make a proper filing with the
21  office for the purpose of extending the appropriate forms of
22  property insurance to include coverage for insurable sinkhole
23  losses.
24         Section 17.  Section 627.7065, Florida Statutes, is
25  created to read:
26         627.7065  Database of information relating to
27  sinkholes; the Department of Financial Services and the
28  Department of Environmental Protection.--
29         (1)  The Legislature finds that there has been a
30  dramatic increase in the number of sinkholes and insurance
31  claims for sinkhole damage in the state during the past 10
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    11:11 AM   05/02/05                            s1488c2c-40-t03

Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 years. Accordingly, the Legislature recognizes the need to 2 track current and past sinkhole activity and to make the 3 information available for prevention and remediation 4 activities. The Legislature further finds that the Florida 5 Geological Survey of the Department of Environmental 6 Protection has created a partial database of some sinkholes 7 identified in Florida, although the database is not reflective 8 of all sinkholes or insurance claims for sinkhole damage. The 9 Legislature determines that creating a complete electronic 10 database of sinkhole activity serves an important purpose in 11 protecting the public and in studying property claims 12 activities in the insurance industry. 13 (2) The Department of Financial Services, including 14 the employee of the Division of Consumer Services designated 15 as the primary contact for consumers on issues relating to 16 sinkholes, and the Office of the Insurance Consumer Advocate 17 shall consult with the Florida Geological Survey and the 18 Department of Environmental Protection to implement a 19 statewide automated database of sinkholes and related activity 20 identified in the state. 21 (3) Representatives of the Department of Financial 22 Services, with the agreement of the Department of 23 Environmental Protection, shall determine the form and content 24 of the database. The content may include standards for 25 reporting and investigating sinkholes for inclusion in the 26 database and requirements for insurers to report to the 27 departments the receipt of claims involving sinkhole loss and 28 other similar activities. The Department of Financial Services 29 may require insurers to report present and past data of 30 sinkhole claims. The database also may include information of 31 damage due to ground settling and other subsidence activity. 2 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 (4) The Department of Financial Services may manage 2 the database or may contract for its management and 3 maintenance. The Department of Environmental Protection shall 4 investigate reports of sinkhole activity and include its 5 findings and investigations in the database. 6 (5) The Department of Environmental Protection, in 7 consultation with the Department of Financial Services, shall 8 present a report of activities relating to the sinkhole 9 database, including recommendations regarding the database and 10 similar matters, to the Governor, the Speaker of the House of 11 Representatives, the President of the Senate, and the Chief 12 Financial Officer by December 31, 2005. The report may 13 consider the need for the Legislature to create an entity to 14 study the increase in sinkhole activity in the state and other 15 similar issues relating to sinkhole damage, including 16 recommendations and costs for staffing the entity. The report 17 may include other information, as appropriate. 18 (6) The Department of Financial Services, in 19 consultation with the Department of Environmental Protection, 20 may adopt rules to implement this section. 21 Section 18. Section 627.707, Florida Statutes, is 22 amended to read: 23 627.707 Minimum Standards for investigation of 24 sinkhole claims by insurers; nonrenewals.-- 25 (1) Upon receipt of a claim for a sinkhole loss, an 26 insurer must meet the following minimum standards in 27 investigating a claim: 28 (1)(a) Upon receipt of a claim for a sinkhole loss, 29 The insurer must make an inspection of the insured's premises 30 to determine if there has been physical damage to the 31 structure which may might be the result of sinkhole activity. 3 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 (b) If, upon the investigation pursuant to paragraph 2 (a), the insurer discovers damage to a structure which is 3 consistent with sinkhole activity or if the structure is 4 located in close proximity to a structure in which sinkhole 5 damage has been verified, then prior to denying a claim, the 6 insurer must obtain a written certification from an individual 7 qualified to determine the existence of sinkhole activity, 8 stating that the cause of the claim is not sinkhole activity, 9 and that the analysis conducted was of sufficient scope to 10 eliminate sinkhole activity as the cause of damage within a 11 reasonable professional probability. The written certification 12 must also specify the professional discipline and professional 13 licensure or registration under which the analysis was 14 conducted. 