Amendment
Bill No. 7225
Amendment No. 310605
CHAMBER ACTION
Senate House
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1Representative(s) Legg offered the following:
2
3     Amendment (with title amendment)
4     Between lines 4769 and 4770, insert:
5     Section 34.  Subsection (1) and paragraph (d) of subsection
6(2) of section 627.706, Florida Statutes, are amended to read:
7     627.706  Sinkhole insurance; definitions.--
8     (1)  Every insurer authorized to transact property
9insurance in this state shall make available coverage for
10insurable sinkhole losses on any structure, including contents
11of personal property contained therein, to the extent provided
12in the form to which the sinkhole coverage attaches. A policy
13for residential property insurance may include a deductible
14amount applicable to sinkhole losses equal to 1 percent, 2
15percent, 5 percent, or 10 percent of the policy dwelling limits,
16with appropriate premium discounts offered with each deductible
17amount.
18     (2)  As used in ss. 627.706-627.7074, and as used in
19connection with any policy providing coverage for sinkhole
20losses:
21     (d)  "Professional engineer" means a person, as defined in
22s. 471.005, who has a bachelor's degree or higher in engineering
23with a specialty in the geotechnical engineering field. A
24professional An engineer must have geotechnical experience and
25expertise in the identification of sinkhole activity as well as
26other potential causes of damage to the structure.
27     Section 35.  Subsections (2), (3), (5), (6), and (9) of
28section 627.707, Florida Statutes, are amended to read:
29     627.707  Standards for investigation of sinkhole claims by
30insurers; nonrenewals.--Upon receipt of a claim for a sinkhole
31loss, an insurer must meet the following standards in
32investigating a claim:
33     (2)  Following the insurer's initial inspection, the
34insurer shall engage a professional an engineer or a
35professional geologist to conduct testing as provided in s.
36627.7072 to determine the cause of the loss within a reasonable
37professional probability and issue a report as provided in s.
38627.7073, if:
39     (a)  The insurer is unable to identify a valid cause of the
40damage or discovers damage to the structure which is consistent
41with sinkhole loss; or
42     (b)  The policyholder demands testing in accordance with
43this section or s. 627.7072.
44     (3)  Following the initial inspection of the insured
45premises, the insurer shall provide written notice to the
46policyholder disclosing the following information:
47     (a)  What the insurer has determined to be the cause of
48damage, if the insurer has made such a determination.
49     (b)  A statement of the circumstances under which the
50insurer is required to engage a professional an engineer or a
51professional geologist to verify or eliminate sinkhole loss and
52to engage a professional an engineer to make recommendations
53regarding land and building stabilization and foundation repair.
54     (c)  A statement regarding the right of the policyholder to
55request testing by a professional an engineer or a professional
56geologist and the circumstances under which the policyholder may
57demand certain testing.
58     (5)(a)  Subject to paragraph (b), if a sinkhole loss is
59verified, the insurer shall pay to stabilize the land and
60building and repair the foundation in accordance with the
61recommendations of the professional engineer as provided under
62s. 627.7073, and in consultation with the policyholder, subject
63to the coverage and terms of the policy. The insurer shall pay
64for other repairs to the structure and contents in accordance
65with the terms of the policy.
66     (b)  The insurer may limit its payment to the actual cash
67value of the sinkhole loss, not including underpinning or
68grouting or any other repair technique performed below the
69existing foundation of the building, until the policyholder
70enters into a contract for the performance of building
71stabilization or foundation repairs. After the policyholder
72enters into the contract, the insurer shall pay the amounts
73necessary to begin and perform such repairs as the work is
74performed and the expenses are incurred. The insurer may not
75require the policyholder to advance payment for such repairs. If
76repair covered by a personal lines residential property
77insurance policy has begun and the professional engineer
78selected or approved by the insurer determines that the repair
79cannot be completed within the policy limits, the insurer must
80either complete the professional engineer's recommended repair
81or tender the policy limits to the policyholder without a
82reduction for the repair expenses incurred.
83     (c)  Upon the insurer's obtaining the written approval of
84the policyholder and any lienholder, the insurer may make
85payment directly to the persons selected by the policyholder to
86perform the land and building stabilization and foundation
87repairs. The decision by the insurer to make payment to such
88persons does not hold the insurer liable for the work performed.
