HB 217

1	A bill to be entitled
2	An act relating to sinkhole insurance; providing a short
3	title; amending s. 627.707, F.S.; authorizing insurers to
4	make direct payment for certain repairs; excluding
5	insurers from liability for repairs under certain
6	circumstances; revising the requirements for reimbursement
7	of the insurer with respect to certain claims; amending s.
8	627.7072, F.S.; revising testing standards for sinkholes;
9	requiring a report upon conclusion of testing; requiring
10	retention of certain information for a specified period;
11	authorizing the Department of Environmental Protection to
12	adopt rules for the implementation of sinkhole testing and
13	reporting; amending s. 627.7073, F.S.; revising a
14	presumption relating to the findings, opinions, and
15	recommendations in sinkhole reports; creating s. 627.7074,
16	F.S.; providing for an alternative procedure for the
17	resolution of disputed sinkhole insurance claims, which is
18	optional, nonbinding, and informal; providing definitions;
19	requiring the Department of Financial Services to certify
20	and maintain a list of neutral evaluators, prepare a
21	consumer information pamphlet explaining the alternative
22	procedure, and adopt rules for the implementation of an
23	alternative procedure; requiring insurers to provide the
24	consumer information pamphlets to policyholders upon
25	receipt of a sinkhole report or denial of a claim;
26	providing for payment of costs and attorney's fees;
27	preserving access to courts and authorizing judicial
28	review of neutral evaluation recommendations; providing an
29	effective date.
30
31	Be It Enacted by the Legislature of the State of Florida:
32
33	Section 1.  This act may be cited as the "Sinkhole
34	Insurance Relief Act."
35	Section 2.  Paragraph (b) of subsection (5) and subsection
36	(7) of section 627.707, Florida Statutes, are amended to read:
37	627.707  Standards for investigation of sinkhole claims by
38	insurers; nonrenewals.--Upon receipt of a claim for a sinkhole
39	loss, an insurer must meet the following standards in
40	investigating a claim:
41	(5)
42	(b)  The insurer may limit its payment to the actual cash
43	value of the sinkhole loss, not including underpinning or
44	grouting or any other repair technique performed below the
45	existing foundation of the building, until the policyholder
46	enters into a contract for the performance of building
47	stabilization or foundation repairs. After the policyholder
48	enters into the contract, the insurer shall pay the amounts
49	necessary to begin and perform such repairs as the work is
50	performed and the expenses are incurred. The insurer may not
51	require the policyholder to advance payment for such repairs. If
52	repair has begun and the engineer selected or approved by the
53	insurer determines that the repair cannot be completed within
54	the policy limits, the insurer must either complete the
55	engineer's recommended repair or tender the policy limits to the
56	policyholder without a reduction for the repair expenses
57	incurred. The insurer may make payment directly to the persons
58	selected by the policyholder to perform the land and building
59	stabilization and foundation repairs. The insurer has no
60	liability for the work performed unless it agrees to such
61	liability in writing.
62	(7)  If the insurer obtains, pursuant to s. 627.7073,
63	written certification that there is no sinkhole loss or that the
64	cause of the damage was not sinkhole activity, and if the
65	policyholder has submitted the sinkhole claim without good faith
66	grounds for submitting such claim, the policyholder shall
67	reimburse the insurer for 50 percent of the actual costs of the
68	analyses and services provided under ss. 627.7072 and 627.7073;
69	however, a policyholder is not required to reimburse an insurer
70	more than $2,500 with respect to any claim. A policyholder is
71	required to pay reimbursement under this subsection only if the
72	insurer, prior to ordering the analysis under s. 627.7072,
73	informs the policyholder in writing of the policyholder's
74	potential liability for reimbursement and gives the policyholder
75	the opportunity to withdraw the claim.
76	Section 3.  Subsection (2) of section 627.7072, Florida
77	Statutes, is amended, and subsections (3), (4), (5), and (6) are
78	added to that section, to read:
79	627.7072  Testing standards for sinkholes.--
80	(2)  Testing shall be conducted in compliance with
81	standards of the American Society for Testing and Materials
82	International (ASTM), the United States Army Corps of Engineers,
83	or the Florida Department of Transportation, or other
84	appropriate standards, as determined by rule of the Department
85	of Environmental Protection, to the extent applicable by a
86	professional geologist shall be conducted in compliance with the
87	Florida Geological Survey Special Publication No. 57 (2005).
88	(3)(a)  All of the following may be performed in the
89	initial phase of testing, referred to as phase I testing, by or
90	under the supervision of the engineer or professional geologist,
91	as appropriate:
92	1.  Identification and location of all reasonably
93	observable damage.
