Florida Senate - 2013 SB 1498
By Senator Brandes
22-00706-13 20131498__
1 A bill to be entitled
2 An act relating to sinkhole insurance; amending s.
3 627.706, F.S.; revising the definition of the term
4 “structural damage”; amending s. 627.707, F.S.;
5 providing that an insurer must pay for stabilizing a
6 structure if a sinkhole loss is verified, using a
7 stabilization method that includes a specified type of
8 warranty; requiring a policyholder who is paid by an
9 insurer to stabilize a structure to repair the
10 sinkhole; requiring an insurer to renew a property
11 insurance policy when certain sinkhole losses have
12 been paid; removing a provision authorizing an insurer
13 to nonrenew a policy when the insurer has paid the
14 policy limits for a sinkhole loss; amending s.
15 627.7073, F.S.; providing that a specified report to
16 determine the presence or absence of sinkhole loss or
17 other cause of damage is to be considered the jointly
18 owned property of the insurer and the policyholder;
19 requiring such reports to be provided to policyholders
20 and insurers in a specified manner; providing
21 requirements with respect to the form of such reports;
22 specifying a period within which an insurer that pays
23 a claim for sinkhole loss must file a copy of such
24 report with the clerk of court; providing monetary
25 penalty payable by the insurer to the clerk of court
26 for failing to timely file such report; providing an
27 effective date.
28
29 Be It Enacted by the Legislature of the State of Florida:
30
31 Section 1. Paragraph (k) of subsection (2) of section
32 627.706, Florida Statutes, is amended to read:
33 627.706 Sinkhole insurance; catastrophic ground cover
34 collapse; definitions.—
35 (2) As used in ss. 627.706-627.7074, and as used in
36 connection with any policy providing coverage for a catastrophic
37 ground cover collapse or for sinkhole losses, the term:
38 (k) “Structural damage” means a covered building,
39 regardless of the date of its construction, has experienced the
40 following:
41 1. Interior floor displacement or deflection in excess of
42 acceptable variances as defined in ACI 117-90 or the Florida
43 Building Code, which results in settlement-related damage to the
44 interior such that the interior building structure or members
45 become unfit for service or represents a safety hazard as
46 defined within the 2007 Florida Building Code;
47 2. Foundation displacement or deflection in excess of
48 acceptable variances as defined in ACI 318-95 or the Florida
49 Building Code, which results in settlement-related damage to the
50 primary structural members or primary structural systems that
51 prevents those members or systems from supporting the loads and
52 forces they were designed to support to the extent that stresses
53 in those primary structural members or primary structural
54 systems exceeds one and one-third the nominal strength allowed
55 under the Florida Building Code for new buildings of similar
56 structure, purpose, or location;
57 3. Damage that results in listing, leaning, or buckling of
58 the exterior load-bearing walls or other vertical primary
59 structural members to such an extent that a plumb line passing
60 through the center of gravity does not fall inside the middle
61 one-third of the base as defined within the Florida Building
62 Code;
63 4. Damage that results in the building, or any portion of
64 the building containing primary structural members or primary
65 structural systems, being significantly likely to imminently
66 collapse because of the movement or instability of the ground
67 within the influence zone of the supporting ground within the
68 sheer plane necessary for the purpose of supporting such
69 building as defined within the Florida Building Code; or
70 5. Damage occurring on or after October 15, 2005, that
71 qualifies as “substantial structural damage” as defined in the
72 Florida Building Code.
73 Section 2. Subsections (5) and (7) of section 627.707,
74 Florida Statutes, are amended to read:
75 627.707 Investigation of sinkhole claims; insurer payment;
76 nonrenewals.—Upon receipt of a claim for a sinkhole loss to a
77 covered building, an insurer must meet the following standards
78 in investigating a claim:
79 (5) If a sinkhole loss is verified, the insurer shall pay
80 to stabilize the structure land and building and repair the
81 foundation in accordance with the recommendations of a the
82 professional engineer retained pursuant to subsection (2), using
83 a stabilization method that is warranted for the lifetime of the
84 structure, with notice to the policyholder, subject to the
85 coverage and terms of the policy. A policyholder who is paid by
86 the insurer to stabilize the structure must also repair the
87 sinkhole. The insurer shall pay for other repairs to the
88 structure and contents in accordance with the terms of the
89 policy. If a covered building suffers a sinkhole loss or a
90 catastrophic ground cover collapse, the insured must repair such
91 damage or loss in accordance with the insurer’s professional
92 engineer’s recommended repairs. However, if the insurer’s
93 professional engineer determines that the repair cannot be
94 completed within policy limits, the insurer must pay to complete
95 the repairs recommended by the insurer’s professional engineer
96 or tender the policy limits to the policyholder.
