HB 1745

1
A bill to be entitled
2An act relating to residential property insurance;
3amending s. 215.555, F.S.; revising provisions relating to
4calculation of an insurer's retention for purposes of
5reimbursement from the Florida Hurricane Catastrophe Fund;
6amending s. 627.4133, F.S.; prohibiting insurers from
7canceling or nonrenewing residential property insurance
8policies under certain emergency circumstances; providing
9exceptions; providing notice requirements; providing
10application to personal residential and commercial
11residential policies covering certain damaged property;
12extending the effective date of certain policies under
13certain hurricane circumstances; authorizing the insurer
14to collect premium for the extended period; providing
15nonapplication; amending s. 627.4143, F.S.; requiring
16private passenger motor vehicle insurance policies to
17contain an outline of coverage; prohibiting delivery or
18issuance of basic homeowner's, mobile home owner's,
19condominium unit owner's, and dwelling policies without a
20comprehensive checklist and outline of coverage;
21specifying checklist and outline of coverage contents;
22requiring the checklist and outline of coverage to be sent
23with each renewal of personal lines residential insurance
24policies; specifying application of the checklist and
25outline of coverage to basic homeowner's, mobile home
26owner's, condominium unit owner's, and dwelling policies;
27amending s. 627.701, F.S.; revising a limitation on a
28deductible amount attributable to hurricane or wind
29losses; providing for computation and display of the
30dollar value of hurricane deductibles; requiring insurers
31to compute and display actual dollar values of certain
32riders for certain policies; providing additional notice
33requirements for certain deductible amounts; requiring
34insurers to notify applicants or policyholders of the
35availability and amounts of certain discounts, credits,
36rate differentials, or reductions in deductibles for
37properties on which certain fixtures have been installed
38or construction techniques have been implemented;
39requiring insurers to provide qualifying information;
40authorizing the Financial Services Commission to adopt
41rules; providing for application of hurricane deductibles
42for certain personal lines residential property insurance
43policies; requiring insurers to offer commercial
44residential property insurance policyholders certain
45alternative hurricane deductibles; providing effective
46dates.
47
48Be It Enacted by the Legislature of the State of Florida:
49
50     Section 1.  Paragraph (e) of subsection (2) of section
51215.555, Florida Statutes, is amended to read:
52     215.555  Florida Hurricane Catastrophe Fund.--
53     (2)  DEFINITIONS.--As used in this section:
54     (e)  "Retention" means the amount of losses below which an
55insurer is not entitled to reimbursement from the fund. An
56insurer's retention shall be calculated as follows:
57     1.  The board shall calculate and report to each insurer
58the retention multiples for that year. For the contract year
59beginning June 1, 2005 2004, the retention multiple shall be
60equal to $4 $4.5 billion divided by the total estimated
61reimbursement premium for the contract year; for subsequent
62years, the retention multiple shall be equal to $4 $4.5 billion,
63adjusted based upon the reported exposure from the prior
64contract year to reflect the percentage growth in exposure to
65the fund for covered policies since 2004 2003, divided by the
66total estimated reimbursement premium for the contract year.
67Total reimbursement premium for purposes of the calculation
68under this subparagraph shall be estimated using the assumption
69that all insurers have selected the 90-percent coverage level.
70     2.  The retention multiple as determined under subparagraph
711. shall be adjusted to reflect the coverage level elected by
72the insurer. For insurers electing the 90-percent coverage
73level, the adjusted retention multiple is 100 percent of the
74amount determined under subparagraph 1. For insurers electing
75the 75-percent coverage level, the retention multiple is 120
76percent of the amount determined under subparagraph 1. For
77insurers electing the 45-percent coverage level, the adjusted
78retention multiple is 200 percent of the amount determined under
79subparagraph 1.
80     3.  An insurer shall determine its provisional retention by
81multiplying its provisional reimbursement premium by the
82applicable adjusted retention multiple and shall determine its
83actual retention by multiplying its actual reimbursement premium
84by the applicable adjusted retention multiple.