89     (6)  Except as provided in subsection (7), the fees and
90costs of the professional engineer or the professional geologist
91shall be paid by the insurer.
92     (9)  The insurer may engage a professional structural
93engineer to make recommendations as to the repair of the
94structure.
95     Section 36.  Section 627.7072, Florida Statutes, is amended
96to read:
97     627.7072  Testing standards for sinkholes.--
98     (1)  The professional engineer or and professional
99geologist shall perform such tests as sufficient, in their
100professional opinion, to determine the presence or absence of
101sinkhole loss or other cause of damage within reasonable
102professional probability and for the professional engineer to
103make recommendations regarding necessary building stabilization
104and foundation repair.
105     (2)  Testing by a professional geologist shall be conducted
106in compliance with the Florida Geological Survey Special
107Publication No. 57 (2005).
108     Section 37.  Subsections (1) and (2) of section 627.7073,
109Florida Statutes, are amended to read:
110     627.7073  Sinkhole reports.--
111     (1)  Upon completion of testing as provided in s. 627.7072,
112the professional engineer or and professional geologist shall
113issue a report and certification to the insurer and the
114policyholder as provided in this section.
115     (a)  Sinkhole loss is verified if, based upon tests
116performed in accordance with s. 627.7072, a professional an
117engineer or and a professional geologist issue a written report
118and certification stating:
119     1.  That the cause of the actual physical and structural
120damage is sinkhole activity within a reasonable professional
121probability.
122     2.  That the analyses conducted were of sufficient scope to
123identify sinkhole activity as the cause of damage within a
124reasonable professional probability.
125     3.  A description of the tests performed.
126     4.  A recommendation by the professional engineer of
127methods for stabilizing the land and building and for making
128repairs to the foundation.
129     (b)  If sinkhole activity is eliminated as the cause of
130damage to the structure, the professional engineer or and
131professional geologist shall issue a written report and
132certification to the policyholder and the insurer stating:
133     1.  That the cause of the damage is not sinkhole activity
134within a reasonable professional probability.
135     2.  That the analyses and tests conducted were of
136sufficient scope to eliminate sinkhole activity as the cause of
137damage within a reasonable professional probability.
138     3.  A statement of the cause of the damage within a
139reasonable professional probability.
140     4.  A description of the tests performed.
141     (c)  The respective findings, opinions, and recommendations
142of the professional engineer or and professional geologist as to
143the cause of distress to the property verification or
144elimination of a sinkhole loss and the findings, opinions, and
145recommendations of the professional engineer as to land and
146building stabilization and foundation repair shall be presumed
147correct.
148     (2)  Any insurer that has paid a claim for a sinkhole loss
149shall file a copy of the report and certification, prepared
150pursuant to subsection (1) and including the legal description
151of the real property and the name of the property owner, with
152the county clerk of court property appraiser, who shall record
153the report and certification with the parcel number. The insurer
154shall bear the cost of filing and recording the report and
155certification. There shall be no cause of action or liability
156against an insurer for compliance with this section. The
157recording of the report and certification does not constitute a
158lien, encumbrance, or restriction on the title to the real
159property nor constitute a defect in the title to the real
160property, create any cause of action or liability against any
161grantor of the real property for breach of any warranty of good
162title or warranty against encumbrances, or create any cause of
163action or liability against any title insurer that insures the
164title to the real property. The seller of real property upon
165which a sinkhole claim has been made by the seller and paid by
166the insurer shall disclose to the buyer of such property that a
167claim has been paid and whether or not the full amount of the
168proceeds were used to repair the sinkhole damage.
169     Section 38.  Effective October 1, 2006, section 627.7074,
170Florida Statutes, is created to read:
171     627.7074  Alternative procedure for resolution of disputed
172sinkhole insurance claims.--
173     (1)  As used in this section, the term:
174     (a)  "Neutral evaluation" means the alternative dispute
175resolution provided for in this section.
176     (b)  "Neutral evaluator" means a professional engineer or a
177professional geologist who has completed a course of study in
178alternative dispute resolution designed or approved by the
179department for use in the neutral evaluation process, who is
180determined to be fair and impartial.
181     (2)(a)  The department shall certify and maintain a list of
182persons who are neutral evaluators.