97 (a) The insurer may limit its total claims payment to the
98 actual cash value of the sinkhole loss, which does not include
99 underpinning or grouting or any other repair technique performed
100 below the existing foundation of the building, until the
101 policyholder enters into a contract for the performance of
102 building stabilization or foundation repairs in accordance with
103 the recommendations set forth in the insurer’s report issued
104 pursuant to s. 627.7073.
105 (b) In order to prevent additional damage to the building
106 or structure, the policyholder must enter into a contract for
107 the performance of building stabilization and foundation repairs
108 within 90 days after the insurance company confirms coverage for
109 the sinkhole loss and notifies the policyholder of such
110 confirmation. This time period is tolled if either party invokes
111 the neutral evaluation process, and begins again 10 days after
112 the conclusion of the neutral evaluation process.
113 (c) After the policyholder enters into the contract for the
114 performance of building stabilization and foundation repairs,
115 the insurer shall pay the amounts necessary to begin and perform
116 such repairs as the work is performed and the expenses are
117 incurred. The insurer may not require the policyholder to
118 advance payment for such repairs. If repair covered by a
119 personal lines residential property insurance policy has begun
120 and the professional engineer selected or approved by the
121 insurer determines that the repair cannot be completed within
122 the policy limits, the insurer must complete the professional
123 engineer’s recommended repair or tender the policy limits to the
124 policyholder without a reduction for the repair expenses
125 incurred.
126 (d) The stabilization and all other repairs to the
127 structure and contents must be completed within 12 months after
128 entering into the contract for repairs described in paragraph
129 (b) unless:
130 1. There is a mutual agreement between the insurer and the
131 policyholder;
132 2. The claim is involved with the neutral evaluation
133 process;
134 3. The claim is in litigation; or
135 4. The claim is under appraisal or mediation.
136 (e) Upon the insurer’s obtaining the written approval of
137 any lienholder, the insurer may make payment directly to the
138 persons selected by the policyholder to perform the land and
139 building stabilization and foundation repairs. The decision by
140 the insurer to make payment to such persons does not hold the
141 insurer liable for the work performed.
142 (f) The policyholder may not accept a rebate from any
143 person performing the repairs specified in this section. If a
144 policyholder receives a rebate, coverage is void and the
145 policyholder must refund the amount of the rebate to the
146 insurer. Any person performing the repairs specified in this
147 section who offers a rebate commits insurance fraud punishable
148 as a third degree felony as provided in s. 775.082, s. 775.083,
149 or s. 775.084. As used in this paragraph, the term “rebate”
150 means a remuneration, payment, gift, discount, or transfer of
151 any item of value to the policyholder by or on behalf of a
152 person performing the repairs specified in this section as an
153 incentive or inducement to obtain repairs performed by that
154 person.
155 (7) An insurer shall renew may not nonrenew any policy of
156 property insurance on the basis of filing of claims for sinkhole
157 loss if the total of such payments does not equal or exceed the
158 policy limits of coverage for the policy in effect on the date
159 of loss, for property damage to the covered building, as set
160 forth on the declarations page, or if the policyholder repaired
161 the structure in accordance with the engineering recommendations
162 made pursuant to subsection (2) upon which any payment or policy
163 proceeds were based. If the insurer pays such limits, it may
164 nonrenew the policy.
165 Section 3. Section 627.7073, Florida Statutes, is amended
166 to read:
167 627.7073 Sinkhole reports.—
168 (1) Upon completion of testing as provided in s. 627.7072,
169 the professional engineer or professional geologist shall issue
170 a report and certification, which shall be considered as
171 property jointly owned by the insurer and the policyholder, to
172 the insurer and the policyholder as provided in this section.
173 (a) Sinkhole loss is verified if, based upon tests
174 performed in accordance with s. 627.7072, a professional
175 engineer or a professional geologist issues a written report and
176 certification stating:
177 1. That structural damage to the covered building has been
178 identified within a reasonable professional probability.
179 2. That the cause of the structural damage is sinkhole
180 activity within a reasonable professional probability.