85     4.  For insurers who experience multiple covered events
86causing loss during the contract year, beginning June 1, 2005,
87each insurer's full retention shall be applied to the two
88largest losses from the covered events for that insurer. For all
89other covered events resulting in losses, the insurer's
90retention shall be reduced to one-third of the full retention.
91The reimbursement contract shall provide for the reimbursement
92of losses for each covered event based on the full retention
93with adjustments made to reflect the reduced retentions after
94January 1 of the contract year provided the insurer reports its
95losses as specified in the reimbursement contract.
96     Section 2.  Paragraphs (d) and (e) are added to subsection
97(2) of section 627.4133, Florida Statutes, to read:
98     627.4133  Notice of cancellation, nonrenewal, or renewal
99premium.--
100     (2)  With respect to any personal lines or commercial
101residential property insurance policy, including, but not
102limited to, any homeowner's, mobile home owner's, farmowner's,
103condominium association, condominium unit owner's, apartment
104building, or other policy covering a residential structure or
105its contents:
106     (d)1.  Upon a declaration of an emergency pursuant to s.
107252.36 and the filing of an order by the Commissioner of
108Insurance Regulation, an insurer may not cancel or nonrenew a
109personal residential or commercial residential property
110insurance policy covering a dwelling or residential property
111located in this state that has been damaged as a result of a
112hurricane or wind loss that is the subject of the declaration of
113emergency for a period of 90 days after the dwelling or
114residential property has been repaired. A structure is deemed to
115be repaired when substantially completed and restored to the
116extent that it is insurable by another authorized insurer that
117is writing policies in this state.
118     2.  However, an insurer or agent may cancel or nonrenew
119such a policy prior to the repair of the dwelling or residential
120property:
121     a.  Upon 10 days' notice for nonpayment of premium; or
122     b.  Upon 45 days' notice:
123     (I)  For a material misstatement or fraud related to the
124claim;
125     (II)  If the insurer can demonstrate that the insured has
126unreasonably caused a delay in the repair of the dwelling; or
127     (III)  If the insurer has paid policy limits.
128     3.  If the insurer elects to nonrenew a policy covering a
129property that has been damaged, the insurer shall provide at
130least 90 days' notice to the insured that the insurer intends to
131nonrenew the policy 90 days after the dwelling or residential
132property has been repaired. Nothing in this paragraph shall
133prevent the insurer from canceling or nonrenewing the policy 90
134days after the repairs are complete for the same reasons the
135insurer would otherwise have canceled or nonrenewed the policy
136but for the limitations of subparagraph 1. The Financial
137Services Commission may adopt rules, and the Commissioner of
138Insurance Regulation may issue orders, necessary to implement
139this paragraph.
140     4.  This paragraph shall also apply to personal residential
141and commercial residential policies covering property that was
142damaged as the result of Tropical Storm Bonnie, Hurricane
143Charley, Hurricane Frances, Hurricane Ivan, or Hurricane Jeanne.
144     (e)  If any cancellation or nonrenewal of a policy subject
145to this subsection is to take effect during the duration of a
146hurricane as defined in s. 627.4025(2)(c), the effective date of
147such cancellation or nonrenewal is extended until the end of the
148duration of such hurricane. The insurer may collect premium at
149the prior rates or the rates then in effect for the period of
150time for which coverage is extended. This paragraph does not
151apply to any property with respect to which replacement coverage
152has been obtained and which is in effect for a claim occurring
153during the duration of the hurricane.
154     Section 3.  Effective October 1, 2005, section 627.4143,
155Florida Statutes, is amended to read:
156     627.4143  Outline of coverage.--
157     (1)  No private passenger automobile or basic homeowner's
158policy shall be delivered or issued for delivery in this state
159unless an appropriate outline of coverage has been delivered
160prior to issuance of the policy or accompanies the policy when
161issued.
