HB 0217CS

CHAMBER ACTION



1The Commerce Council recommends the following:
2     Council/Committee Substitute
3     Remove the entire bill and insert:
4
A bill to be entitled
5An act relating to sinkhole insurance; amending s.
6627.706, F.S.; allowing a deductible amount applicable to
7sinkhole losses in a policy for residential property
8insurance; defining the term "professional engineer";
9amending s. 627.707, F.S.; revising references to certain
10engineers; authorizing insurers to make direct payment for
11certain repairs; excluding insurers from liability for
12repairs under certain circumstances; amending s. 627.7072,
13F.S.; revising references to certain engineers;
14eliminating the requirement for certain testing
15compliance; amending s. 627.7073, F.S.; revising
16requirements for sinkhole reports by professional
17engineers and professional geologists; providing for the
18recording of sinkhole reports by the clerk of court rather
19than the property appraiser; creating s. 627.7074, F.S.;
20prescribing an alternative method for resolving disputed
21sinkhole insurance claims; providing definitions;
22prescribing procedures for invoking the alternative
23method; providing that a recommendation by a neutral
24evaluator is not binding on any party; providing for
25payments of costs; requiring the insurer to pay attorney's
26fees of the policyholder up to a specified amount under
27certain conditions; providing that an insurer is not
28liable for attorney's fees or for certain damages under
29certain conditions; providing for judicial review;
30amending s. 877.02, F.S.; prohibiting certain
31solicitations by contractors and other persons providing
32sinkhole remediation services; providing penalties;
33providing effective dates.
34
35Be It Enacted by the Legislature of the State of Florida:
36
37     Section 1.  Subsection (1) and paragraph (d) of subsection
38(2) of section 627.706, Florida Statutes, are amended to read:
39     627.706  Sinkhole insurance; definitions.--
40     (1)  Every insurer authorized to transact property
41insurance in this state shall make available coverage for
42insurable sinkhole losses on any structure, including contents
43of personal property contained therein, to the extent provided
44in the form to which the sinkhole coverage attaches. A policy
45for residential property insurance may include a deductible
46amount applicable to sinkhole losses equal to 1 percent, 2
47percent, 5 percent, or 10 percent of the policy dwelling limits,
48with appropriate premium discounts offered with each deductible
49amount.
50     (2)  As used in ss. 627.706-627.7074, and as used in
51connection with any policy providing coverage for sinkhole
52losses:
53     (d)  "Professional engineer" means a person, as defined in
54s. 471.005, who has a bachelor's degree or higher in engineering
55with a specialty in the geotechnical engineering field. A
56professional An engineer must have geotechnical experience and
57expertise in the identification of sinkhole activity as well as
58other potential causes of damage to the structure.
59     Section 2.  Subsections (2), (3), (5), (6), and (9) of
60section 627.707, Florida Statutes, are amended to read:
61     627.707  Standards for investigation of sinkhole claims by
62insurers; nonrenewals.--Upon receipt of a claim for a sinkhole
63loss, an insurer must meet the following standards in
64investigating a claim:
65     (2)  Following the insurer's initial inspection, the
66insurer shall engage a professional an engineer or a
67professional geologist to conduct testing as provided in s.
68627.7072 to determine the cause of the loss within a reasonable
69professional probability and issue a report as provided in s.
70627.7073, if:
71     (a)  The insurer is unable to identify a valid cause of the
72damage or discovers damage to the structure which is consistent
73with sinkhole loss; or
74     (b)  The policyholder demands testing in accordance with
75this section or s. 627.7072.
76     (3)  Following the initial inspection of the insured
77premises, the insurer shall provide written notice to the
78policyholder disclosing the following information:
79     (a)  What the insurer has determined to be the cause of
80damage, if the insurer has made such a determination.
81     (b)  A statement of the circumstances under which the
82insurer is required to engage a professional an engineer or a
83professional geologist to verify or eliminate sinkhole loss and
84to engage a professional an engineer to make recommendations
85regarding land and building stabilization and foundation repair.
86     (c)  A statement regarding the right of the policyholder to
87request testing by a professional an engineer or a professional
88geologist and the circumstances under which the policyholder may
89demand certain testing.
90     (5)(a)  Subject to paragraph (b), if a sinkhole loss is
91verified, the insurer shall pay to stabilize the land and
92building and repair the foundation in accordance with the
93recommendations of the professional engineer as provided under
94s. 627.7073, and in consultation with the policyholder, subject
95to the coverage and terms of the policy. The insurer shall pay
96for other repairs to the structure and contents in accordance
97with the terms of the policy.
98     (b)  The insurer may limit its payment to the actual cash
99value of the sinkhole loss, not including underpinning or
100grouting or any other repair technique performed below the
101existing foundation of the building, until the policyholder
102enters into a contract for the performance of building
103stabilization or foundation repairs. After the policyholder
104enters into the contract, the insurer shall pay the amounts
105necessary to begin and perform such repairs as the work is
106performed and the expenses are incurred. The insurer may not
107require the policyholder to advance payment for such repairs. If
108repair covered by a personal lines residential property
109insurance policy has begun and the professional engineer
110selected or approved by the insurer determines that the repair
111cannot be completed within the policy limits, the insurer must
112either complete the professional engineer's recommended repair
113or tender the policy limits to the policyholder without a
114reduction for the repair expenses incurred.