94	2.  A geophysical survey such as a ground-penetrating radar
95	(GPR) test, an electrical resistivity test, or other appropriate
96	geophysical method.
97	3.  Hand auger boring and push penetrometer testing in two
98	or more locations around the foundation of the structure to
99	determine the composition and relative strength of the nearby
100	surface soils. The hand auger boring must penetrate to 10 feet,
101	and the push penetrometer must penetrate to at least 4 feet.
102	Laboratory tests, including, but not limited to, moisture
103	content, organic content for probable organic-rich soils, and
104	Attenberg limits data for clays, must be conducted on any
105	potentially deleterious soils obtained in the hand auger borings
106	to document a proximal cause for damage.
107	4.  The excavation of one or more test pits to determine to
108	the extent possible the thickness, bearing depth, and type of
109	foundation system used in the construction.
110	5.  Preparation of a site map showing damage locations,
111	documentation of representative damage through the use of
112	photographs taken at the time of initial and subsequent site
113	reconnaissance and field testing under this section, and a
114	written description of the nature of each damage feature.
115	6.  A floor slab elevation map.
116	(b)  Phase I testing may include other tests the engineer
117	and professional geologist deem to be practical and appropriate
118	to identify or eliminate the existence of subsurface anomalies
119	and geological features of interest, but may not include the
120	type of tests included under phase II.
121	(4)(a)  If testing performed under subsection (3) is
122	inconclusive as to the determination of sinkhole loss or reveals
123	damage other than that related to a sinkhole, in the opinion of
124	either the engineer or professional geologist, or both, or if
125	additional testing under this section is demanded by the
126	policyholder in writing within 60 days, the following additional
127	tests, referred to as phase II testing, shall be performed by or
128	under the supervision of the engineer or professional geologist:
129	1.  A floor elevation survey or study to determine any
130	variances in the floor elevation.
131	2.  At least two invasive penetration test borings,
132	consisting of standard penetration tests, to determine the
133	composition and properties of the subsurface geologic materials
134	surrounding the structure. Cone penetrometer tests may be used
135	to discover the relative consistency of subsurface conditions.
136	3.  Laboratory analyses of representative samples of
137	potentially problematic materials found within the upper 20 feet
138	of soil to determine if these materials may have contributed to
139	the damage.
140	(b)  Phase II testing may include other tests the engineer
141	and professional geologist deem to be appropriate.
142	(5)  Upon conclusion of testing required by this section,
143	the person conducting the tests must provide a written report to
144	the insurer and policyholder. All relative testing data, logs,
145	error reports, and similar information, regardless of whether
146	the engineer or professional geologist finds the information to
147	be relevant, shall be retained by the engineer or professional
148	geologists for a period of 2 years from the date of the
149	resolution of the claim.
150	(6)  The Department of Environmental Protection may adopt
151	rules to implement this section.
152	Section 4.  Paragraph (c) of subsection (1) of section
153	627.7073, Florida Statutes, is amended to read:
154	627.7073  Sinkhole reports.--
155	(1)  Upon completion of testing as provided in s. 627.7072,
156	the engineer and professional geologist shall issue a report and
157	certification to the insurer and the policyholder as provided in
158	this section.
159	(c)  The respective findings, opinions, and recommendations
160	of the engineer and professional geologist as to the
161	verification or elimination of a sinkhole loss and the findings,
162	opinions, and recommendations of the engineer as to land and
163	building stabilization and foundation repair are conclusive,
164	unless contrary findings and conclusions are proven by clear and
165	convincing evidence shall be presumed correct.
166	Section 5.  Section 627.7074, Florida Statutes, is created
167	to read:
168	627.7074  Alternative procedure for resolution of disputed
169	sinkhole insurance claims.--
170	(1)  As used in this section:
171	(a)  "Neutral evaluation" means the alternative dispute
172	resolution provided for in this section.
173	(b)  "Neutral evaluator" means a qualified engineer or a
174	professional geologist who has completed a course of study in
175	alternative dispute resolution designed or approved by the
176	department for use in the neutral evaluation process, who is
177	determined to be fair and impartial, and who is attempting to
178	resolve the dispute or claim under this section.