183     (b)  The department shall prepare a consumer information
184pamphlet for distribution by insurers to policyholders which
185clearly describes the neutral evaluation process and includes
186information and forms necessary for the policyholder to request
187a neutral evaluation.
188     (3)  Following the receipt of the report provided under s.
189627.7073 or the denial of a claim for a sinkhole loss, the
190insurer shall notify the policyholder of his or her right to
191participate in the neutral evaluation program under this
192section. Neutral evaluation supersedes the alternative dispute
193resolution process under s. 627.7015. The insurer shall provide
194to the policyholder the consumer information pamphlet prepared
195by the department pursuant to paragraph (2)(b).
196     (4)  Neutral evaluation is optional and nonbinding. Either
197the policyholder or the insurer may decline to participate. A
198request for neutral evaluation may be filed with the department
199by the policyholder or the insurer on a form approved by the
200department. The request for neutral evaluation must state the
201reason for the request and must include an explanation of all
202the issues in dispute at the time of the request. Filing a
203request for neutral evaluation tolls the applicable time
204requirements for filing suit for a period of 60 days following
205the conclusion of the neutral evaluation process or the time
206prescribed in s. 95.11, whichever is later.
207     (5)  Neutral evaluation shall be conducted as an informal
208process in which formal rules of evidence and procedure need not
209be observed. A party to neutral evaluation is not required to
210attend neutral evaluation if a representative of the party
211attends and has the authority to make a binding decision on
212behalf of the party. All parties shall participate in the
213evaluation in good faith.
214     (6)  The insurer shall pay the costs associated with the
215neutral evaluation.
216     (7)  Upon receipt of a request for neutral evaluation, the
217department shall refer the request to a neutral evaluator. The
218neutral evaluator shall notify the policyholder and the insurer
219of the date, time, and place of the neutral evaluation
220conference. The conference may be held by telephone, if feasible
221and desirable. The neutral evaluation conference shall be held
222within 45 days after receipt of the request by the department.
223     (8)  The department shall adopt rules of procedure for the
224neutral evaluation process.
225     (9)  For policyholders not represented by an attorney, a
226consumer affairs specialist of the department or an employee
227designated as the primary contact for consumers on issues
228relating to sinkholes under s. 20.121 shall be available for
229consultation to the extent that he or she may lawfully do so.
230     (10)  Evidence of an offer to settle a claim during the
231neutral evaluation process, as well as any relevant conduct or
232statements made in negotiations concerning the offer to settle a
233claim, is inadmissible to prove liability or absence of
234liability for the claim or its value, except as provided in
235subsection (13).
236     (11)  Any court proceeding related to the subject matter of
237the neutral evaluation shall be stayed pending completion of the
238neutral evaluation.
239     (12)  For matters that are not resolved by the parties at
240the conclusion of the neutral evaluation, the neutral evaluator
241shall prepare a report stating that in his or her opinion the
242sinkhole loss has been verified or eliminated and, if verified,
243the need for and estimated costs of stabilizing the land and any
244covered structures or buildings and other appropriate
245remediation or structural repairs. The evaluator's report shall
246be sent to all parties in attendance at the neutral evaluation
247and to the department.
248     (13)  The recommendation of the neutral evaluator is not
249binding on any party, and the parties retain access to courts.
250The neutral evaluator's written recommendation is admissible in
251any subsequent action or proceeding relating to the claim or to
252the cause of action giving rise to the claim only for purposes
253of determining the award of attorney's fees.
254     (14)  If the neutral evaluator first verifies the existence
255of a sinkhole and, second, recommends the need for and estimates
256costs of stabilizing the land and any covered structures or
257buildings and other appropriate remediation or structural
258repairs, which costs exceed the amount that the insurer has
259offered to pay the policyholder, the insurer is liable to the
260policyholder for up to $2,500 in attorney's fees for the
261attorney's participation in the neutral evaluation process. For
262purposes of this subsection, the term "offer to pay" means a
263written offer signed by the insurer or its legal representative
264and delivered to the policyholder within 10 days after the
265insurer receives notice that a request for neutral evaluation
266has been made under this section.