115     (c)  Upon the insurer's obtaining the written approval of
116the policyholder and any lienholder, the insurer may make
117payment directly to the persons selected by the policyholder to
118perform the land and building stabilization and foundation
119repairs. The decision by the insurer to make payment to such
120persons does not hold the insurer liable for the work performed.
121     (6)  Except as provided in subsection (7), the fees and
122costs of the professional engineer or the professional geologist
123shall be paid by the insurer.
124     (9)  The insurer may engage a professional structural
125engineer to make recommendations as to the repair of the
126structure.
127     Section 3.  Section 627.7072, Florida Statutes, is amended
128to read:
129     627.7072  Testing standards for sinkholes.--
130     (1)  The professional engineer or and professional
131geologist shall perform such tests as sufficient, in their
132professional opinion, to determine the presence or absence of
133sinkhole loss or other cause of damage within reasonable
134professional probability and for the professional engineer to
135make recommendations regarding necessary building stabilization
136and foundation repair.
137     (2)  Testing by a professional geologist shall be conducted
138in compliance with the Florida Geological Survey Special
139Publication No. 57 (2005).
140     Section 4.  Subsections (1) and (2) of section 627.7073,
141Florida Statutes, are amended to read:
142     627.7073  Sinkhole reports.--
143     (1)  Upon completion of testing as provided in s. 627.7072,
144the professional engineer or and professional geologist shall
145issue a report and certification to the insurer and the
146policyholder as provided in this section.
147     (a)  Sinkhole loss is verified if, based upon tests
148performed in accordance with s. 627.7072, a professional an
149engineer or and a professional geologist issue a written report
150and certification stating:
151     1.  That the cause of the actual physical and structural
152damage is sinkhole activity within a reasonable professional
153probability.
154     2.  That the analyses conducted were of sufficient scope to
155identify sinkhole activity as the cause of damage within a
156reasonable professional probability.
157     3.  A description of the tests performed.
158     4.  A recommendation by the professional engineer of
159methods for stabilizing the land and building and for making
160repairs to the foundation.
161     (b)  If sinkhole activity is eliminated as the cause of
162damage to the structure, the professional engineer or and
163professional geologist shall issue a written report and
164certification to the policyholder and the insurer stating:
165     1.  That the cause of the damage is not sinkhole activity
166within a reasonable professional probability.
167     2.  That the analyses and tests conducted were of
168sufficient scope to eliminate sinkhole activity as the cause of
169damage within a reasonable professional probability.
170     3.  A statement of the cause of the damage within a
171reasonable professional probability.
172     4.  A description of the tests performed.
173     (c)  The respective findings, opinions, and recommendations
174of the professional engineer or and professional geologist as to
175the cause of distress to the property verification or
176elimination of a sinkhole loss and the findings, opinions, and
177recommendations of the professional engineer as to land and
178building stabilization and foundation repair shall be presumed
179correct.
180     (2)  Any insurer that has paid a claim for a sinkhole loss
181shall file a copy of the report and certification, prepared
182pursuant to subsection (1), with the county clerk of court
183property appraiser, who shall record the report and
184certification with the parcel number. The insurer shall bear the
185cost of filing and recording the report and certification. There
186shall be no cause of action or liability against an insurer for
187compliance with this section. The seller of real property upon
188which a sinkhole claim has been made shall disclose to the buyer
189of such property that a claim has been paid and whether or not
190the full amount of the proceeds were used to repair the sinkhole
191damage.
192     Section 5.  Effective October 1, 2006, section 627.7074,
193Florida Statutes, is created to read:
194     627.7074  Alternative procedure for resolution of disputed
195sinkhole insurance claims.--
196     (1)  As used in this section, the term:
197     (a)  "Neutral evaluation" means the alternative dispute
198resolution provided for in this section.
199     (b)  "Neutral evaluator" means a professional engineer or a
200professional geologist who has completed a course of study in
201alternative dispute resolution designed or approved by the
202department for use in the neutral evaluation process, who is
203determined to be fair and impartial.
204     (2)(a)  The department shall certify and maintain a list of
205persons who are neutral evaluators.
206     (b)  The department shall prepare a consumer information
207pamphlet for distribution by insurers to policyholders which
208clearly describes the neutral evaluation process and includes
209information and forms necessary for the policyholder to request
210a neutral evaluation.
211     (3)  Following the receipt of the report provided under s.
212627.7073 or the denial of a claim for a sinkhole loss, the
213insurer shall notify the policyholder of his or her right to
214participate in the neutral evaluation program under this
215section. Neutral evaluation supersedes the alternative dispute
216resolution process under s. 627.7015. The insurer shall provide
217to the policyholder the consumer information pamphlet prepared
218by the department pursuant to paragraph (2)(b).
