Senate Bill sb0286
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Florida Senate - 2006 SB 286
By Senator Fasano
11-76A-06 See HB 217
1 A bill to be entitled
2 An act relating to sinkhole insurance;
3 providing a short title; amending s. 627.707,
4 F.S.; authorizing insurers to make direct
5 payment for certain repairs; excluding insurers
6 from liability for repairs under certain
7 circumstances; revising the requirements for
8 reimbursement of the insurer with respect to
9 certain claims; amending s. 627.7072, F.S.;
10 revising testing standards for sinkholes;
11 requiring a report upon conclusion of testing;
12 requiring retention of certain information for
13 a specified period; authorizing the Department
14 of Environmental Protection to adopt rules for
15 the implementation of sinkhole testing and
16 reporting; amending s. 627.7073, F.S.; revising
17 a presumption relating to the findings,
18 opinions, and recommendations in sinkhole
19 reports; creating s. 627.7074, F.S.; providing
20 for an alternative procedure for the resolution
21 of disputed sinkhole insurance claims, which is
22 optional, nonbinding, and informal; providing
23 definitions; requiring the Department of
24 Financial Services to certify and maintain a
25 list of neutral evaluators, prepare a consumer
26 information pamphlet explaining the alternative
27 procedure, and adopt rules for the
28 implementation of an alternative procedure;
29 requiring insurers to provide the consumer
30 information pamphlets to policyholders upon
31 receipt of a sinkhole report or denial of a
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 claim; providing for payment of costs and
2 attorney's fees; preserving access to courts
3 and authorizing judicial review of neutral
4 evaluation recommendations; providing an
5 effective date.
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7 Be It Enacted by the Legislature of the State of Florida:
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9 Section 1. This act may be cited as the "Sinkhole
10 Insurance Relief Act."
11 Section 2. Paragraph (b) of subsection (5) and
12 subsection (7) of section 627.707, Florida Statutes, are
13 amended to read:
14 627.707 Standards for investigation of sinkhole claims
15 by insurers; nonrenewals.--Upon receipt of a claim for a
16 sinkhole loss, an insurer must meet the following standards in
17 investigating a claim:
18 (5)
19 (b) The insurer may limit its payment to the actual
20 cash value of the sinkhole loss, not including underpinning or
21 grouting or any other repair technique performed below the
22 existing foundation of the building, until the policyholder
23 enters into a contract for the performance of building
24 stabilization or foundation repairs. After the policyholder
25 enters into the contract, the insurer shall pay the amounts
26 necessary to begin and perform such repairs as the work is
27 performed and the expenses are incurred. The insurer may not
28 require the policyholder to advance payment for such repairs.
29 If repair has begun and the engineer selected or approved by
30 the insurer determines that the repair cannot be completed
31 within the policy limits, the insurer must either complete the
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 engineer's recommended repair or tender the policy limits to
2 the policyholder without a reduction for the repair expenses
3 incurred. The insurer may make payment directly to the persons
4 selected by the policyholder to perform the land and building
5 stabilization and foundation repairs. The insurer has no
6 liability for the work performed unless it agrees to such
7 liability in writing.
8 (7) If the insurer obtains, pursuant to s. 627.7073,
9 written certification that there is no sinkhole loss or that
10 the cause of the damage was not sinkhole activity, and if the
11 policyholder has submitted the sinkhole claim without good
12 faith grounds for submitting such claim, the policyholder
13 shall reimburse the insurer for 50 percent of the actual costs
14 of the analyses and services provided under ss. 627.7072 and
15 627.7073; however, a policyholder is not required to reimburse
16 an insurer more than $2,500 with respect to any claim. A
17 policyholder is required to pay reimbursement under this
18 subsection only if the insurer, prior to ordering the analysis
19 under s. 627.7072, informs the policyholder in writing of the
20 policyholder's potential liability for reimbursement and gives
21 the policyholder the opportunity to withdraw the claim.
22 Section 3. Subsection (2) of section 627.7072, Florida
23 Statutes, is amended, and subsections (3), (4), (5), and (6)
24 are added to that section, to read:
25 627.7072 Testing standards for sinkholes.--
26 (2) Testing shall be conducted in compliance with
27 standards of the American Society for Testing and Materials
28 International (ASTM), the United States Army Corps of
29 Engineers, or the Florida Department of Transportation, or
30 other appropriate standards, as determined by rule of the
31 Department of Environmental Protection, to the extent
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 applicable by a professional geologist shall be conducted in
2 compliance with the Florida Geological Survey Special
3 Publication No. 57 (2005).
4 (3)(a) All of the following may be performed in the
5 initial phase of testing, referred to as phase I testing, by
6 or under the supervision of the engineer or professional
7 geologist, as appropriate:
8 1. Identification and location of all reasonably
9 observable damage.