15 (2) Following the insurer's initial inspection, the 16 insurer shall engage an engineer or a professional geologist 17 to conduct testing as provided in s. 627.7072 to determine the 18 cause of the loss within a reasonable professional probability 19 and issue a report as provided in s. 627.7073, if: 20 (a) The insurer is unable to identify a valid cause of 21 the damage or discovers damage to the structure which is 22 consistent with sinkhole loss; or 23 (b) The policyholder demands testing in accordance 24 with this section or s. 627.7072. 25 (3) Following the initial inspection of the insured 26 premises, the insurer shall provide written notice to the 27 policyholder disclosing the following information: 28 (a) What the insurer has determined to be the cause of 29 damage, if the insurer has made such a determination. 30 (b) A statement of the circumstances under which the 31 insurer is required to engage an engineer or a professional 4 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 geologist to verify or eliminate sinkhole loss and to engage 2 an engineer to make recommendations regarding land and 3 building stabilization and foundation repair. 4 (c) A statement regarding the right of the 5 policyholder to request testing by an engineer or a 6 professional geologist and the circumstances under which the 7 policyholder may demand certain testing. 8 (4) If the insurer determines that there is no 9 sinkhole loss, the insurer may deny the claim. If the insurer 10 denies the claim, without performing testing under s. 11 627.7072, the policyholder may demand testing by the insurer 12 under s. 627.7072. The policyholder's demand for testing must 13 be communicated to the insurer in writing after the 14 policyholder's receipt of the insurer's denial of the claim. 15 (5)(a) Subject to paragraph (b), if a sinkhole loss is 16 verified, the insurer shall pay to stabilize the land and 17 building and repair the foundation in accordance with the 18 recommendations of the engineer as provided under s. 627.7073, 19 and in consultation with the policyholder, subject to the 20 coverage and terms of the policy. The insurer shall pay for 21 other repairs to the structure and contents in accordance with 22 the terms of the policy. 23 (b) The insurer may limit its payment to the actual 24 cash value of the sinkhole loss until such time as expenses 25 related to land and building stabilization and foundation 26 repairs are incurred. 27 (6) Except as provided in subsection (7), the fees and 28 costs of the engineer or the professional geologist shall be 29 paid by the insurer. 30 (7)(c) If the insurer obtains, pursuant to s. 627.7073 31 paragraph (b), written certification that there is no sinkhole 5 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 loss or that the cause of the damage claim was not sinkhole 2 activity, and if the policyholder has submitted the sinkhole 3 claim without good faith grounds for submitting such claim, 4 the policyholder shall reimburse the insurer for 50 percent of 5 the actual costs cost of the analyses and services provided 6 analysis under ss. 627.7072 and 627.7073 paragraph (b); 7 however, a policyholder is not required to reimburse an 8 insurer more than $2,500 with respect to any claim. A 9 policyholder is required to pay reimbursement under this 10 subsection paragraph only if the insurer, prior to ordering 11 the analysis under s. 627.7072 paragraph (b), informs the 12 policyholder in writing of the policyholder's potential 13 liability for reimbursement and gives the policyholder the 14 opportunity to withdraw the claim. 15 (8)(2) No insurer shall nonrenew any policy of 16 property insurance on the basis of filing of claims for 17 partial loss caused by sinkhole damage or clay shrinkage as 18 long as the total of such payments does not exceed the current 19 policy limits of coverage for property damage, and provided 20 the insured has repaired the structure in accordance with the 21 engineering recommendations upon which any payment or policy 22 proceeds were based. 23 (9) The insurer may engage a structural engineer to 24 make recommendations as to the repair of the structure. 25 Section 19. Section 627.7072, Florida Statutes, is 26 created to read: 27 627.7072 Testing standards for sinkholes.-- 28 (1) The engineer and professional geologist shall 29 perform such tests as sufficient, in their professional 30 opinion, to determine the presence or absence of sinkhole loss 31 or other cause of damage within reasonable professional 6 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 probability and for the engineer to make recommendations 2 regarding necessary building stabilization, and foundation 3 repair. 4 (2) Testing by a professional geologist shall be 5 conducted in compliance with the Florida Geological Survey 6 Special Publication No. 57 (2005). 7 Section 20. Section 627.7073, Florida Statutes, is 8 created to read: 9 627.7073 Sinkhole reports.-- 10 (1) Upon completion of testing as provided in s. 11 627.7072, the engineer and professional geologist shall issue 12 a report and certification to the insurer and the policyholder 13 as provided in this section. 