267     (15)  If the policyholder declines to participate in
268neutral evaluation requested by the insurer or declines to
269resolve the matter in accordance with the recommendation of the
270neutral evaluator pursuant to this section, the insurer is not
271liable for attorney's fees under s. 627.428 or other provisions
272of the insurance code or for extra-contractual damages related
273to a claim for a sinkhole loss.
274     Section 39.  Subsection (2) of section 877.02, Florida
275Statutes, is amended to read:
276     877.02  Solicitation of legal services or retainers
277therefor; penalty.--
278     (2)  It shall be unlawful for any person in the employ of
279or in any capacity attached to any hospital, sanitarium, police
280department, wrecker service or garage, prison or court, or for a
281person authorized to furnish bail bonds, investigators,
282photographers, insurance or public adjusters, or for a general
283or other contractor as defined in s. 489.105 or other business
284providing sinkhole remediation services, to communicate directly
285or indirectly with any attorney or person acting on said
286attorney's behalf for the purpose of aiding, assisting or
287abetting such attorney in the solicitation of legal business or
288the procurement through solicitation of a retainer, written or
289oral, or any agreement authorizing the attorney to perform or
290render legal services.
291     Section 40.  (1)  By February 1, 2007, the Office of
292Insurance Regulation shall calculate a presumed factor to
293reflect the impact of the changes made in this act to rates
294filed by residential property insurers providing sinkhole loss
295coverage. The office shall issue a notice informing all insurers
296writing residential property insurance coverage of the presumed
297factor.
298     (2)  In determining the presumed factor, the office shall
299use generally accepted actuarial techniques and standards in
300determining the expected impact on losses, expenses, and
301investment income of the insurer.
302     (3)  The office may contract with an appropriate vendor to
303determine the presumed factor.
304     (4)  Each residential property insurer shall, at its next
305rate filing after May 1, 2007, reflect a rate change that takes
306into account the presumed factor determined under subsection
307(1).
308     (5)  The sum of $250,000 in nonrecurring funds is
309appropriated from the Insurance Regulatory Trust Fund in the
310Department of Financial Services to the Office of Insurance
311Regulation for the 2006-2007 fiscal year for the purposes of
312funding the provisions of this section.
313     Section 41.  The sums of $115,322 in recurring funds and
314$10,486 in nonrecurring funds are appropriated from the
315Insurance Regulatory Trust Fund in the Department of Financial
316Services for the 2006-2007 fiscal year for the purposes of
317funding the provisions of this act, and two full-time equivalent
318positions with 59,435 in associated salary rate are authorized.
319
320
321======= T I T L E  A M E N D M E N T =======
322     Remove line 284 and insert:
323providing penalties for a violation; amending s. 627.706, F.S.;
324allowing a deductible amount applicable to sinkhole losses in a
325policy for residential property insurance; defining the term
326"professional engineer"; amending s. 627.707, F.S.; revising
327references to certain engineers; authorizing insurers to make
328direct payment for certain repairs; excluding insurers from
329liability for repairs under certain circumstances; amending s.
330627.7072, F.S.; revising references to certain engineers;
331eliminating the requirement for certain testing compliance;
332amending s. 627.7073, F.S.; revising requirements for sinkhole
333reports by professional engineers and professional geologists;
334providing for the recording of sinkhole reports by the clerk of
335court rather than the property appraiser; specifying limitations
336on the effect of recording the report and certification;
337creating s. 627.7074, F.S.; prescribing an alternative method
338for resolving disputed sinkhole insurance claims; providing
339definitions; prescribing procedures for invoking the alternative
340method; providing that a recommendation by a neutral evaluator
341is not binding on any party; providing for payments of costs;
342requiring the insurer to pay attorney's fees of the policyholder
343up to a specified amount under certain conditions; providing
344that an insurer is not liable for attorney's fees or for certain
345damages under certain conditions; amending s. 877.02, F.S.;
346prohibiting certain solicitations by contractors and other
347persons providing sinkhole remediation services; providing
348penalties; requiring the Office of Insurance Regulation to
349calculate a certain presumed factor on residential property
350insurance rates; providing requirements and procedures for
351determining such calculation; requiring the office to provide
352notice of such rate factor to insurers; requiring insurers to
353include such rate factor in certain rate filings; providing
354appropriations and authorizing additional positions and salary
355rates; providing effective


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