219     (4)  Neutral evaluation is optional and nonbinding. Either
220the policyholder or the insurer may decline to participate. A
221request for neutral evaluation may be filed with the department
222by the policyholder or the insurer on a form approved by the
223department. The request for neutral evaluation must state the
224reason for the request and must include an explanation of all
225the issues in dispute at the time of the request. Filing a
226request for neutral evaluation tolls the applicable time
227requirements for filing suit for a period of 60 days following
228the conclusion of the neutral evaluation process or the time
229prescribed in s. 95.11, whichever is later.
230     (5)  Neutral evaluation shall be conducted as an informal
231process in which formal rules of evidence and procedure need not
232be observed. A party to neutral evaluation is not required to
233attend neutral evaluation if a representative of the party
234attends and has the authority to make a binding decision on
235behalf of the party. All parties shall participate in the
236evaluation in good faith.
237     (6)  The insurer shall pay the costs associated with the
238neutral evaluation.
239     (7)  Upon receipt of a request for neutral evaluation, the
240department shall refer the request to a neutral evaluator. The
241neutral evaluator shall notify the policyholder and the insurer
242of the date, time, and place of the neutral evaluation
243conference. The conference may be held by telephone, if feasible
244and desirable. The neutral evaluation conference shall be held
245within 45 days after receipt of the request by the department.
246     (8)  The department shall adopt rules of procedure for the
247neutral evaluation process.
248     (9)  For policyholders not represented by an attorney, a
249consumer affairs specialist of the department or an employee
250designated as the primary contact for consumers on issues
251relating to sinkholes under s. 20.121 shall be available for
252consultation to the extent that he or she may lawfully do so.
253     (10)  Evidence of an offer to settle a claim during the
254neutral evaluation process, as well as any relevant conduct or
255statements made in negotiations concerning the offer to settle a
256claim, is inadmissible to prove liability or absence of
257liability for the claim or its value, except as provided in
258subsection (13).
259     (11)  Any court proceeding related to the subject matter of
260the neutral evaluation shall be stayed pending completion of the
261neutral evaluation.
262     (12)  For matters that are not resolved by the parties at
263the conclusion of the neutral evaluation, the neutral evaluator
264shall prepare a report stating that in his or her opinion the
265sinkhole loss has been verified or eliminated and, if verified,
266the need for and estimated costs of stabilizing the land and any
267covered structures or buildings and other appropriate
268remediation or structural repairs. The evaluator's report shall
269be sent to all parties in attendance at the neutral evaluation
270and to the department.
271     (13)  The recommendation of the neutral evaluator is not
272binding on any party, and the parties retain access to courts.
273The neutral evaluator's written recommendation is admissible in
274any subsequent action or proceeding relating to the claim or to
275the cause of action giving rise to the claim only for purposes
276of determining the award of attorney's fees.
277     (14)  If the neutral evaluator first verifies the existence
278of a sinkhole and, second, recommends the need for and estimates
279costs of stabilizing the land and any covered structures or
280buildings and other appropriate remediation or structural
281repairs, which costs exceed the amount that the insurer has
282offered to pay the policyholder, the insurer is liable to the
283policyholder for up to $2,500 in attorney's fees for the
284attorney's participation in the neutral evaluation process. For
285purposes of this subsection, the term "offer to pay" means a
286written offer signed by the insurer or its legal representative
287and delivered to the policyholder within 10 days after the
288insurer receives notice that a request for neutral evaluation
289has been made under this section.
290     (15)  If the policyholder declines to participate in
291neutral evaluation requested by the insurer or declines to
292resolve the matter in accordance with the recommendation of the
293neutral evaluator pursuant to this section, the insurer is not
294liable for attorney's fees under s. 627.428 or other provisions
295of the insurance code or for extra-contractual damages related
296to a claim for a sinkhole loss.
297     (16)  A party may seek judicial review of the
298recommendation of the neutral evaluator to determine whether the
299recommendation is reasonable. A recommendation is reasonable
300unless: it was procured by corruption, fraud, or other undue
301means; there was evident partiality by the neutral evaluator or
302misconduct prejudicing the rights of any party; or the neutral
303evaluator exceeded the authority and power granted by this
304section. If the court declares the recommendation is not
305reasonable, the neutral evaluation recommendation shall be
306vacated.
307     Section 6.  Subsection (2) of section 877.02, Florida
308Statutes, is amended to read:
309     877.02  Solicitation of legal services or retainers
310therefor; penalty.--
311     (2)  It shall be unlawful for any person in the employ of
312or in any capacity attached to any hospital, sanitarium, police
313department, wrecker service or garage, prison or court, or for a
314person authorized to furnish bail bonds, investigators,
315photographers, insurance or public adjusters, or for a general
316or other contractor as defined in s. 489.105 or other business
317providing sinkhole remediation services, to communicate directly
318or indirectly with any attorney or person acting on said
319attorney's behalf for the purpose of aiding, assisting or
320abetting such attorney in the solicitation of legal business or
321the procurement through solicitation of a retainer, written or
322oral, or any agreement authorizing the attorney to perform or
323render legal services.
324     Section 7.  Except as otherwise expressly provided in this
325act, this act shall take effect July 1, 2006.


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