10 2. A geophysical survey such as a ground-penetrating
11 radar (GPR) test, an electrical resistivity test, or other
12 appropriate geophysical method.
13 3. Hand auger boring and push penetrometer testing in
14 two or more locations around the foundation of the structure
15 to determine the composition and relative strength of the
16 nearby surface soils. The hand auger boring must penetrate to
17 10 feet, and the push penetrometer must penetrate to at least
18 4 feet. Laboratory tests, including, but not limited to,
19 moisture content, organic content for probable organic-rich
20 soils, and Attenberg limits data for clays, must be conducted
21 on any potentially deleterious soils obtained in the hand
22 auger borings to document a proximal cause for damage.
23 4. The excavation of one or more test pits to
24 determine to the extent possible the thickness, bearing depth,
25 and type of foundation system used in the construction.
26 5. Preparation of a site map showing damage locations,
27 documentation of representative damage through the use of
28 photographs taken at the time of initial and subsequent site
29 reconnaissance and field testing under this section, and a
30 written description of the nature of each damage feature.
31 6. A floor slab elevation map.
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 (b) Phase I testing may include other tests the
2 engineer and professional geologist deem to be practical and
3 appropriate to identify or eliminate the existence of
4 subsurface anomalies and geological features of interest, but
5 may not include the type of tests included under phase II.
6 (4)(a) If testing performed under subsection (3) is
7 inconclusive as to the determination of sinkhole loss or
8 reveals damage other than that related to a sinkhole, in the
9 opinion of either the engineer or professional geologist, or
10 both, or if additional testing under this section is demanded
11 by the policyholder in writing within 60 days, the following
12 additional tests, referred to as phase II testing, shall be
13 performed by or under the supervision of the engineer or
14 professional geologist:
15 1. A floor elevation survey or study to determine any
16 variances in the floor elevation.
17 2. At least two invasive penetration test borings,
18 consisting of standard penetration tests, to determine the
19 composition and properties of the subsurface geologic
20 materials surrounding the structure. Cone penetrometer tests
21 may be used to discover the relative consistency of subsurface
22 conditions.
23 3. Laboratory analyses of representative samples of
24 potentially problematic materials found within the upper 20
25 feet of soil to determine if these materials may have
26 contributed to the damage.
27 (b) Phase II testing may include other tests the
28 engineer and professional geologist deem to be appropriate.
29 (5) Upon conclusion of testing required by this
30 section, the person conducting the tests must provide a
31 written report to the insurer and policyholder. All relative
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 testing data, logs, error reports, and similar information,
2 regardless of whether the engineer or professional geologist
3 finds the information to be relevant, shall be retained by the
4 engineer or professional geologists for a period of 2 years
5 from the date of the resolution of the claim.
6 (6) The Department of Environmental Protection may
7 adopt rules to implement this section.
8 Section 4. Paragraph (c) of subsection (1) of section
9 627.7073, Florida Statutes, is amended to read:
10 627.7073 Sinkhole reports.--
11 (1) Upon completion of testing as provided in s.
12 627.7072, the engineer and professional geologist shall issue
13 a report and certification to the insurer and the policyholder
14 as provided in this section.
15 (c) The respective findings, opinions, and
16 recommendations of the engineer and professional geologist as
17 to the verification or elimination of a sinkhole loss and the
18 findings, opinions, and recommendations of the engineer as to
19 land and building stabilization and foundation repair are
20 conclusive, unless contrary findings and conclusions are
21 proven by clear and convincing evidence shall be presumed
22 correct.
23 Section 5. Section 627.7074, Florida Statutes, is
24 created to read:
25 627.7074 Alternative procedure for resolution of
26 disputed sinkhole insurance claims.--
27 (1) As used in this section:
28 (a) "Neutral evaluation" means the alternative dispute
29 resolution provided for in this section.
30 (b) "Neutral evaluator" means a qualified engineer or
31 a professional geologist who has completed a course of study
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Florida Senate - 2006 SB 286
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1 in alternative dispute resolution designed or approved by the
2 department for use in the neutral evaluation process, who is
3 determined to be fair and impartial, and who is attempting to
4 resolve the dispute or claim under this section.