162     (2)  The outline of coverage for a private passenger motor
163vehicle insurance policy shall contain all of the following:
164     (a)  A brief description of the principal benefits and
165coverage provided in the policy, broken down by each class or
166type of coverage provided under the policy for which a premium
167is charged, and itemization of the applicable premium.
168     (b)  A summary statement of the principal exclusions and
169limitations or reductions contained in the policy by class or
170type, including, but not limited to, deductibles, coinsurance,
171and any other limitations or reductions.
172     (c)  A summary statement of any renewal or cancellation
173provisions.
174     (d)  A description of the credit or surcharge plan that is
175being applied. The description may display numerical or
176alphabetical codes on the declarations page or premium notice to
177enable the insured to determine the reason or reasons why her or
178his policy is being surcharged or is receiving a credit.
179     (e)  A list of any additional coverage provided through any
180rider or endorsement which accompanies the policy. The list
181shall contain a descriptive reference to each additional
182coverage, rather than solely a reference to a form or code
183number.
184     (f)  For a private passenger motor vehicle insurance
185policy, The extent of coverage provided to the insured in the
186event of collision damage to a rental vehicle rented by the
187insured. The proof-of-insurance card required by s. 316.646 must
188also specify whether rental car coverage is provided, and may
189refer to the outline of coverage as to the details or extent of
190coverage.
191     (3)  A basic homeowner's, mobile home owner's, condominium
192unit owner's, or dwelling policy may not be delivered or issued
193for delivery in this state unless a comprehensive checklist of
194coverage, on a form adopted by the commission, and an
195appropriate outline of coverage have been delivered prior to
196issuance of the policy or accompanies the policy when issued.
197The commission shall, by rule, adopt a form for the checklist
198for each type of policy to which this subsection applies. Each
199form shall indicate that it was adopted by the commission.
200     (a)  The checklist must contain a list of the standard
201provisions and elements that may typically be included in such
202policies, whether or not they are included in the particular
203policy being issued, in a format that allows the insurer to
204place a check mark next to the provision's elements that are
205included so the consumer can see what is included and what is
206not included in the policy. As an alternative to checking the
207boxes on the checklist, an insurer may delete the check boxes
208from the form and replace them with text indicating whether the
209provision's elements are included or not. Limits of liability
210shall be listed for each item. The checklist must include, but
211is not limited to, the following:
212     1.  Property coverage for the principal premises shown in
213the declarations.
214     2.  Property coverage for other structures on the residence
215premises.
216     3.  Whether the principal premises and other structures are
217insured against the following perils:
218     a.  Fire.
219     b.  Lightning.
220     c.  Explosion.
221     d.  Hurricane loss.
222     e.  Nonhurricane wind loss.
223     f.  Collapse.
224     g.  Mold.
225     h.  Sinkhole loss.
226     i.  Vandalism.
227     4.  Personal property coverage.
228     5.  Whether personal property is insured against the
229following perils:
230     a.  Fire.
231     b.  Lightning.
232     c.  Hurricane loss.
233     d.  Nonhurricane wind loss.
234     e.  Collapse.
235     f.  Mold.
236     g.  Sinkhole loss.
237     h.  Theft.
238     6.  The following additional coverages:
239     a.  Debris removal.
240     b.  Loss assessment.
241     c.  Additional living expenses.
242     7.  Personal liability coverage.
243     8.  Medical payments coverage.
244     9.  Discounts applied to the premium.
245     10.  Deductibles for loss due to hurricane and loss to
246other perils.
247     11.  Building ordinance or law coverage.
248     12.  Replacement cost coverage.
249     13.  Actual cash value coverage.
250     (b)  The forms shall allow insurers to place other
251coverages on the checklists which may or may not be included in
252the insurer's policies.
253     (c)  The outline of coverage must contain:
254     1.  A brief description of the principal benefits and
255coverage provided in the policy, itemized by each class or type
256of coverage provided under the policy for which a premium is
257charged, and itemization of the applicable premium.
258     2.  A summary statement of the principal exclusions and
259limitations or reductions contained in the policy by class or
260type, including, but not limited to, deductibles, coinsurance,
261and any other limitations or reductions.