179	(c)  "Department" means the Department of Financial
180	Services.
181	(2)  The department shall certify and maintain a list of
182	persons who are neutral evaluators.
183	(3)  Following its receipt of the report provided under s.
184	627.7073 or its denial of a claim for a sinkhole loss, the
185	insurer shall notify the policyholder of his or her right to
186	participate in the neutral evaluation program under this
187	section. The department shall prepare a consumer information
188	pamphlet for distribution by the insurer to policyholders. The
189	pamphlet shall clearly describe the neutral evaluation process
190	and include directions and forms necessary for the policyholder
191	to request a neutral evaluation.
192	(4)  Neutral evaluation is optional and nonbinding. Either
193	the policyholder or the insurer may decline to participate. A
194	request for neutral evaluation shall be filed with the
195	department by the policyholder or the insurer on a form approved
196	by the department. The request for neutral evaluation must state
197	the reason for the request and must include an explanation of
198	all the issues in dispute at the time of the request. Filing a
199	request for neutral evaluation tolls the applicable time
200	requirements for filing suit for a period of 60 days following
201	the conclusion of the neutral evaluation process or the time
202	prescribed in s. 95.11, whichever is later.
203	(5)  Neutral evaluation shall be conducted as an informal
204	process in which formal rules of evidence and procedure need not
205	be observed. A party to neutral evaluation is not required to
206	attend neutral evaluation if a representative of the party
207	attends and has the authority to make a binding decision on
208	behalf of the party. All parties shall participate in the
209	evaluation in good faith.
210	(6)  The insurer shall pay the costs associated with the
211	neutral evaluation.
212	(7)  Upon receipt of a request for neutral evaluation, the
213	department shall refer the request to a neutral evaluator. The
214	neutral evaluator shall notify the policyholder and the insurer
215	of the date, time, and place of the neutral evaluation
216	conference. The conference may be held by telephone, if feasible
217	and desirable. The neutral evaluation conference shall be held
218	within 45 days after receipt of the request by the department.
219	(8)  The department shall adopt rules of procedure for the
220	neutral evaluation process.
221	(9)  For policyholders not represented by an attorney, a
222	consumer affairs specialist of the department or an employee
223	designated as the primary contact for consumers on issues
224	relating to sinkholes under s. 20.121 shall be available for
225	consultation to the extent that he or she may lawfully do so.
226	(10)  Disclosures and information divulged in the neutral
227	evaluation process are not admissible in any subsequent action
228	or proceeding relating to the claim or to the cause of action
229	giving rise to the claim, except as provided in subsection (13).
230	(11)  Any court proceeding related to the subject matter of
231	the neutral evaluation shall be stayed pending completion of the
232	neutral evaluation.
233	(12)  For matters that are not resolved by the parties at
234	the conclusion of the neutral evaluation, the neutral evaluator
235	shall prepare a report stating that in his or her opinion the
236	sinkhole loss has been verified or eliminated and, if verified,
237	the need for and estimated costs of stabilizing the land and any
238	covered structures or buildings and other appropriate
239	remediation or structural repairs. The evaluator's report shall
240	be sent to all parties in attendance at the neutral evaluation
241	and to the department.
242	(13)  The recommendation of the neutral evaluator is not
243	binding on any party and the parties retain access to courts.
244	The neutral evaluator's written recommendation is admissible in
245	any subsequent action or proceeding relating to the claim or to
246	the cause of action giving rise to the claim only for purposes
247	of determining the award of attorney's fees.
248	(14)  If the policyholder declines to participate in
249	neutral evaluation requested by the insurer or declines to
250	resolve the matter in accordance with the recommendation of the
251	neutral evaluator pursuant to this section, the insurer shall
252	not be liable for attorney's fees under s. 627.428 or other
253	provisions of the insurance code or for extra contractual
254	damages related to a claim for a sinkhole loss.
255	(15)  A party may seek judicial review of the
256	recommendation of the neutral evaluator to determine whether the
257	recommendation was reasonable. A recommendation is reasonable
258	unless it was procured by corruption, fraud, or other undue
259	means; there was evident partiality by the neutral evaluator or
260	misconduct prejudicing the rights of any party; or the neutral
261	evaluator exceeded the authority and power granted by this
262	subsection. If the court declares the recommendation is not
263	reasonable, the neutral evaluation recommendation shall be
264	vacated.
265	Section 6.  This act shall take effect July 1, 2006.

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