5 (c) "Department" means the Department of Financial
6 Services.
7 (2) The department shall certify and maintain a list
8 of persons who are neutral evaluators.
9 (3) Following its receipt of the report provided under
10 s. 627.7073 or its denial of a claim for a sinkhole loss, the
11 insurer shall notify the policyholder of his or her right to
12 participate in the neutral evaluation program under this
13 section. The department shall prepare a consumer information
14 pamphlet for distribution by the insurer to policyholders. The
15 pamphlet shall clearly describe the neutral evaluation process
16 and include directions and forms necessary for the
17 policyholder to request a neutral evaluation.
18 (4) Neutral evaluation is optional and nonbinding.
19 Either the policyholder or the insurer may decline to
20 participate. A request for neutral evaluation shall be filed
21 with the department by the policyholder or the insurer on a
22 form approved by the department. The request for neutral
23 evaluation must state the reason for the request and must
24 include an explanation of all the issues in dispute at the
25 time of the request. Filing a request for neutral evaluation
26 tolls the applicable time requirements for filing suit for a
27 period of 60 days following the conclusion of the neutral
28 evaluation process or the time prescribed in s. 95.11,
29 whichever is later.
30 (5) Neutral evaluation shall be conducted as an
31 informal process in which formal rules of evidence and
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 procedure need not be observed. A party to neutral evaluation
2 is not required to attend neutral evaluation if a
3 representative of the party attends and has the authority to
4 make a binding decision on behalf of the party. All parties
5 shall participate in the evaluation in good faith.
6 (6) The insurer shall pay the costs associated with
7 the neutral evaluation.
8 (7) Upon receipt of a request for neutral evaluation,
9 the department shall refer the request to a neutral evaluator.
10 The neutral evaluator shall notify the policyholder and the
11 insurer of the date, time, and place of the neutral evaluation
12 conference. The conference may be held by telephone, if
13 feasible and desirable. The neutral evaluation conference
14 shall be held within 45 days after receipt of the request by
15 the department.
16 (8) The department shall adopt rules of procedure for
17 the neutral evaluation process.
18 (9) For policyholders not represented by an attorney,
19 a consumer affairs specialist of the department or an employee
20 designated as the primary contact for consumers on issues
21 relating to sinkholes under s. 20.121 shall be available for
22 consultation to the extent that he or she may lawfully do so.
23 (10) Disclosures and information divulged in the
24 neutral evaluation process are not admissible in any
25 subsequent action or proceeding relating to the claim or to
26 the cause of action giving rise to the claim, except as
27 provided in subsection (13).
28 (11) Any court proceeding related to the subject
29 matter of the neutral evaluation shall be stayed pending
30 completion of the neutral evaluation.
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Florida Senate - 2006 SB 286
11-76A-06 See HB 217
1 (12) For matters that are not resolved by the parties
2 at the conclusion of the neutral evaluation, the neutral
3 evaluator shall prepare a report stating that in his or her
4 opinion the sinkhole loss has been verified or eliminated and,
5 if verified, the need for and estimated costs of stabilizing
6 the land and any covered structures or buildings and other
7 appropriate remediation or structural repairs. The evaluator's
8 report shall be sent to all parties in attendance at the
9 neutral evaluation and to the department.
10 (13) The recommendation of the neutral evaluator is
11 not binding on any party and the parties retain access to
12 courts. The neutral evaluator's written recommendation is
13 admissible in any subsequent action or proceeding relating to
14 the claim or to the cause of action giving rise to the claim
15 only for purposes of determining the award of attorney's fees.
16 (14) If the policyholder declines to participate in
17 neutral evaluation requested by the insurer or declines to
18 resolve the matter in accordance with the recommendation of
19 the neutral evaluator pursuant to this section, the insurer
20 shall not be liable for attorney's fees under s. 627.428 or
21 other provisions of the insurance code or for extra
22 contractual damages related to a claim for a sinkhole loss.
23 (15) A party may seek judicial review of the
24 recommendation of the neutral evaluator to determine whether
25 the recommendation was reasonable. A recommendation is
26 reasonable unless it was procured by corruption, fraud, or
27 other undue means; there was evident partiality by the neutral
28 evaluator or misconduct prejudicing the rights of any party;
29 or the neutral evaluator exceeded the authority and power
30 granted by this subsection. If the court declares the
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Florida Senate - 2006 SB 286
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1 recommendation is not reasonable, the neutral evaluation
2 recommendation shall be vacated.
3 Section 6. This act shall take effect July 1, 2006.
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