181 3. That the analyses conducted were of sufficient scope to
182 identify sinkhole activity as the cause of damage within a
183 reasonable professional probability.
184 4. A description of the tests performed.
185 5. A recommendation by the professional engineer of methods
186 for stabilizing the land and building and for making repairs to
187 the foundation.
188 (b) If there is no structural damage or if sinkhole
189 activity is eliminated as the cause of such damage to the
190 covered building, the professional engineer or professional
191 geologist shall issue a written report and certification to the
192 policyholder and the insurer stating:
193 1. That there is no structural damage or the cause of such
194 damage is not sinkhole activity within a reasonable professional
195 probability.
196 2. That the analyses and tests conducted were of sufficient
197 scope to eliminate sinkhole activity as the cause of the
198 structural damage within a reasonable professional probability.
199 3. A statement of the cause of the structural damage within
200 a reasonable professional probability.
201 4. A description of the tests performed.
202 (c) The respective findings, opinions, and recommendations
203 of the insurer’s professional engineer or professional geologist
204 as to the cause of distress to the property and the findings,
205 opinions, and recommendations of the insurer’s professional
206 engineer as to land and building stabilization and foundation
207 repair set forth by s. 627.7072 shall be presumed correct.
208 (d) The professional engineer or professional geologist
209 shall provide by certified mail, return receipt requested, two
210 original signed and sealed reports to the policyholder and one
211 photocopy of the report to the insurer.
212 (2) An insurer that has paid a claim for a sinkhole loss
213 shall file a copy of the report and certification, prepared
214 pursuant to subsection (1), including the legal description of
215 the real property and the name of the property owner, the
216 neutral evaluator’s report, if any, which indicates that
217 sinkhole activity caused the damage claimed, a copy of the
218 certification indicating that stabilization has been completed,
219 if applicable, and the amount of the payment, with the county
220 clerk of court, who shall record the report and certification.
221 The insurer shall bear the cost of filing and recording one or
222 more reports and certifications. If an insurer fails to file a
223 copy of the report within 30 days after payment of a sinkhole
224 claim, a $25 penalty shall be assessed for each day beyond the
225 30th day that the insurer is determined to be in noncompliance
226 with this section until the insurer is in compliance, which
227 shall be payable to the clerk of the court. There shall be no
228 cause of action or liability against an insurer for compliance
229 with this section.
230 (a) The recording of the report and certification does not:
231 1. Constitute a lien, encumbrance, or restriction on the
232 title to the real property or constitute a defect in the title
233 to the real property;
234 2. Create any cause of action or liability against any
235 grantor of the real property for breach of any warranty of good
236 title or warranty against encumbrances; or
237 3. Create any cause of action or liability against any
238 title insurer that insures the title to the real property.
239 (b) As a precondition to accepting payment for a sinkhole
240 loss, the policyholder must file a copy of any sinkhole report
241 regarding the insured property which was prepared on behalf or
242 at the request of the policyholder. The policyholder shall bear
243 the cost of filing and recording the sinkhole report. The
244 recording of the report does not:
245 1. Constitute a lien, encumbrance, or restriction on the
246 title to the real property or constitute a defect in the title
247 to the real property;
248 2. Create any cause of action or liability against any
249 grantor of the real property for breach of any warranty of good
250 title or warranty against encumbrances; or
251 3. Create any cause of action or liability against a title
252 insurer that insures the title to the real property.
253 (c) The seller of real property upon which a sinkhole claim
254 has been made by the seller and paid by the insurer must
255 disclose to the buyer of such property, before the closing, that
256 a claim has been paid and whether or not the full amount of the
257 proceeds was used to repair the sinkhole damage.
258 (3) Upon completion of any building stabilization or
259 foundation repairs for a verified sinkhole loss, the
260 professional engineer responsible for monitoring the repairs
261 shall issue a report to the property owner which specifies what
262 repairs have been performed and certifies within a reasonable
263 degree of professional probability that such repairs have been
264 properly performed. The professional engineer issuing the report
265 shall file a copy of the report and certification, which
266 includes a legal description of the real property and the name
267 of the property owner, with the county clerk of the court, who
268 shall record the report and certification. This subsection does
269 not create liability for an insurer based on any representation
270 or certification by a professional engineer related to the
271 stabilization or foundation repairs for the verified sinkhole
272 loss.
273 Section 4. This act shall take effect July 1, 2013.