14 (a) Sinkhole loss is verified if, based upon tests 15 performed in accordance with s. 627.7072, an engineer and a 16 professional geologist issue a written report and 17 certification stating: 18 1. That the cause of the actual physical and 19 structural damage is sinkhole activity within a reasonable 20 professional probability. 21 2. That the analyses conducted were of sufficient 22 scope to identify sinkhole activity as the cause of damage 23 within a reasonable professional probability. 24 3. A description of the tests performed. 25 4. A recommendation by the engineer of methods for 26 stabilizing the land and building and for making repairs to 27 the foundation. 28 (b) If sinkhole activity is eliminated as the cause of 29 damage to the structure, the engineer and professional 30 geologist shall issue a written report and certification to 31 the policyholder and the insurer stating: 7 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 1. That the cause of the damage is not sinkhole 2 activity within a reasonable professional probability. 3 2. That the analyses and tests conducted were of 4 sufficient scope to eliminate sinkhole activity as the cause 5 of damage within a reasonable professional probability. 6 3. A statement of the cause of the damage within a 7 reasonable professional probability. 8 4. A description of the tests performed. 9 (c) The respective findings, opinions, and 10 recommendations of the engineer and professional geologist as 11 to the verification or elimination of a sinkhole loss and the 12 findings, opinions, and recommendations of the engineer as to 13 land and building stabilization and foundation repair shall be 14 presumed correct. 15 (2) Any insurer that has paid a claim for a sinkhole 16 loss shall file a copy of the report and certification, 17 prepared pursuant to subsection (1), with the county property 18 appraiser who shall record the report and certification with 19 the parcel number. The insurer shall bear the cost of filing 20 and recording the report and certification. There shall be no 21 cause of action or liability against an insurer for compliance 22 with this section. The seller of real property upon which a 23 sinkhole claim has been made shall disclose to the buyer of 24 such property that a claim has been paid and whether or not 25 the full amount of the proceeds were used to repair the 26 sinkhole damage. 27 28 (Redesignate subsequent sections.) 29 30 31 8 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 ================ T I T L E A M E N D M E N T =============== 2 And the title is amended as follows: 3 On page 4, line 11, through 4 page 5, line 1, delete those lines 5 6 and insert: 7 insurance; providing definitions; creating s. 8 627.7065, F.S.; providing legislative findings; 9 requiring the Department of Financial Services 10 and the Office of the Insurance Consumer 11 Advocate to consult with the Florida Geological 12 Survey and the Department of Environmental 13 Protection to implement a statewide automated 14 database of sinkholes and related activity; 15 providing requirements for the form and content 16 of the database; authorizing the Department of 17 Financial Services to require insurers to 18 provide certain information; providing for 19 management of the database; requiring the 20 department to investigate sinkhole activity 21 reports and include findings and investigations 22 in the database; requiring the Department of 23 Environmental Protection to report on the 24 database to the Governor, Legislature, and 25 Chief Financial Officer; authorizing the 26 Department of Financial Services to adopt 27 implementing rules; amending s. 627.707, F.S.; 28 revising standards for investigations of 29 sinkhole claims by insurers; requiring an 30 insurer to engage an engineer or professional 31 geologist for certain purposes; requiring a 9 11:11 AM 05/02/05 s1488c2c-40-t03
Florida Senate - 2005 SENATOR AMENDMENT Bill No. CS for CS for SB 1488 Barcode 711894 1 report under certain circumstances; requiring 2 an insurer to provide written notice to a 3 policyholder disclosing certain information; 4 authorizing an insurer to deny a claim under 5 certain circumstances; authorizing a 6 policyholder to demand certain testing; 7 providing requirements; specifying required 8 activities for insurers if a sinkhole loss is 9 verified; specifying payment requirements for 10 insurers; providing limitations; requiring the 11 insurer to pay fees of the engineer and 12 geologist; authorizing an insurer to engage a 13 structural engineer for certain purposes; 14 creating s. 627.7072, F.S.; specifying 15 requirements for sinkhole testing by engineers 16 and geologists; creating s. 627.7073, F.S.; 17 providing reporting requirements for engineers 18 and geologists after testing for sinkholes; 19 specifying a presumption of correctness of 20 certain findings; requiring an insurer paying a 21 sinkhole loss claim to file a report and 22 certification with the county property 23 appraiser; requiring the property appraiser to 24 record the report and certification; requiring 25 the insurer to bear the cost of filing and 26 recording; requiring a seller of certain 27 property to make certain disclosures to 28 property buyers under certain circumstances; 29 creating s. 627.711, F.S.; 30 31 10 11:11 AM 05/02/05 s1488c2c-40-t03