262     3.  A summary statement of any renewal or cancellation
263provisions.
264     4.  A description of the credit or surcharge plan that is
265being applied. The description may display numerical or
266alphabetical codes on the declarations page or premium notice to
267enable the insured to determine the reason or reasons why her or
268his policy is being surcharged or is receiving a credit.
269     5.  A summary of any additional coverage provided through
270any rider or endorsement that accompanies the policy.
271     (4)(3)  The outline of coverage for a private passenger
272motor vehicle policy is required only on the initial policy
273issued by an insurer. The outline of coverage and the checklist
274for a basic homeowner's, mobile home owner's, condominium unit
275owner's, or dwelling policy are required on the initial policy
276and each renewal thereof issued by an insurer.
277     (5)(4)  An insurer must insert the following language on
278the outline of coverage:
279
280"The following outline of coverage or checklist is for
281informational purposes only. Florida law prohibits this outline
282or checklist from changing any of the provisions of the
283insurance contract which is the subject of this outline. Any
284endorsement regarding changes in types of coverage, exclusions,
285limitations, reductions, deductibles, coinsurance, renewal
286provisions, cancellation provisions, surcharges, or credits will
287be sent separately."
288
289     (7)(5)  Neither this section nor the outline of coverage or
290checklist mandated by this section alters or modifies the terms
291of the insurance contract, creates a cause of action, or is
292admissible in any civil action.
293     Section 4.  Paragraph (a) of subsection (3) and subsection
294(4) of section 627.701, Florida Statutes, are amended to read:
295     627.701  Liability of insureds; coinsurance; deductibles.--
296     (3)(a)  A policy of residential property insurance shall
297include a deductible amount applicable to hurricane or wind
298losses no lower than $500 and no higher than 2 percent of the
299policy dwelling limits with respect to personal lines
300residential risks, and no higher than 3 percent of the policy
301limits with respect to commercial lines residential risks;
302however, if a risk was covered on August 24, 1992, under a
303policy having a higher deductible than the deductibles allowed
304by this paragraph, a policy covering such risk may include a
305deductible no higher than the deductible in effect on August 24,
3061992. Notwithstanding the other provisions of this paragraph, a
307personal lines residential policy covering a risk valued at
308$50,000 or less may include a deductible amount attributable to
309hurricane or wind losses no lower than $250, and a personal
310lines residential policy covering a risk valued at $100,000 or
311more may include a deductible amount attributable to hurricane
312or wind losses no higher than 10 5 percent of the policy limits
313unless subject to a higher deductible on August 24, 1992;
314however, no maximum deductible is required with respect to a
315personal lines residential policy covering a risk valued at more
316than $500,000. An insurer may require a higher deductible,
317provided such deductible is the same as or similar to a
318deductible program lawfully in effect on June 14, 1995. In
319addition to the deductible amounts authorized by this paragraph,
320an insurer may also offer policies with a copayment provision
321under which, after exhaustion of the deductible, the
322policyholder is responsible for 10 percent of the next $10,000
323of insured hurricane or wind losses.
324     (4)(a)  Any policy that contains a separate hurricane
325deductible must on its face include in boldfaced type no smaller
326than 18 points the following statement: "THIS POLICY CONTAINS A
327SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN
328HIGH OUT-OF-POCKET EXPENSES TO YOU." A policy containing a
329coinsurance provision applicable to hurricane losses must on its
330face include in boldfaced type no smaller than 18 points the
331following statement: "THIS POLICY CONTAINS A CO-PAY PROVISION
332THAT MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU."
333     (b)  Beginning October 1, 2005, for any personal lines
334residential property insurance policy containing a separate
335hurricane deductible, the insurer shall compute and prominently
336display the actual dollar value of the hurricane deductible on
337the declarations page of the policy at issuance and, for
338renewal, on the renewal declarations page of the policy or on
339the premium renewal notice.
340     (c)  Beginning October 1, 2005, for any personal lines
341residential property insurance policy containing an inflation
342guard rider, the insurer shall compute and prominently display
343the actual dollar value of the hurricane deductible on the
344declarations page of the policy at issuance and, for renewal, on
345the renewal declarations page of the policy or on the premium
346renewal notice. In addition, beginning October 1, 2005, for any
347personal lines residential property insurance policy containing
348an inflation guard rider, the insurer shall notify the
349policyholder of the possibility that the hurricane deductible
350may be higher than indicated when loss occurs due to application
351of the inflation guard rider. Such notification shall be made on
352the declarations page of the policy at issuance and, for
353renewal, on the renewal declarations page of the policy or on
354the premium renewal notice.
355     Section 5.  Effective October 1, 2005, subsection (10) is
356added to section 627.701, Florida Statutes, to read:
357     627.701  Liability of insureds; coinsurance; deductibles.--
358     (10)  Using a form prescribed by the Office of Insurance
359Regulation, the insurer shall clearly notify the applicant or
360policyholder of any personal lines residential property
361insurance policy, at the time of the issuance of the policy and
362at each renewal, of the availability and the range of each
363premium discount, credit, other rate differential, or reduction
364in deductibles for properties on which fixtures or construction
365techniques demonstrated to reduce the amount of loss in a
366windstorm can or have been installed or implemented. The
367prescribed form shall describe generally what actions the
368policyholders may be able to take to reduce their windstorm
369premium. The prescribed form and a list of such ranges approved
370by the office for each insurer licensed in the state and
371providing such discounts, credits, other rate differentials, or
372reductions in deductibles for properties described in this
373subsection shall be available for electronic viewing and
374download from the Department of Financial Services' or the
375Office of Insurance Regulation's Internet website. The Financial
376Services Commission may adopt rules to implement this
377subsection.
378     Section 6.  Subsection (5) of section 627.701, Florida
379Statutes, as created by section 4 of chapter 2004-480, Laws of
380Florida, is amended to read:
381     627.701  Liability of insureds; coinsurance; deductibles.--
382     (5)(a)  The hurricane deductible of any personal lines
383residential property insurance policy issued or renewed on or
384after May 1, 2005, shall be applied as follows:
385     1.(a)  The hurricane deductible shall apply on an annual
386basis to all covered hurricane losses that occur during the
387calendar year for losses that are covered under one or more
388policies issued by the same insurer or an insurer in the same
389insurer group.
390     2.(b)  If a hurricane deductible applies separately to each
391of one or more structures insured under a single policy, the
392requirements of this paragraph subsection apply with respect to
393the deductible for each structure.
394     3.(c)  If there was a hurricane loss for a prior hurricane
395or hurricanes during the calendar year, the insurer may apply a
396deductible to a subsequent hurricane which deductible that is
397the greater of the remaining amount of the hurricane deductible
398or the amount of the deductible that applies to perils other
399than a hurricane. Insurers may require policyholders to report
400hurricane losses that are below the hurricane deductible or to
401maintain receipts or other records of such hurricane losses in
402order to apply such losses to subsequent hurricane claims.
403     4.(d)  If there are hurricane losses in a calendar year on
404more than one policy issued by the same insurer or an insurer in
405the same insurer group, the hurricane deductible shall be the
406highest amount stated in any one of the policies. If a
407policyholder who had a hurricane loss under the prior policy is
408provided or offered a lower hurricane deductible under the new
409or renewal policy, the insurer must notify the policyholder, in
410writing, at the time the lower hurricane deductible is provided
411or offered, that the lower hurricane deductible will not apply
412until January 1 of the following calendar year.
413     (b)  For any commercial residential property insurance
414policy issued or renewed on or after January 1, 2006, the
415insurer must offer the policyholder one of the following
416alternative hurricane deductibles:
417     1.  A hurricane deductible that applies on an annual basis
418as provided in paragraph (a).
419     2.  A hurricane deductible that applies to each hurricane.
420     Section 7.  Except as otherwise provided herein, this act
421shall take effect upon becoming a law.


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